Partners Group has recently agreed to invest over $200 million in a Taiwanese greenfield solar power platform aiming to develop a 550MW portfolio over the next three years. Cathay Life Insurance, Taiwan’s largest insurer, is also a minority investor in the platform.
For those wondering why this significant investment has taken place now, the answer lies with the recently elected Taiwanese government and its intention to triple the island nation’s solar power capacity from 6.2GW to 20GW by 2025. As the world’s second-largest solar panel exporter, Taiwan has so far installed 936MW of solar across the island.
The new administration, led by President Tsai Ing-wen, who took office in May, announced its intention to increase renewable energy’s share of the power mix to 20 percent by 2025 – renewables currently contribute just over 4 percent, according to government statistics.
“The development of Taiwan’s renewables market has really kicked off in 2016, thanks to the breakthrough developments in the past 12 to 18 months,” highlights Andrew Kwok, Partners’ senior vice-president of private infrastructure Asia-Pacific.
“The newly elected government’s solar energy targets coupled with the re-zoning of idle agricultural land for solar ground-mounted installations will provide the necessary scale and support for our platform,” explains Kwok.
Taiwan launched its renewables policy in 2009 with a focus on onshore wind. Development of solar power, on the other hand, had been restrained to rooftop systems due to limited land supply. Last year, the Taiwanese government announced plans to turn polluted agricultural land into ground-mounted solar power generation zones. As of April, 2,500 hectares of land have been included in the scheme.
“There are several components supporting solar investment in Taiwan, including policy support from the new administration and a world-leading solar manufacturing industry. However, the availability of land for ground-mounted plants is the factor that fell into place at the end of 2015, making now a good time to invest in the sector,” argues Kwok.
Taiwan needs a total of 22,500 hectares of land to reach its target of developing 3GW of rooftop solar and 17GW of ground-mounted capacity, the Ministry of Economic Affairs says, adding that land for salt manufacturing could also be added to solar power generation zones. As a result, the Ministry is confident that 1.44GW of solar will be built by June 2018.
“We expect there will be an increasing trend of inbound investments in the solar power sector in the next few years,” says Kwok, pointing out that Taiwan also aims to replace nuclear power generation with renewable sources.
And while solar might be grabbing the lion’s share of attention thanks to these new developments, the government also plans to build up offshore wind generation from scratch to a total of 3GW by 2030. The country currently has 666MW of onshore wind.
The Taiwanese government is also trying to deliver a better investment environment for its renewables sector. Part of that includes reforming the country’s power industry, in an attempt to introduce market competition and break the monopoly of state-owned utility Taiwan Power Company.
The reform scheme, proposed in July and now under public consultation, aims to open up Taiwan’s power generation, transmission and distribution sectors, with a new regulatory framework for the industry. This will allow more private developers to be able to sell power to private and public distributors. At present, all electricity is procured by the Taiwan Power Company.
The renewables sector in Taiwan is still at an early development stage, but as all of these different pieces fall into place, do not expect Partners and Cathay Life to be the only investors looking to tap into this new market’s eye-catching potential. As one Asia-focused renewables developer put it to us: Taiwan might just be Asia’s “next renewables hotspot”.