Chinese Taipeis Renewable Energy Development, Promotion and Pricing Mechanism Feng-Shuo YangDirector, Research Division V Taiwan Institute of Economic ResearchAPEC Workshop on Renewable Energy Promotion and Pricing Mechanism 26 September 20133F The Banquet, San Want Hotel, Taipei, Chinese Taipei

OutlineEnergy Supply and Demand Trends and Achievements of Renewable Energy Development Renewable Energy Promotion Policy Renewable Energy Pricing MechanismConclusion

*

Energy Supply SourcesIn 2012 indigenous energy was only 2.51%, while percentage of imported energy reached 97.49%.Energy Supply MixFossil energy remains as the major sources: coal (29.7%), oil (48.0%), natural gas (12.2%) and nuclear (8.3%)Renewable energy accounts for 1.8% of energy supply *I. Energy Supply and Demand*

*Energy demand structureA. Energy consumption industrial (38.2%), services (11.0%), residential (10.9%) and transportation (11.9%)B. Electricity consumption industrial (52.8%), services (19.4%), residential (17.9%) and transportation (0.5%)Industrial sector is the largest energy consumer, therefore, structural adjustment of the sector and promotion of energy efficiency measures are key strategies. *Domestic energy consumption 1993~2012 (by sector)2012 Domestic energy consumption structure (by sector)*I. Energy Supply and Demand

Chart1

7949.406

42564.758

13262.698

996.707

12280.009

12119.505

22359.288

2012

1

1993199419951996199719981999200020012002200320042005200620072008200920102011

195.73237.80316.86398.21399.20380.47390.64335.20307.26280.43234.06239.69219.93191.70144.9496.1684.7785.7095.57

318.78310.70310.19341.64364.18393.58425.07428.65476.65423.61341.22376.38394.48371.26334.71271.19275.40301.25280.88

108.53104.41104.28106.78125.96134.51146.56154.06149.03155.41147.84156.42157.67164.30227.40291.95285.46299.15308.11

9,172.379,683.9910,093.2510,360.1610,613.5311,095.1911,400.1911,617.5711,616.4012,169.5912,308.2412,770.0313,139.1813,152.7312,738.8512,112.6912,260.4912,643.8912,839.43

0.9363948077

1

0000

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93.64%

94.94%

()

:

2012

Energy sector self-use7949.406

Industrial sector42564.758

Transportation sector13262.698

Agricultural sector996.707

Service sector12280.009

Housing sector12119.505

Non-energy consumption22359.288

3

Chart1

5297.11323348.4339795.4111400.8545927.7667160.9946098.532

6039.14924297.99910336.8881420.0816590.027480.3366572.873

6327.10125199.66210824.5721471.5386837.5578029.1257346.997

6600.0126076.15911206.781520.9087505.1738588.397583.735

6996.26428113.24411502.8731414.3947820.3718729.6437623.15

7275.17229064.50612003.7511213.618551.9659982.588231.855

7434.49231082.16412362.4641243.6079055.09410251.7238552.379

7942.09834289.21612535.4811390.9479867.61810744.5419434.644

8172.49533802.64512549.3371408.98110155.86210829.44313987.326

7938.55536155.6913029.0321435.07810612.32911192.98514628.62

8220.12436727.86613031.3571579.66611129.25611446.22216569.65

8508.97138412.34813542.5181656.73811641.07411583.24417447.523

8987.05638821.28113911.2621527.0812224.84612269.32717117.415

9073.60240398.87613879.9871204.81512635.57412272.08917585.502

8845.34842085.3813445.9071003.88112553.24312341.97421986.716

8115.65840450.86312771.9871103.11712610.07812285.52421727.531

7802.49837662.98512906.119961.61812172.73612255.26723006.746

8097.90142091.16913329.983943.64412476.60812248.42424198.078

8078.02943160.56613523.997967.28912378.67712487.83321321.968

7949.40642564.75813262.698996.70712280.00912119.50522359.288

Energy sector self-use

Industrial sector

Transportation sector

Agricultural sector

Service sector

Housing sector

Non-energy consumption

103 KLOE

1

1993199419951996199719981999200020012002200320042005200620072008200920102011

195.73237.80316.86398.21399.20380.47390.64335.20307.26280.43234.06239.69219.93191.70144.9496.1684.7785.7095.57

318.78310.70310.19341.64364.18393.58425.07428.65476.65423.61341.22376.38394.48371.26334.71271.19275.40301.25280.88

108.53104.41104.28106.78125.96134.51146.56154.06149.03155.41147.84156.42157.67164.30227.40291.95285.46299.15308.11

9,172.379,683.9910,093.2510,360.1610,613.5311,095.1911,400.1911,617.5711,616.4012,169.5912,308.2412,770.0313,139.1813,152.7312,738.8512,112.6912,260.4912,643.8912,839.43

0.9363948077

1

0000

0000

0000

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0000

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0000

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0000

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0000

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93.64%

94.94%

()

:

19931994199519961997199819992000200120022003200420052006200720082009201020112012

Energy sector self-use5,297.116,039.156,327.106,600.016,996.267,275.177,434.497,942.108,172.507,938.568,220.128,508.978,987.069,073.608,845.358,115.667,802.508,097.908,078.037949.406

Industrial sector23,348.4324,298.0025,199.6626,076.1628,113.2429,064.5131,082.1634,289.2233,802.6536,155.6936,727.8738,412.3538,821.2840,398.8842,085.3840,450.8637,662.9942,091.1743,160.5742564.758

Transportation sector9,795.4110,336.8910,824.5711,206.7811,502.8712,003.7512,362.4612,535.4812,549.3413,029.0313,031.3613,542.5213,911.2613,879.9913,445.9112,771.9912,906.1213,329.9813,524.0013262.698

Agricultural sector1,400.851,420.081,471.541,520.911,414.391,213.611,243.611,390.951,408.981,435.081,579.671,656.741,527.081,204.821,003.881,103.12961.62943.64967.29996.707

Service sector5,927.776,590.026,837.567,505.177,820.378,551.979,055.099,867.6210,155.8610,612.3311,129.2611,641.0712,224.8512,635.5712,553.2412,610.0812,172.7412,476.6112,378.6812280.009

Housing sector7,160.997,480.348,029.138,588.398,729.649,982.5810,251.7210,744.5410,829.4411,192.9911,446.2211,583.2412,269.3312,272.0912,341.9712,285.5212,255.2712,248.4212,487.8312119.505

Non-energy consumption6,098.536,572.877,347.007,583.747,623.158,231.868,552.389,434.6413,987.3314,628.6216,569.6517,447.5217,117.4217,585.5021,986.7221,727.5323,006.7524,198.0821,321.9722359.288

()

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2011

2011()

*%103 MW5-year renewable energy demonstration plan was promoted2nd National EnergyConference conclusion:to formulate specific act forrenewable energyPromulgation of the Renewable Energy Development ActThousand Wind Turbines and Million Solar Rooftop PVs ProjectAdoption of bidding mechanism for Solar PV Completion date as thebasis for solar PV tariffII. Trends and Achievements of Renewable Energy DevelopmentThe Installed capacity of Renewable EnergyThe percentage of Renewable Energy of power supplying

Ocean and geothermal energy: developingCumulative installed capacity of renewable energy (2013.05)1. As of the end of May 2013, cumulative installed capacity of renewable energy is approximately 3,748.9 MW, 7.7% as of total power system. 2. Total installed area of solar water heating system is 2.27 million m2 (estimated 500,000 household installed, penetration rate 3.63%), installation density is 5th in the world (2008).3. Comprehensive supply of biodiesel B2, with annual usage of 100,000 kiloliters.4. Promotion Achievement1998~2009: average annual increase of installed capacity of renewable energy power generation is 88.7 MW.2010~2012: average annual increase of installed capacity of renewable energy power generation is 132.0 MW.Installed capacity of solar PV has grown 23 times after Renewable Energy Development Act passed in 2009. *HydroBiomassWind powerSolar PVII. Trends and Achievements of Renewable Energy Development

2nd National Energy Conference conclusion: formulate specific renewable energy act Renewable Energy Development Act was promulgated in July 2009. Feed-in tariff for renewable energy was adopted. The installation of solar PV system in public buildings was subsidized in Economic Revitalization Policy and 6% renewable energy use in public building was promotedNSTPE announced to enhance R&D on renewable energy technology in next 5 years. 5-year renewable energy demonstration plan promoted by MOEA, include subsidies for wind power generation and solar PV19982000200520091st National Energy Conference conclusion: renewable energy development 2010Comprehensive use of B2 dieselSubsidiary acts of Renewable Energy Development Act was passed, and FIT for renewable energy was started to operate. Promote gasohol project in Taipei and Kaohsiungmetropolitan area2011Thousand Wind Turbines and Million Solar Rooftop PVs Project was approved by Executive Yuan, and the project office was set up. 20122013New energy policy Framework aims to ensure nuclear safety, promote green and low carbon environment, and gradually move towards a nuclear-free society. 1. The Evolution of Renewable Energy PromotionIII. Renewable Energy Promotion Policy*

*2. Renewable Energy Promotion TargetPlanning principlesMature and feasible technology Cost-orientedBalanced development phasesAcceptable impact of power price Driving domestic industrial developmentResults of planWind powerPromote Thousand Wind Turbines project (2) Offshore after onshore Solar PVs(1) Promote Million Solar Rooftop PVs project(2) Gradual expansion; ground-mounted after rooftopBiomass(1)Waste-to energy: transformation of existing municipal waste incineration plants into biomass energy centers(2)Biomass power: better use of existing agricultural wastes, and biogas from waste (sewage) treatment plants(3)Biodiesel: comprehensive use of B2 biodieselGeothermalSuperficial geothermal energy exploration then deep thermal technology developmentHydro powerDeveloped by Taipower company and private power enterprises

Ocean powerR&D of ocean power systemPioneer demonstration project to attract the participation of private sectorIII. Renewable Energy Promotion Policy

*(1) Target Expansion and Overall Development StrategyDue to the geographical environment and natural resource limitations, The renewable energy with matured technology and low power generation costs will have priority in government development policy. Moreover, the authorities will encourage the industry players to consolidate their R&D and manufacturing capabilities. Thus, Chinese Taipei can be one of the Green Power Exporting countries.(2) Target of the Promotion of Renewable EnergyAccording to the Renewable Energy Development Act, the target of renewable energy installation shall increase up to 6,500MW for 20 years. To correspond with the upcoming goals for GHG reduction, energy diversification, and renewable energy expansion, the renewable energy installation target is revised to reach 9,952MW by 2025, and 12,502MW by 2030 (i.e. meet the target of increasing 6,500 MW in 20 years 5 years earlier). In other words, more aggressive targets are set for developing renewable energy in Chinese Taipei.2. Renewable Energy Promotion TargetIII. Renewable Energy Promotion Policy

(3) Aggressive Installation Capacity Targets To prompt the solar PV and offshore wind power, we also approve the Million Solar Rooftop PVs and Thousand Wind Turbines Promotion project. The goal of project will be conducted to reach the goal of installing 3,100 MW of PV systems by 2030 and 1,000 wind turbine ( including 450 onshore and 600 offshore wind turbine) .III. Renewable Energy Promotion Policy*

Installed capacity of expanded promotion target (MW)YearEnergy type20102015202020252030Land wind4768711,2001,2001,200Offshore wind0156001,8003,000Hydro1,9772,0892,1382,5022,502Solar PVs215521,3002,5003,100Geothermal0466150200Biogas2529293131Wastes8008489251,3691,369Ocean0130200600Fuel cell0760200500Total3,2994,4166,3489,95212,502Percentage of renewable energy of annual installed capacity8.1%10.3%11.1%14.8%16.1%Compared with installed capacity in 20101(base)1.341.923.023.79

(1) Solar PV: Million Solar Rooftop PVs projectA. Promotion strategies: gradual expansion, rooftop first then ground mounted.B. Promoting measures: coordination and mutual support between central and local governments, procedure simplification and deregulation, financing environment for market mechanism. Introduction of PV-ESCO combined with available financing to reduce the burden of the installers. C. Overall objective: cumulative installed capacity reaching 2,500MW by 2025, 3,100MW by 2030 (RF 3,000MW and GM 100MW).(2) Wind Power: Thousand Wind Turbines projectA. Accelerate Onshore promotion: 1,200 MW (about 450 units) completed by 2020.B. Offshore demonstration incentive: 4 demonstration units completed by 2015. 600MW wind farm (about 120-180 units) completed by 2020. C. Offshore development block: annual increase of offshore wind farm of 240MW. 2,400MW completed in next 10 years.D. Overall objective: 3,000 MW of offshore wind farm completed by 2030. 4,200MW of total wind farm completed by 2030.*3. New Energy Policy Framework (2011.110.03)III. Renewable Energy Promotion Policy

(3) Biomass powerA. Coordinating with FIT for renewable energy and MOEA Biogas Power Generation System Subsidy Scheme to encourage the industrial participation in the installation. 4 counties (Pingtung, Tainan, Yunlin, Changhua) have submitted their application in 2013.B. Investment in advanced fuel conversion technology (e.g. biomass pyrolysis oil, firing technique), diversification of biofuel sources and improvement of fuel quality. C. Short-term objective: 877MW by 2015. D. Long-term objective: 1,400MW and 3.42% of total power generation completed by 2025. (4) Ocean powerA. Short-term objective: demonstration of MW grade power plant completed by 2015 and development of commercial power plant (30MW) started from 2020.B. Long-term objective: 200MW and 0.24% of total power generation by 2025.III. Renewable Energy Promotion Policy3. New Energy Policy Framework (2011.110.03)*

*(5) Geothermal powerA. Development strategy: from shallow to deep ground (EGS).B. Coordinating with FIT for renewable energy and MOEA Biogas Power Generation System Subsidy Scheme to encourage the industrial participation in the installation. In December 2012, a demonstration project of 50kW enhanced dual cycle geothermal power generation system with autonomous technology was built in Qingshui, Yilan county. C. Short-term objective: 1 MW Renovate-Operate-Transfer (ROT) Qingshui project completed in 2013. 23MW in Qingshui area completed by 2018. D. Long-term objective: 100MW in Datun Mountain area and 0.24% of total power generation completed by 2025. 3. New Energy Policy Framework (2011.110.03)III. Renewable Energy Promotion Policy

*4. Renewable Energy Development Act (23 articles)Promotion target, mandatory grid interconnection and power purchasing obligations, FIT for different renewable energy with reasonable profits, and development fund for subsidies are four pillars of CTs power purchasing system. FIT mechanism is the core. III. Renewable Energy Promotion Policy

(1) Feed-in Tariff Rate *Every year, Renewable Energy Feed-in Tariff Rate Review Committee will review the technical improvement, cost change, achieved target and relate factors of each type of renewable energy to examine Feed-in Tariff Rate and calculation formula. * To secure reasonable investment return for the industry, renewable electricity generated by the industry and the public will be fully purchased with fixed rate for 20 years, with WACC rate of 5.25% (discount rate). *4. Renewable Energy Development ActRenewable energy power-purchasing systemRate-setting reviewShare the initial risk of IndustryFixed Feed-in Tariff, FITDeliberate the suggestions from industryIII. Renewable Energy Promotion Policy

(2)Set up Promotion target The Renewable Energy Development Act is aimed to increase dramatically CTs renewable energy use in the next 20 years. *Concrete target of installed capacity: 9,952 MW by 2025 12,502MW by 2030(3)Set up renewable energy development fundThe establishment of renewable energy development fund is aimed to internalize the external cost of traditional fossil fuel. * Power enterprises are required to pay the fund for power generation from non-renewables. * Upon approval, the amount paid to the fund can be reflected in the power price to meet the principles of users/polluters charge. *4. Renewable Energy Development ActIII. Renewable Energy Promotion Policy

(4) Elimination of development restrictionRelated acts and laws have been amended in coordination with REDA*4. Renewable Energy Development ActIII. Renewable Energy Promotion Policy

RegulationPurposeContentElectric regulationsAmendment of Electricity Act and related regulationsElectricity Act, Electricity Registration Regulation, Self-Use Power Generation Equipment Registration RegulationLand Act Building ActReduce barriers of renewable energy equipment installationExemption of miscellaneous license for renewable energy equipment installation, non-urban land registration changesAdministrative orders related to renewable energy equipmentIdentification and bidding system for renewable energy equipmentRenewable energy power generation system installation administration, renewable energy power generation facility demonstration incentive scheme, import tax exemption of renewable energy power generation equipment, solar PV power generation bidding procedureTaipower regulationTaipower responseTaipower renewable energy power generation grid interconnection rule

(5) Grid interconnection and power purchasing obligationPower enterprise is obliged to purchase power generated from renewables and to provide grid interconnection. (6) Demonstration subsidyRenewable energy with development potentials are entitled to receive subsidies for a period in the initial development stage. Currently demonstration projects of offshore wind power, geothermal and methane gas can receive subsidies. (7) Other supporting measuresOther promotional measures include duty exemption of imported renewable energy power generation equipment, deregulation of related acts, and specific offices for each type of renewable energy. *4. Renewable Energy Development ActIII. Renewable Energy Promotion Policy

Financial Mechanism of the Act Renewable Energy Development Fund (Article 7)Provide for the funding sources needed and purposes of use for developing renewable energy Feedin tariffs (Article 9)Constitute a committee for stipulating the buy wholesale rate and formula of calculation for power generated by renewable energy facilities Subsidy (Article 10)Subsidize power utilities for purchasing or selfuse generating of renewable electricity Rewarded demonstration (Article 11)Be reward for renewable energy facilities with potentiality in an early stages of technical development Incentives to thermal applications (Article 13)Subsidize thermal applications of solar energy and biofuels *4. Renewable Energy Development ActIII. Renewable Energy Promotion Policy

1. Power Purchasing Mechanism for Renewable Energy(1) Characteristics*Adoption of FIT system*Renewable energy power are guaranteed to be purchased with a preferential rate in a 20 period Basic ideaRenewable energy power generation facility installerTaipowerCompanyUserElectriccurrentCashflowCharacteristics1.Fixed tariff over 20 years period enable the industry to control cash flow of each stage, facilitating investment decision planning and reducing operational risks. 2.Adoption mode of energy rate and cost benchmarking to encourage regions with competitive renewable energy resources and enterprises with better operational efficiency to enter the market with priority, and enhance the economic benefits of renewable energy.3.FIT rate is calculated based on signing day rate, but for Solar PV specifically, completion date rates and bidding system is adopted, is an improved FIT system with Taiwanese characteristicsRE Development FundElectricity surchargeSubsidy for cost difference ElectriccurrentCashflowIV. Renewable Energy Pricing Mechanism*

According to REDA: A. Central competent authority (MOEA) should invite all relevant ministry, scholars and experts, and organizations to form a committee, to validate the Feed-in Tariff rate and its calculation formula of renewable energy power generation facility. B. Tariffs and formula should be reviewed or revised annually by referring to technical improvement, cost change, target achievement status and related factors of each type of renewable energy.C. Tariff shall not be lower than the average generation cost for thermal-fired (fossil fuel) power of domestic power utilities.*1. Power Purchasing Mechanism for Renewable Energy (2) RE Feed-in Tariff rate Validation CommitteeIV. Renewable Energy Pricing Mechanism

*1. Power Purchasing Mechanism for Renewable Energy(2) RE Feed-in Tariff rate Validation CommitteeVice minister of MOEA as convener invites all ministry, scholars, experts and organizationsCommittee formationLegal basisIV. Renewable Energy Pricing Mechanism

Adopts the international best practice: investment and O&M Cost + Reasonable rate of return, to reflect the capital cost and investment risk to ensure a reasonable profit return to the investors. Feed-in Tariffs are fixed tariff payments over a long operating period (20 years) based on actual power sold. In principle, the FIT rates must Renewable energy resources that are locally abundant and operate with high economic efficiency are prioritized.

1. Power Purchasing Mechanism for Renewable Energy (3) Calculation formula of Feed-in Tariff rateIV. Renewable Energy Pricing Mechanism*

A. According to REDA: Technical improvement, cost change, target achievement and related factors of each type of renewable energy will be reviewed or revised annually.B. Current Feed-in Tariff calculation parameter for renewable energy power is as follows:*1. Power Purchasing Mechanism for Renewable Energy (4) Calculation parameter and contentIV. Renewable Energy Pricing Mechanism

ItemParameterContent(1)Initial installation costTotal initial investment capital(2)Annual O&M costAve. annual related O&M costs in 20 years(3) Annual electricity saleAve. annual electricity sale(4)Purchasing periodElectricity purchasing period (operation years of facility)(5)WACCTime value of money invested

*(2)A. Feed-in Tariff except solar PV*(LVRT)2.5924/(1012.5971/) 1. Power Purchasing Mechanism for Renewable Energy (5) Current Feed-in Tariff rate of renewable energy powerIV. Renewable Energy Pricing Mechanism

Type of renewable energycategorylevel (kW)2012 rates (NTD/kWh)2013 rates (NTD/kWh)Change rate (%)Wind powerOnshore1~

*1. Power Purchasing Mechanism for Renewable Energy (5) Current Feed-in Tariff rate of renewable energy powerB. Feed-in Tariff for solar PVIV. Renewable Energy Pricing Mechanism

TypecategoryLevel(kW)Ceiling rates for 1st period 2012 (NTD/kWh)Ceiling rates for 2nd period 2012 (NTD/kWh)Ceiling rates for 1st period 2013 (NTD/kWh)Ceiling rates for 2nd period 2013 (NTD/kWh)1st period change (%)2nd period change (%)Solar PVRooftop1~

(1) Origins of biddingConsidering short construction period and reduced set-up costs due to rapid technical progress, completion date rates and bidding system was discussed and adopted in 2011 to avoid delay in construction work of the enterprises seeking excess profits.According to REDA and subsidiary acts, the bidding system aims to truly reflect cost changes of solar PV installation through market mechanism, making the FIT for solar PV more fair, reasonable and effective. Supporting measures of bidding mechanism(A) Bidding quota is set up for each period. (B) FIT for solar PV is regarded as Ceiling rate of the bidding price. (C) Submission discount rate as quotation of the bidding. The rate of the winner is ceiling rate announced at completion date(1-discount rate).*2. Solar PVs bidding mechanismIV. Renewable Energy Pricing Mechanism

(2) Subjects suitable for bidding*2. Solar PVs bidding mechanismIV. Renewable Energy Pricing Mechanism

201120122013Suitable1. Rooftop installation of non-residential owner from 1kW~10kW1. Rooftop installation from 30 kW ~ 5 MW.1. Rooftop installation from 30 kW ~ 5 MW.2. Rooftop installation over 10 kW.2. Ground-mounted installation from 1 kW~1MW.2. Ground-mounted installation from 1 kW~1MW.3. Ground-mounted installation from 1 kW~1MW.Unsuitable1. Government building with mandatory installation 6% of green energy facilities1. Rooftop installation from 1 kW~30 kW.1. Rooftop installation from 1 kW~30 kW.2. Installations that received subsidy from MOEA or BOE in the past.2.Government agencies or state-owned enterprises installations2. Installation for buildings owned or managed by government and public schools.3. Installations that received subsidy from MOEA or BOE in the past.3. Private installations of the rented public buildings approved by local government with accumulated approved capacity under 3MW4.State-owned agency installations which at the time applicable of this provision, cumulative approved capacity under 5MW.5. Installations that received subsidy from MOEA or BOE in the past

A. Peru is implementing bidding system respectively in 2008 and 2010. Bidding subjects were biomass, wind power, solar and small hydro.B. To develop Solar PVs, India has included 5-20MW into the bidding mechanism, and specified that each bidder can bid a maximum of 50MW. Also, solar heating is also purchased through bidding.C. French government promulgated an administrative order on Mar 2011 to solve the excessive solar PV applications through setting a maximum capacity and bidding operations. On Feb 2012 the bidding for offshore wind power has begun.D. In Jan 2013, Italy begun to implement a new renewable energy purchasing system. Bidding mechanism was applied to certain levels of renewable energy including onshore and offshore wind power, hydro, geothermal and biomass.E. Thailand: wind, solar, small hydro and biomass.F. Brazil: small hydro, wind power, biomass (bagasse cogeneration)G. China: onshore and offshore wind power, and solar PVs.(3) International applicationInternationally, bidding system is mainly applied to solar and wind power*2. Solar PVs bidding mechanismIV. Renewable Energy Pricing Mechanism

An estimated amount of 561.41 million NTD saved from renewable energy development fund over 20 years (on average 28.07 million NTD saved annually) as a result of implementing the 2012 Solar PV Bidding Mechanism.*(4) Benefits from the 2012 Solar PV Bidding Scheme2. Solar PVs bidding mechanismIV. Renewable Energy Pricing Mechanism

typeRangeCeiling FIT Rate(A)Awarded Bid Total Capacity(kW)Ave. Bid Award discount RateEffective FIT RateBRate difference(A-B)Monet saved (NTD)1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd Roof-top30kW~100kW 8.53948.3259 3,6517,0802.09%3.33%8.3608 8.0488 0.1786 0.2771 6,535,000100kW~500kW8.18367.9701 19,78042,7293.25%3.73%7.9178 7.6732 0.2658 0.2969 44,860,000>500kW7.32977.1873 9,899 -2.28%-7.1626 7.18730.1671 04,136,000Subtotal)33,330 49,809---55,530,000Ground-mountedN/A6.90276.7604 1689093.01%3.41%6.6949 6.5299 0.2078 0.2305 611,000Total-33,498 50,718---56,141,000

*Purpose of Renewable Energy Development FundSubsidy for renewable energy power pricesSubsidy for renewable energy equipmentDemonstration incentive and promoting the utilization of renewable energyOther uses related to renewable energy development approved by the central competent authoritySources of Renewable Energy Development FundOver a certain installed capacity Government funding through budget processInterest income from the FundOther related incomesFunders with certain installed capacityTaipower CompanyPrivate-owned power generation enterprisesIndustry with self-use power generation equipment installed3. Renewable Energy Development FundIV. Renewable Energy Pricing Mechanism

3. Renewable Energy Development FundOperational process of Renewable Energy Development Fund--income based on expected expenses to balance revenue and expenditure--*consumerPrivate power enterprises,IPPsFundTaipower Company

Self-use power generation equipment with certain capacityFossil energyPower gridRenewable energy power generation installersurchargesurchargesurchargePaymentpaymentpaymentGrid interconnection and power purchaseEquipment subsidyCost difference subsidyIV. Renewable Energy Pricing Mechanism

*3. Renewable Energy Development FundIV. Renewable Energy Pricing Mechanism

1. Renewable Energy Development Act is the foundation Act for promoting renewable energy. By the end of 2012, total installed capacity of renewable energy increase approximately 551MW, reaching 3,697MW, installed capacity accounted for 6.8%.As for promotion targets, CTs currently uses total installed capacity as basis. It is targeted to reach total installed capacity of renewable energy of 12,502MW by 2030, accounting for 16.1% of total power installed capacity. Thousand Wind Turbines and Million Solar Rooftop PVs project is the main policy to promote Solar PV and wind power.Regarding promotion policy, currently main core mechanism is FIT, and the Renewable Energy Development Fund is used to pay for the wholesale renewable power. Since the cost of solar PV has declined rapidly in recent years, to reflect exact costs and encourage companies to complete work as soon as possible, rate applicable on the basis of completion date in coordination with bidding mechanism is adopted, and double phase rate is announced within each year as supporting measures. CTs electricity market is slowly reforming to become more liberalized, and by reflecting the true cost of energy, in the long term as conventional energy prices rise, renewable energy will be a key factor to bring prices down.*V. Conclusion

**Your comments are welcome!

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