Power Purchase Agreement in Taiwan

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Power Purchase Agreements (PPAs) have become increasingly common as a means of driving renewable energy development in Taiwan.

PPAs are contracts that enable independent power producers (IPPs) to sell electricity to a utility or another buyer, typically over a long-term period. They help the IPP to secure financing, manage risks, and lock in a revenue stream from their renewable energy projects. For the utility, PPAs may offer advantages compared to purchasing electricity on the open market, such as price stability and environmental benefits.

In Taiwan, the government has set a goal of having 20% of the country`s power generated from renewable sources by 2025. As part of this effort, the government has implemented several measures to facilitate the use of PPAs for renewable energy generation.

One of the main mechanisms for implementing PPAs in Taiwan is the Feed-in-Tariff (FIT) system. This system guarantees a fixed price for renewable energy producers for a certain period, typically 20 years. In 2020, the FIT rate for solar energy was NT$5.516/kWh, while the rate for wind energy was NT$6.279/kWh.

Another important development in the use of PPAs in Taiwan is the establishment of the Taiwan Renewable Energy Certification Center (T-RECs). T-RECs are tradable certificates that represent the environmental attributes of renewable energy produced in Taiwan. T-RECs enable buyers to demonstrate that they have purchased renewable energy, and they can be used to comply with regulatory requirements or to meet sustainability goals.

PPAs and T-RECs are expected to play a significant role in driving Taiwan`s renewable energy development in the coming years. The government has set a target of 27 GW of renewable energy capacity by 2025, with a particular emphasis on solar and wind power. To achieve this goal, it is likely that we will see a growing number of PPAs signed between IPPs and utilities, as well as a greater use of T-RECs to support the growth of the domestic renewable energy market.

In conclusion, PPAs have become an important tool for driving renewable energy development in Taiwan. With the government`s ambitious targets and supportive regulatory framework, we can expect to see further growth in the use of PPAs in the coming years. By enabling the development of new renewable energy projects and supporting the transition away from fossil fuels, PPAs are helping to build a more sustainable future for Taiwan and the world.

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