A green revolution is taking place under the sun, promising a cleaner, more secure energy supply.

Sitting smack on the Tropic of Cancer, Taiwan has made a commonsense move by successfully commercializing solar power, taking advantage of a readily available energy source. With the added benefits of energy security and independence, environmental conservation, and a boost to economic growth, the case for leaning into solar is clear.

The rise of this energy source – particularly over the last two decades, thanks to improved silicon manufacturing efficiency – has been revolutionary but relatively low-profile. Unlike traditional energy sources, there are no sprouting towers belching fumes, no gigantic spinning fan blades, and no radioactive waste. Instead, discreet black panels of energy-supplying solar cells have gradually appeared across rooftops and acres of non-arable fields.

“Renewable energy represents a global shift toward balancing economic and environmental impacts by reducing reliance on traditional fossil fuels with high greenhouse gas emissions,” says Kerry Li, communication manager of Singapore-headquartered renewables company Vena Energy. Taiwan is leveraging this silent solar boom to not only reduce its reliance on imported fossil fuels but also enhance energy security and address climate change concerns.

Nuclear power, which Taiwan has long relied on as a significant part of its energy mix, is being phased out. The island’s remaining power-generating reactors are set to be decommissioned in 2025, leaving just one tiny research reactor on National Tsing Hua University’s campus. Nuclear was once considered to be an attractive, cost-effective means of generating electricity. But when evaluating factors such as fuel costs, power plant decommissioning, nuclear waste disposal, and land reuse – in addition to external, social, and operational costs – nuclear no longer seems so economical.

In the past few years, Taiwan has instead managed to attract solar-focused companies like GSSG Solar, a Denver-based renewable investment manager. Brandon Shenfield, GSSG Solar’s director of new markets, makes the case that solar energy offers a cheaper alternative to more traditional energy sources.

“Solar provides electricity during the peak demands in Taiwan, which are the times when the demand nearly outstrips supply, resulting in low reserve margins for the utility operators,” he says.

Shenfield points out that nuclear and coal are both baseload resources that are not 1:1 replaced by the output from solar projects. However, managing energy at the grid level can reduce the need for constant baseload power, which often doesn’t address peak demands effectively or economically.

Storage solutions

In March 2022, Taiwan’s National Development Council released its net zero roadmap, which set ambitious targets to build between 40 and 80 gigawatts (GW) of solar photovoltaics (PV) capacity by 2050. The government aims to build 20 GW of that capacity by 2025. The original plan was to have renewable energy make out 20% of the energy mix by 2025. Out of that 20%, solar power was meant to take up 66%. With renewable energy constituting 10% of the energy mix in 2023, this goal is now seemingly unreachable.

Taiwan’s offshore wind industry, once hailed as a sector with great prospects, faces significant challenges. High localization requirements, which mandate that a large percentage of components be sourced locally, have raised project costs and led to inefficiencies and delays. This situation has dampened investor confidence and made the sector less attractive, prompting several companies to pull out or scale back their involvement.

According to the Energy Administration (EA) under the Ministry of Economic Affairs, solar PV installations have already reached nearly 13.4 GW as of June this year. Rooftop installations account for 8.4 GW (about 63% of the total), reaching the EA’s 8-GW target ahead of schedule.

While the power derived from solar panels is suitable for meeting peak demand, Taiwan faces significant hurdles in storing excess electricity generated during these periods for later use. But constant improvements in battery technology are easing the challenge, resulting in enhanced energy density, longer lifespans, and greater cost-effectiveness. The price of lithium-ion batteries, which dominate the energy-storage market, has dropped steeply in recent years thanks to economies of scale, technological progress, and improved manufacturing efficiency.

“When PV solar reaches its peak output in the middle of the day, the combined generation can exceed demand, particularly on weekends and holidays,” says Bo Hesselbaek, senior business development director at Fluence Energy, an energy storage products and services provider. “In Taiwan, BESS [battery energy storage systems] can help shift solar PV generation to later in the day.”

While the greatest energy demand originates in the north, the most viable solar sites are located in the south. Transmission constraints both within the local grid and along the main south-to-north transmission corridors further complicate the situation. These local grid limitations can be mitigated by integrating BESS with solar PV plants, allowing for charging during the day and discharging in the evening.

These storage systems “can transition between charging and discharging in just milliseconds to seconds, and are designed for frequent charge and discharge cycles to match the intermittent nature of solar power generation,” says Gina Lu, business development manager at Fluence Energy.

The extent to which BESS should be integrated with solar PV generation, as opposed to using standalone solar PV, depends on factors such as the generation mix, grid configuration, geography, and cost. In Taiwan’s case, it’s also paramount to ensure that solar panels are well-designed and resilient to the island’s subtropical climate and proneness to earthquakes.

Standalone storage systems and solar-plus-storage systems represent two approaches to energy management, each with distinct advantages and applications. A standalone system is designed to store electricity from the grid or other power sources for use at a later time. It enhances grid stability, provides backup power during outages, and manages energy costs by storing electricity when rates are low and discharging during peak demand periods. The system can be integrated with various energy sources, including traditional fossil fuels and renewable energy, making it versatile and adaptable to different energy infrastructures.

Solar-plus-storage systems, on the other hand, combine PV solar panels with battery storage, creating a more integrated and sustainable energy solution. This combination allows for the direct capture of solar energy, which can then be stored for use when sunlight is unavailable, such as during nighttime or cloudy days. Solar-plus-storage systems enhance the self-sufficiency of energy consumers by reducing reliance on the grid and providing a consistent power supply from a renewable source. They also offer significant environmental benefits by reducing greenhouse gas emissions and promoting the use of clean energy.

While standalone storage systems are often more straightforward and can be deployed in a broader range of scenarios, solar-plus-storage systems are particularly appealing for those seeking to maximize the benefits of renewable energy and achieve greater energy independence. The choice between the two depends on specific energy needs, infrastructure, and environmental goals. But both systems are crucial in transitioning to a more resilient and sustainable energy future.

Fluence Energy’s Lu notes that the rapid response capability of charging and discharging enables solar-plus-storage systems to provide vital grid services, such as frequency regulation and grid stability. These systems can adjust their output much faster than other storage technologies.

“Battery energy storage systems boast high round-trip efficiency, usually around 85%, allowing them to store and dispatch solar power with minimal energy loss, thereby maximizing revenue potential,” Lu says.

High round-trip efficiency in solar power battery storage refers to the ratio of the energy output from the battery to the energy input required to store that energy. It measures how efficiently a battery can store and then release energy. A higher round-trip efficiency indicates that less energy is lost due to heat generation, internal resistance, and other inefficiencies during storage and retrieval.

Challenging climate

Despite the capacity and enthusiasm among government and commercial enterprises for expanding solar projects in Taiwan, the industry still faces numerous challenges – notably the need to develop and attract specialized talent.

“The high demand for skilled power engineers in Taiwan’s semiconductor industry creates a competitive landscape,” says Vena Energy’s Li. “The same talent pool is crucial for the expanding solar industry. The solar sector needs to attract and develop talent to support its growth.”

She notes that Vena Energy collaborates with domestic universities’ electrical engineering departments through internship programs to cultivate the talent necessary for the industry’s sustainable operation.

Other challenges include the scarcity of land suitable for commercial farms, due in part to the complexities of obtaining permits and terrain suitability. Taiwan is a densely populated island with a significant amount of its land either mountainous or already dedicated to urban and agricultural uses, leaving limited space for large-scale commercial farms, including those needed for renewable energy projects.

The regulatory environment for land use in Taiwan can be complex, especially when it involves land that has been zoned for agricultural use. Switching the designated use of land from agricultural to commercial use involves navigating a series of bureaucratic hurdles, including lengthy Environmental Impact Assessments and rezoning, which can involve public hearings, approvals from various governmental bodies, and potential opposition from local communities or environmental groups, as well as other permits and regulatory compliances. Additionally, Taiwan’s power grid needs to be upgraded to accommodate power from renewable sources.

“In all our renewable energy projects, we prioritize environmental protection to minimize impacts while advancing corporate social responsibility and economic development,” says Li.

All modules purchased in Taiwan must pay a recycling fee from a fund administered by the Ministry of Environment. This fund ensures that PV modules adhere to a circular economy model, where components are reused or downcycled at the end of their lifecycle. “Given the relatively small amount of PV installed in Taiwan to date, this is still in its nascency,” says Shenfield. “As the market expands, so will the solutions to recycle.”

Each solar module in Taiwan is assigned a unique manufacturing serial number, which is rechecked during the recycling process to ensure proper handling. “At the end of their lifecycle, solar panels can achieve a recycling rate of approximately 95%,” notes Vena Energy’s Li. Once dismantled, key materials such as silicon, copper, aluminum, plastic, and glass are recycled and reused. These processed materials can re-enter the production chain, generating new economic value globally.

Taiwan has implemented several laws and regulations governing renewable energy. The cornerstone of this framework is the Renewable Energy Development Act (REDA), first enacted in 2009 and amended several times since. It sets the framework for promoting renewable energy, including feed-in tariffs (FITs), which guarantee fixed prices for solar-generated electricity for up to 20 years. The act also mandates renewable energy certificates and outlines the government’s role in supporting research and development in the sector.

REDA includes several key provisions to bolster the growth of solar power. In addition to FITs, the act sets specific installation targets, provides subsidies, ensures priority grid access, and mandates standards and certification for solar equipment, all aimed at increasing solar capacity, reducing reliance on fossil fuels, and fostering technological advancements in the sector.

Still, for renewable energy to be adopted successfully, industry players stress that Taiwan needs to enact relevant laws and regulations to ensure everything runs smoothly, from planning and financing to installation approval and end-of-life solar panel plans.

“At some point, decisions about solar development must be made around appropriate land use to achieve a population’s energy, food, and housing needs while respecting natural ecosystems and open space,” says GSSG Solar’s Shenfield. This process needs to consider Taiwan’s national interests and goals, along with ways to gain support from local landowners, farmers, fishers, and nearby residents. Having clear national goals is essential, he adds.

Lack of clarity can make it difficult for companies to navigate the complicated regulatory and permitting procedures for installing solar panels, says Fluence Energy’s Lu. Enhanced cross-departmental communication and coordination between central and local governments would greatly facilitate the effective implementation of renewable energy targets and policies, she notes.

Shenfield emphasizes that regulatory certainty is critical for solar power development in any market. “As the Taiwan solar market has accelerated, this certainty will further develop the rules-based solar ecosystem we have identified as central to our investment efforts,” he says. He adds that such a rules-based order has allowed GSSG Solar to remain active as a foreign investor in Japan for the past decade.