Minister of Economic Affairs J.W. Kuo has raised the possibility of establishing renewable energy facilities in the Philippines to address Taiwan's surging energy demands, particularly from the semiconductor industry. With domestic green power development facing mounting obstacles, Taiwan could consider transporting power back via shipping or undersea cables to bridge the gap.
Renewable energy providers welcome the minister's proactive approach to solving Taiwan's green power shortfall but caution that building power plants in the Philippines would require a close look at costs and risks.
The first hurdle is cost. Preliminary estimates suggest that installing a cable connection between Taiwan and the Philippines could surpass NT$100 billion. For offshore wind, inflation pressures have already pushed companies to raise green power prices, but major buyers, including semiconductor giants, have rejected prices over NT$6 per kWh. Power routed from the Philippines could cost an estimated NT$8 per kWh due to transmission losses, potentially sparking the same pricing impasse that has slowed offshore wind negotiations in Taiwan. If buyers refuse these rates, the green energy initiative could face setbacks, putting Taiwan's energy security and investor returns at risk.
Take offshore wind energy as an example: amid inflation and other pressures, firms seeking to raise green power prices report that large buyers, such as semiconductor companies, are unwilling to pay over NT$6 per kWh, creating a pricing stalemate. For electricity sent from the Philippines to Taiwan, the estimated cost, factoring in power losses during cable transmission, would be around NT$8 per kWh. Should this exceed buyers' expectations and lead to rejection, Taiwan could face a similar standoff to that in offshore wind energy, where unresolved green energy issues might also lead to major losses for investors.
Risk management is also key. The Philippines has previously reversed subsidy policies abruptly, leaving some international investors with losses. Taiwanese companies have encountered similar challenges, underscoring strategic risks for firms considering the Philippines. Will the ministry offer these companies any substantial assurances?
Another concern is maintenance. Repairing damaged cables due to unforeseen events could drive up costs, not to mention green power outages. In a geopolitical crisis, cables, much like nuclear plants, are obvious targets, adding a layer of vulnerability.
Finally, the Philippines' subsidies for renewable energy rely heavily on Chinese-made components, potentially limiting Taiwan's solar and wind manufacturers' access to this new market.
Taiwan's own renewable energy sector is mired in challenges. While offshore wind energy faces a pricing deadlock, solar power development has encountered land acquisition issues. The Ministry of Agriculture's solar-agriculture coexistence requirements enforce stringent standards on agricultural output, making it tough for solar firms to comply, even with experienced agricultural partners.
Industry leaders argue that Taiwan's fallow or underutilized lands could be an ideal solution for solar development. Effective cross-department coordination within the government could lower costs and reduce risks compared to investing in overseas green power projects.
