What’s Next: Taiwan
Under the backdrop of restructuring electricity market mechanisms in the Asia-Pacific region, Apala Group has launched a new article series, What’s Next?. This series aims to explore future trends in the renewable energy market across the region and provide key priorities for renewable energy buyers.
Since 2020, Taiwan has officially opened its renewable energy trading market. Although power transmission and distribution remain under the control of Taiwan Power Company (Taipower), the generation and retail markets have gradually liberalized. As transaction volumes steadily grow, market activity is increasing. However, the primary concern in the market is not merely "insufficient supply" but rather the persistently high prices of renewable energy.
According to data, Taiwan's renewable energy premium (the percentage increase over conventional electricity prices) is at least 65%, the highest in the Asia-Pacific region. Many expect that as supply increases, prices will gradually decrease. However, price formation is influenced not only by supply and demand but also by deep-rooted market mechanisms and policies.
Taiwan's current "Feed-in Tariff" (FiT) mechanism leads renewable energy generators to use the annual FiT rate as the baseline price for electricity sales, keeping prices high. While FiT provides stable revenue, it also limits market price flexibility. Additionally, since its implementation in 2010, the FiT system has been subject to various policy and political considerations, making it difficult to abolish or significantly adjust in the short term. Therefore, future market developments must seek breakthroughs within the existing system. So… What’s Next?
Impact of the RE30 Low-Carbon Electricity Program
To meet corporate renewable energy demand, Taipower plans to implement the RE30 program in July 2025, offering a mix of 30% renewable energy and 70% conventional electricity as a new option for corporate renewable energy procurement. The initial supply for the first year is 1.66 billion kWh, with a maximum purchase limit of 100 million kWh per account. The electricity price is set at NT$6.3/kWh (excluding VAT and wheeling fees), higher than the market average of NT$5.5–6/kWh.
The core mechanism of RE30 is to supplement corporate renewable energy shortfalls rather than replace market transactions. For example, if a company purchases 1 million kWh of RE30, 300,000 kWh must come from renewable energy. If the company has already purchased 250,000 kWh from the market, Taipower will supply the remaining 50,000 kWh to ensure the 30% renewable energy ratio.
This mechanism has several key implications:
Corporations must still prioritize market purchases: RE30 is only a supplementary program; due to its limited volume and price, companies cannot take it as a replacement for PPAs or market transactions.
Stable renewable energy supply option: Compared to market price fluctuations, RE30 has a fixed price, providing a convenient choice for companies that are unable to sign PPAs directly.
Carbon accounting impact: Since RE30 is a "bundled renewable tariff" sourced from Taipower's own projects and deducted from overall carbon emissions, it does not involve double counting. However, as Taipower's generation mix changes, the carbon emission factor for conventional electricity use may slightly increase.
Taipower’s Financial Pressure and Market Changes
In February 2025, the Legislative Yuan approved the removal of Taipower's NT$100 billion subsidy budget, further worsening its financial situation. Taipower's accumulated losses have exceeded NT$420 billion, with a debt ratio of 92.7%.
To cope with financial pressure, Taipower may further increase electricity prices. Over the past two years, Taipower has consecutively raised electricity rates, and another adjustment is possible in April this year. However, despite mounting financial pressure, Taipower maintains its policy stance of "not competing with private enterprises" and is unlikely to aggressively enter the renewable energy market in the short term. Therefore, companies should not entirely rely on Taipower to achieve renewable energy targets.
The Role and Challenges of Taismart Power
To address corporate renewable energy demand and offshore wind market challenges, the Ministry of Economic Affairs initiated the establishment of "Taiwan Smart Electricity" (Taismart Power) in 2024, a joint venture between state-affiliated and private enterprises. China Steel Corporation has been named as one of the first investors. Taismart Power is currently applying for a credit rating and planning to raise capital, with an expected scale of NT$2 billion. The goal is to sign Corporate Power Purchase Agreements (CPPAs) with multiple offshore wind farms by the first half of 2025.
Taismart Power was established primarily to solve offshore wind power trading issues and has explicitly stated that it will only sell offshore wind electricity, excluding other types of renewable energy. While Taismart Power has indicated that its electricity prices will follow market rates, its key advantage may lie in offering more flexible contract structures. This could allow corporations to purchase offshore wind power without committing to 20-year long-term agreements—something that private power retailers currently struggle to provide.
Future Outlook
Taiwan's renewable energy market is at a critical turning point. As policies evolve and market dynamics shift, corporate buyers must carefully evaluate renewable energy procurement strategies to navigate price volatility and regulatory developments.
The RE30 program offers a stable but higher-cost option, suitable for companies unable to sign PPAs, while potentially increasing the carbon emission factor for conventional electricity.
Taipower’s financial pressure may lead to further electricity price hikes, affecting overall power costs.
Taismart Power’s development could reshape offshore wind transactions, and if it provides more flexible, shorter-term contracts, it could help corporations mitigate the risks of long-term renewable energy procurement.
In this environment, market participants must closely monitor policy changes and adjust their strategies flexibly to maintain a competitive edge in the evolving market.