2012 Taiwan feed-in tariff reduction announced

TAIWAN: On February 7, 2012, Taiwan announced its feed-in tariff. According to a survey conducted by EnergyTrend, the green energy research division of TrendForce, due to the steep drop in the solar module’s price in 2011, the installed capacities of a number of countries have increased, which considerably consumed those countries’ budget for the green energy industry. As a result, several countries, including Germany, Greece, the United Kingdom and Switzerland, have reduced their energy subsidies and adjusted their policies regarding different system capacities.

Due to the subsidy adjustment, the demand for 1Q12 in Europe is expected to be strong; the demand in China, the United States, Japan and Australia will pick up later. EnergyTrend estimates the global installed capacity at 26GW in 2012, a slight increase compared to 2011.Source: EnergyTrend, Taiwan.

Aside from Germany, Greece and Switzerland have announced to cut subsidies, the United Kingdom also adjusted its subsidy according to the current electricity price index. On the other hand, Czech Republic has modestly increased its subsidy for 2012 and set the amount at CZK 11.7 billion, with its installed capacity is expected to rebound for the first time since 2010. However, given that the Czech government increased the tax rate due to the subsidy surplus in the past, most manufacturers still take a conservative stance on investing.

As for Asia, the applications poured in following the subsidy announcement of the Malaysian government. On a first-come, first served basis, there will be no subsidy for any more applications until 2H13. Whether Malaysia will provide an extra subsidy per the industry and the local governments’ request remains to be seen.

According to Taiwan’s feed-in tariff announcement on February 7, the rate now changes twice a year as opposed to annual changes in the past. Systems that were established prior to June 30 apply to the discount rate of the first stage, ranging from 5.8 percent to 8.3 percent.

Aside from the small systems, with respect to the large systems open for bidding, the bidder proposing the highest discount rate wins the bid. Based on the current solar system cost, the small solar rooftop system is considered more profitable, while the large solar system may receive little interest due to its high development cost and the discount rate factor.