Taiwan has witnessed rapid growth in its renewable energy sector. To bolster the adoption of clean energy, the government is actively promoting a free-market framework for green energy trading. With regard to global initiatives aimed at achieving net-zero emissions and meeting RE100 supply chain requirements, various industries are allocating resources to participate in the green energy market. PwC highlights that the volume of green energy traded in Taiwan surged from 700 million kWhs in 2021 to 1.1 billion kWh in 2022, marking a remarkable 60% annual growth. With the ongoing expansion of renewable energy sources, future energy management is poised to become a major focal point for industries.
As the deployment of renewable energy sources continues to increase, ensuring the power grid's capacity to accommodate this growth becomes a significant challenge. Currently, Taiwan's power grid renewal efforts are progressing relatively slowly. Consequently, industries are gearing up to prioritize energy management and grid enhancements in the foreseeable future. Notably, companies across diverse sectors, such as semiconductors, energy, and telecommunications, have been announcing their participation in green energy trading initiatives. For instance, Gempower Energy, a subsidiary of Taiwan Cement, facilitated the procurement of nearly a million kWh of green energy for the sports brand Decathlon from five Taiwanese suppliers. Similarly, Star Renewables, a subsidiary of HD Renewable Energy, entered into a power purchase agreement with Bank SinoPac, encompassing a total contract volume of 14.3 million kWh of green energy for 2023. Examining corporate trends, it is evident that various companies are actively aligning with ESG and net-zero objectives, further invigorating the green energy trading market.
According to PwC's 2022 Taiwan CPPA market report, Taiwan's total power installation capacity reached 62 GW in 2022, with renewable energy installations accounting for 14 GW, constituting 23% of the total capacity. In terms of electricity generation, the cumulative renewable energy output in 2022 amounted to 23.8 billion kWh, reflecting a substantial 36% increase compared to 2021. The trajectory of Taiwan's renewable energy growth is evident in the statistics related to green energy trading.
In the realm of renewable energy, solar photovoltaic takes the lead regarding installed capacity and electricity generation. As of the end of 2022, the accumulated installed capacity amounted to 9.7 GW, with a total electricity generation of 10.7 billion kWh. PwC underscores that Taiwan's renewable energy expansion is evident when examining the data related to green energy trading.
The volume of green energy traded in Taiwan soared from 700 million kWh in 2021 to 1.1 billion kWh in 2022, registering an impressive 60% annual growth rate. While this represents a relatively modest portion in comparison to the total renewable energy generation of 238 billion kWh, it underscores the prevailing trend of self-consumption as the primary use of renewable energy. Nevertheless, the data on green energy trading highlights the exponential growth in wind power trading volume, constituting 60% of the overall renewable energy trading volume.
In 2020, Taiwan initiated the liberalization of its green energy trading market. The driving force behind this market transformation is the growing demand for green energy from businesses. Enterprises can now meet their green energy procurement requirements through Corporate Power Purchase Agreements (CPPAs). PwC reports that since 2020, 1,885 GWh of renewable energy has been delivered to corporate customers through Taiwan's power grid. The top ten corporate buyers account for nearly 98% of the total green energy procurement, with TSMC being the largest purchaser of green energy. Wind power dominates the energy sources for green energy procurement, comprising 78% of the total. This is attributed to the lower feed-in tariff (FiT) for onshore wind power compared to retail electricity rates, making electricity prices in the free market more competitive.
Consequently, CPPA's electricity transactions mutually benefit large consumers and renewable energy developers.Companies embarking on green energy procurement may initially grapple with unfamiliarity regarding the power system and the intricacies of power purchase contracts. One major challenge in green energy trading stems from the diverse generation patterns of renewable energy sources. Buyers must comprehend their electricity consumption patterns and assess their alignment with the generation patterns of renewable energy sites to increase the share of green energy. Another challenge confronted by companies is dealing with excess electricity. Before engaging in green energy procurement, an evaluation of the electricity consumption and generation capacities of both parties is essential. Failure to match these capacities can lead to excess electricity costs, requiring the buyer to subsidize the renewable energy provider, resulting in additional expenses due to surplus electricity. Consequently, assessing and managing surplus electricity becomes a vital consideration.
To aid companies in implementing green energy trading and supply, PwC has introduced the "Green Energy Procurement Dashboard." This tool assists companies in aligning their electricity consumption patterns with the generation patterns of renewable energy sites, enabling the calculation of procurement and surplus electricity ratios. Additionally, it draws inspiration from the buyer's roadmap proposed by the Clean Energy Buyers Alliance (CEBA) in the US.