As circumstances change, should governments change regulations? Let's look at
feed-in-tariffs [FITs] in Taiwan as an example.
FITs require electric utilities to purchase renewable energy at a premium
and with long-term contracts. The government subsidizes the difference and
the electricity is fed into the grid.
Hence, FITs effectively encourage investment in renewable energy by enticing
investors. They also reduce market demand for traditional energy and fundamentally
alter future market prices.
In June 2009, Taiwan established an FIT to promote solar photovoltaic energy
systems. But, late in 2010, in response to a drop in photovoltaic rates, the
Bureau of Energy changed the rules. The Bureau decided that the rate depends
on when a project begins operation, not when the deal is signed.
For deals already signed, feed-in-rates may be 30 percent lower and profits
correspondingly decreased. Investors were very upset. So were advocates of renewable
energy since there is likely to be less confidence in new investments.
Perhaps the Taiwan government pulled a fast one, denying investors the high
returns that should accompany high risks, while also discouraging renewables.
Perhaps the government is justified. The costs of solar energy came down considerably
and the investor's profits on earlier rates would have been very high. The government
argument is that investor's profits should be reasonable. The decision also
saves valuable budget funding.
What do you think? Do you save government subsidies for other projects and
reduce profits to "reasonable levels," but risk discouraging crucial
investment and suffocating renewable energy? Or, do you reward early investors,
but risk excessive profits and spend additional government funds?
Adapted by William
Vocke from John D'Angola
For more information see:
John D'Angola, "
Taiwan's
Feed-in Tariff Controversy," Green Study, March 23, 2011.
Photo Credits in order of Appearance:LainmoonWunkaiWalmart
ZilupeHeidi
BlantonChanghua
Coast Conservation ActionWunkaiTanjun
Chih-Hao
Chen
