Effective Subsidy

Despite the economic downturn, Doris Hsu, president of local solar product manufacturer Sino-American Silicon Products Inc., maintains high hopes for the development of the energy source in the long term. "This is the path our planet has to follow to keep the environment clean," Hsu says. She observes that while scientists formerly argued for the use of "green" energy sources because of fears of oil depletion, today they are more apt to express concerns about the environment and climate change. This means that concerns over a possible slowing of solar energy development due to the falling price of oil, which dropped by more than US$100 per barrel from July through December in 2008, can be dismissed.

"We're experiencing a critical time in the face of global warming and a shortage of fossil fuels," NTU's Lan Chung-wen says. "It's a time of crisis, but it also represents a very good opportunity for the photovoltaic industry to develop." The worldwide recession has unquestionably affected Taiwan's solar industry, but in light of the potential environmental benefits, cost savings and energy independence promised by solar cells, the industry's future continues to look bright.

If the findings of a 2004 report released by Rice University in the United States Lan cites are correct, global dependence on fossil fuels should be reduced as early as possible, as oil will be used up in 40 years and natural gas in 60 years. The report estimates that coal resources will last for 190 more years, but coal is the most pollutingin terms of both particulate matter and greenhouse gasof all major energy sources.

A concentrated push to advance solar energy is also underway in the public sphere. "Governments the world over are continuing to make policies encouraging the use of solar energy," Sino-American's Doris Hsu says. These policies typically include subsidies aimed at developing the solar power industry in two categories: by paying one-off subsidies to offset the cost of solar panel installation by household and corporate users and by purchasing electricity generated by solar cells. Taiwan has mainly adopted the first strategy, although the result thus far has been less than impressive, mainly because the subsidy only covers a maximum of half the total expense of installing a solar system. With the typical household system costing a total of NT$200,000 to $300,000 (US$6,060 to $9,090) to install, many homeowners still find the expense too high, even after the 50 percent subsidy. No wonder 98 percent of solar cells made in Taiwan are exported, mostly to Europe, where subsidies and incomes tend to be higher.

Despite all the talk around the world about the benefits of green energy sources, Gintech says solar cells now provide less than 0.1 percent of the world's total electricity demand. "That means there's a lot of room for the development of the industry and its boom will last for a long time," Ellick Liao says. "When its production cost goes down and economies of scale start to emerge, the photovoltaic industry should be able to survive on its own without government support," he adds. Gintech estimates that the annual production value of the industry could reach US$100 billion globally in 2016, compared with US$18.6 billion in 2007. By 2050, half of all electricity generated around the world is likely to be produced by solar cells, according to Gintech's research. As for Taiwan, PVTC says the amount of solar power generated on the island could increase to 31 megawatts by 2010, up from 4 megawatts in 2008.

One development that would greatly assist the growth of the solar power industry would be the passage of the Renewable Energy Development Act, which was first drafted in 2001. Passage of the act would put a more effective subsidy program in place to encourage the use of solar power. If the act were passed, owners of private installations generating excess solar power could sell it to the government at a preferential rate of between NT$8 to $10 (US$0.24 to $0.30) per kilowatt-hour. To put this in perspective, state-owned Taiwan Power Co. sells conventionally generated electricity for less than NT$3 (US$0.09) per kilowatt-hour. Thus, individual homeowners could be more willing to install solar panel arrays and sell any unused power to the government.

To ensure such a bright future, Liao observes, the government should support the sector's early development until the cost of electricity generated by solar cells is competitive with that produced by conventional sources. Liao believes that this "grid parity" could come as early as 2015, when the cost of electricity generated by solar cells is thought likely to equal that of conventionally generated energy. After that, solar-generated electricity is likely to become cheaper than that from conventional sources. At present, the average cost for electricity generated by solar cells in the 10-largest Organization for Economic Cooperation and Development (OECD) member countries is about 1.5 to 3 times higher than that of conventional electricity. Currently, the cost of conventionally generated electricity in the 10-largest OECD countries ranges from a low of US$0.14 per kilowatt-hour in California in the United States to a high of US$0.29 in Germany. Liao believes that the cost for solar electricity in OECD countries could drop from the present US$0.46 to US$0.24 per kilowatt-hour by 2015.

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