Newsletter
2022 Guidelines on the Bidding and Allocation of Installed Capacity for Battery Energy Storage Systems Combined with Solar Power Generation Facilities and its Amendments Announced by the Ministry of Economic Affairs of Taiwan
In order to mitigate the issues concerning the intermittency of solar facilities and maximize the use of Taiwan Power Company’s ("Taipower") grid capacity to promote the installation of solar projects, the Ministry of Economic Affairs (MOEA) promulgated the 2022 Guidelines on the Bidding and Allocation of Installed Capacity for Battery Energy Storage Systems Combined with Solar Power Generation Facilities on June 28, 2022 (Ref. No.: Jing-Neng-Zi-11104602280), in accordance with Subparagraph 8, Paragraph 3 of the announcement on the feed-in-tariff for renewable energy projects for 2022 and its amendments on September 20, 2022 (Ref. No.: Jing-Neng-Zi-11104603870) (collectively "BESS Guidelines").
Under the BESS Guidelines, a solar project combined with a battery energy storage systems ("BESS") enjoys the following two main advantages:
1.Favorable Rate for the BESS
Taipower provides different tariff rates on the power discharged by the BESS and that generated by the solar project, with a more favorable tariff rate applicable to the BESS, i.e.,:
（1） If the power generated by the solar project is sold to Taipower, the tariff will be the feed-in tariff announced by the MOEA applicable to such solar project ("FiT"); and
（2） Taipower will offtake the power discharged by the BESS pursuant to the BESS Guidelines at (a) the capacity rate (which will be the bidding rate submitted by the successful bidder, plus (b) the electricity rate (which will be 125% of the FiT).
2.Released Capacity
After an applicant for the grid capacity for the BESS is awarded with the grid capacity, the applicant should release certain grid capacity applicable to the solar project in accordance with the BESS Guidelines (which should be 1.5 times the nominal effective power of the BESS; "Released Capacity"). With respect to the Released Capacity, the successful bidder should sign or amend the power purchase agreement signed with Taipower for the solar project within one month after the bidder receives the awarded consent letter by deducting the Released Capacity from the maximum grid capacity granted to the solar project, provided that the successful bidder is entitled to priority right to receive allocation of the Released Capacity for its application to develop other solar project(s) within one year from the date of announcement of the bid award ("Award Announcement") ("New Project").
The MOEA will announce the bidding date from time to time in accordance with the BESS Guidelines. As of today, the MOEA has announced two times; the first invitation to bid was announced on June 29, 2022, with submission deadline on July 21, 2022. For this first bid, no applicant was awarded with capacity. The second invitation to bid was announced on September 27, 2022, with submission deadline on October 14, 2022. If any applicant would like to participate in the bid, it should follow the application and project installation requirements set forth under the BESS Guidelines and be mindful of the following matters in particular:
(i) The BESS should be connected to a Type 1 solar project that has an installed capacity of 1MW or above and has obtained an establishment permit or completed the construction. The applicant should be an electricity business that operates the solar project.
(ii) If the construction of the solar project has not yet been completed at the time when the bid submission is made, the construction should be completed within one year after the Award Announcement; the BESS should be completed within 13 months after the Award Announcement.
(iii) If the applicant wishes to develop a New Project, the establishment permit for such New Project should be obtained within one year after the Award Announcement.
(iv) If the BESS comes in a full set, China should not be its place of origin.
(v) The applicant should post bond for the bid (1kW/NT$1,000 calculated on the basis of the nominal power of the BESS) and the bond should be paid in cash.
(vi) The BESS Guidelines impose certain conditions on the charging and discharging of power by the BESS. If a successful bidder fails to follow the relevant rules, Taipower's purchase price related to the power supplied by the BESS to the successful bidder will be affected.
After an applicant is awarded the bid, if such applicant fails to complete the construction of the solar project or the BESS or the onsite inspection for the BESS by the deadline set forth under the BESS Guidelines, the monthly capacity rate will be reduced for the period equivalent to the number of the delay months (i.e., by reducing 0.5% of the bidding rate). For the deadline applicable to the completion of solar project or BESS construction under the BESS Guidelines, unless the delay is not attributable to the successful bidder, the successful bidder may only, with justifiable reason(s), apply with the BOE for a one-time extension for up to two months.
As the BESS Guidelines were just announced in June this year, it seems that various ancillary regulations have not yet been promulgated (e.g., ancillary rules on the BESS, installation permit and land usage issues associated with the BESS). Consequently, the detailed and overall execution process remains to be gradually established by the developers and the authorities concerned.