CommonWealth Magazine | ‘Solar Power Fat Cats’: Green Energy Reduced to Money-making Game
Taiwan has made a big push to develop solar power, but in the process financial incentives have emerged that are distorting the market and hurting the environment. CommonWealth Magazine takes a closer look at the downside of solar power development in Taiwan.
“It’s making money for me even when I take a midday nap,” Wei Jung-hua (魏榮華), a landowner in Guanmiao District in Tainan, said of the two-hectare plot of farmland he rented to solar power operators.“
As he was driving his white Porsche toward the site, Wei talked about how much more lucrative this arrangement has been compared with renting the land to farmers. “The rent solar operators are paying me is at least 10 times higher than what I could get from farmers. When I heard what they were offering, I signed a deal the next day,” he said.
The winds of solar power are gusting across Taiwan, amid efforts to make the island less dependent on fossil fuels, but those winds are turning the promise of renewable energy into shortcuts for making a quick fortune. They have infected the entire island and penetrated rural villages, and are setting off a rapidly growing conflict between power generation and the preservation of land and farms.
At the heart of the conflicts are the huge incentives created by green energy. Like the many dolls stacked inside a Russian doll, rural solar installations offer several layers of profit – five to be precise – with the rent paid to a landowner only the beginning.
The second cut goes to the real estate broker. Brokers who succeed in pushing a project until an “establishment permit” can be obtained stand to make NT$5.5 million in commission for every hectare of land converted into a solar power field. One or two big deals can be enough for these middlemen to retire on.
The third and even more lucrative layer of profit goes to the solar power developer. The electricity generated on a hectare of land sells for about NT$5.78 million, earning a net profit of about NT$2 million. Developers need no more than seven years to recoup their original investment.
If that windfall from electricity profits is not appealing enough, developers can extract a quick and hefty profit from foreign concerns. One solar power developer revealed this fourth layer of profit: selling solar power stations that are ready to roll to foreign buyers. After deducting development costs and engineering costs, developers can clear a profit of at least NT$10 million per hectare on such deals.
“The fifth layer is the most ruthless – “laundering” farmland into land for industrial use, which can make the land three to five times more valuable.”
One solar power insider revealed that one developer rented more than 100 hectares of farmland in southern Taiwan with ulterior motives, writing into the lease agreement that “efforts will be made toward converting the land into industrial-use land in the future.” The idea was to give the landowner more of an incentive to allow development of the land.