Energy Company Figurehead Scandal Sheds Light on Taipower's Huge Losses
United Daily News Editorial, August 15, 2023
Recently, two pieces of news related to energy have caught public attention and sparked widespread discussion. First, Taiwan Power Company (Taipower), a state-owned power company, is projected to incur losses of NT$400 billion (about US$12.5 billion) this year, which could potentially lead to bankruptcy due to exceeding its total capital. Second, a verbal dispute between internet celebrity Holger Chen, known popularly as “Kuan Chang,” and Legislator Lai Pin-yu of the ruling Democratic Progressive Party (DPP) brought to light the issue that Legislator Lai's father Lai Ching-lin represented 18 green energy companies that sells electricity to Taipower. Chen severely criticized the DPP, alleging that the entire party is unfairly benefiting from the green energy industry. However, J&V Energy Technology Company clarified that Mr. Lai’s ownership stake is only 1 percent, and the Company is not a Lai family business. These two matters might seem unrelated, but the fact that the ruling DPP has a substantial interest in 18 green energy companies reveals a connection to the financial woes of Taipower.
It is an irrefutable fact that Lai Ching-lin is chairman of these 18 green energy companies, all of which are registered on the fourth and sixth floors of No. 1 Jihu Road, Neihu District, Taipei. This location coincides with the registration of the J&V Energy Technology Company, where he also serves as chairman, in the same building. Mr. Lai, a heavyweight of the DPP’s New Tide faction, previously held positions as a legislator and as the Vice Chairman of the Council of Labor Affairs, Executive Yuan respectively. Leveraging the opportunities presented by the Tsai government's strong push for wind and solar energy, Mr. Lai established 18 green energy companies within a span of just three to four years. This accomplishment not only demonstrates his keen insight but also suggests that he may have a knack for accumulating wealth. Otherwise, why would he have taken the initiative to establish so many green energy companies in such a short amount of time?
The capital amounts of these 18 companies range from NT$1 million (about US$31,250) to NT$12 billion (about US$375 million), obviously indicating that they are designated to play various roles in the green energy sector. Over the three years during the devastating global pandemic, Lai Chin-lin quietly expanded his deployment at an astonishing pace, setting up five or six companies annually. The most intriguing aspect is that J&V Energy Technology Company was originally founded by Chang Chien-wei. However, Mr. Lai took over the role of chairman in 2017, while Chang himself assumed the role of spokesperson. This arrangement suggests an intention to leverage Mr. Lai's political connections to expand the company's operations and reap financial benefits.
Certainly, the green energy industry plays an important role in our national development. Nevertheless, it could potentially lead to ecological damage, misuse of land, collusion between government and businesses, and corruption without proper regulations. The frequent occurrence of malpractice and corruption cases related to green energy development in counties such as Miaoli, Changhua, Yunlin, and Tainan highlights a pervasive problem of so-called “green energy cockroaches.”
Another phenomenon often overlooked by the public is the unreasonable green electricity pricing system. According to the “Renewable Energy Development Act,” Taipower is obliged to purchase green energy from green energy companies at high prices but can only sell it at lower prices to customers. Coupled with the government's tendency to freeze electricity prices for political considerations, the burden of losses on Taipower continues to grow tremendously.
In short, private green energy companies developing wind and solar power are guaranteed a fixed price for the energy they sell to Taipower. Although this ensures profits for the private green energy companies, it results in a loss-making proposition for Taipower. According to Taipower's data, as of the end of June this year, the average purchase prices for wind power is NT$7.03 per kilowatt-hour, solar energy is NT$4.84 per kilowatt-hour, and geothermal energy is NT$6.22 per kilowatt-hour. The overall average cost of purchasing green energy from private companies is NT$5.10 per kilowatt-hour. However, Taipower sells electricity to consumers at much lower prices, with residential electricity priced at only NT$2.63 per kilowatt-hour and industrial electricity at NT$2.58 per kilowatt-hour. In other words, for every kilowatt-hour of green energy Taipower purchases, it can only sell it at half of its cost. This is the origin of the phrase "sell one unit, lose one unit" regarding green energy, and this is also how Taipower accumulates substantial losses.
With this context, it reveals the flaws and contradictions in the Tsai administration's energy transition policy. Apart from the growing concern among the business community in Taiwan over unstable power supply, the government continues to hide the truth from citizens, leading to a situation that "benefits private energy companies while damaging the interest of Taipower." In an era of diversified energy, all the countries in the world have embraced a liberalization policy for their power industries. However, Taiwan remains an exception, with the state-owned Taipower acting as the sole conductor of the power industry. It not only bears the costs of all private power plants but also ensures their profits. Ultimately, as Taipower accumulates mounting debts, the government is left without any other choice but to allocate budget subsidies to keep it lingering on with the last breath of life. We must question if it is an intelligent model for a rational government to manage its energy industry.
Perceiving the lucrative opportunities presented by the DPP’s green energy policy, Lai Chin-lin established 18 green energy companies at once, clearly demonstrating his keen sense of the "no loss" secret. Not only that, J&V Energy Technology Company, apart from selling electricity to Taipower, exerts its strong political and business connections to easily secure many government-sponsored public projects. Public records reveal that J&V Energy Technology Company won contracts for three energy storage projects in just the past two years from the government, with a combined value exceeding billions, contributing to the company's profits of over NT$1.5 billion (about US$46.8 million) in the first half of this year alone. President Tsai's energy transition policy provides tremendous benefits exclusively for those within the green camp, making it aptly named "Unlimited Glory"!
The energy transition policy of the Tsai administration not only conduces to Taipower’s huge losses but also conspires with DPP-affiliated businesses to siphon off benefits from state-owned enterprises. One must question whether this policy truly serves the welfare of the nation and its people.