The CPPA Insurance Mechanism is scheduled to be implemented in September

　　The CPPA (Corporate Power Purchase Agreement) Insurance Mechanism is scheduled to be implemented in September. Regarding the eligibility criteria for enterprises to purchase electricity, the National Credit Guarantee Administration (NCGA) has stated that enterprises must meet either of the following two conditions.

　　The Bureau of Standards, Metrology and Inspection, MOEA (BSMI-MOEA) has indicated the demand for green electricity in Taiwan's industry in 2030, including large enterprises, will reach 29.5 billion kWh, with over 700 million kWh for small and medium-sized enterprises. Additionally, when including telecommunications companies, commercial service providers, and others, the total demand will reach 31.8 billion kWh. This year's survey has shown an increase of 6 billion kWh in the demand for green electricity, primarily due to the number of businesses requiring green electricity increasing from 91 to 212.

　　Domestic reports indicate that in response to the escalating demand for green energy in the country's industries, officials from the MOEA have stated that the strategy for assisting large enterprises in procuring green energy is primarily centered around offshore wind power to meet their needs. For Small and Medium-Sized enterprises (SMEs) , the focus will be on utilizing green energy trading platforms primarily based on photovoltaic power. This approach is aimed at addressing the diverse demands of different industry sectors and fostering the development of the green energy market, with the ultimate goal of enhancing market vitality.

　　Due to the offshore wind power CPPA, the primary electricity consumers are large-scale manufacturing industries, developers typically secure their power buyers in advance, often engaging with 3 to 5 corporate purchasers to share the power output. Recognizing this, the government is implementing the Green Energy Insurance Mechanism to provide credit guarantees for major enterprises with insufficient international credit ratings. Additionally, this mechanism aims to address contract transition gaps during the CPPA execution period, thereby enhancing financial stability.

　　Officials from the NCGA have explained that in the event that the original power purchasing enterprise is unable to fulfill the CPPA, the financial guarantee compensation mechanism is activated. Under this mechanism, the Guarantee Fund covers 80% of the compensation, while the contracting bank bears the remaining 20% of the losses. Currently, the eight major state-owned banks are participating in the Green Energy Insurance Mechanism.

　　In terms of eligibility criteria for electricity procurement, enterprises must meet either of the following conditions: Attain a short-term credit rating of twA-3 or above or a long-term credit rating of twBBB- or above, as evaluated by the Taiwan Ratings, or an equivalent rating from other internationally renowned credit rating agencies; Another is to be part of the same corporate group (as determined by the regulations of the S.W.I.F.T. National Member Group of Taiwan) and have an average annual electricity consumption exceeding 5 GW/h over the past 5 years.

　　For individual enterprises, the maximum financing guarantee limit is up to 8 billion New Taiwan Dollars (NTD), with a maximum guaranteed coverage ratio of 80%. The guarantee procedure fee for power purchase credit is calculated at an annual rate ranging from 0.3% to 1.75% of the guaranteed amount.

　　In other restrictions, power purchasing enterprises within the same corporate group's average annual electricity consumption over the past 5 years must be at least twice the estimated average annual purchased electricity quantity. Furthermore, the total resale of electricity to supply chain manufacturers or other non-affiliated companies within each year must not exceed 30% of the estimated purchased electricity quantity for that year.

Reference:
1. https://ec.ltn.com.tw/article/breakingnews/4411473
2. https://ncga.eximbank.com.tw/Home/PublicDownload