Researchers in Taiwan are proposing a market-based incentive scheme to help property owners to move from using their roofs for illegal dwellings to rooftop solar power generation. They found these owners should be rewarded for solar power generation but also be compensated for the income loss due to the removal of illegal rentals.
Researchers at the National Taiwan University have proposed to use rooftop solar power generation as an antidote to the so-called rooftop slum, which consists of building illegal housing on the rooftops of apartment buildings in cities and countries with a high population density and low land availability, such as Taiwan, Hong Kong, and South Korea.
The scientists proposed a market-based incentive scheme for rooftop PV in an effort to encourage Taiwanese property owners to shift away from illegal rooftop dwellings. They claim 711,109 illegal constructions of this kind have been built in the country to date, most of which, 84% or 595,478 cases, are located in six cities, namely Taipei, New Taipei, Taoyuan, Taichung, Tainan, and Kaohsiung.
“Addressing the issue of illegal rooftop dwellings becomes crucial not only from a regulatory standpoint but also in unlocking the full capacity of urban rooftops for solar PV deployment,” they stated, noting that some significant action to demolish part of these illegal dwellings was already implemented by the island’s authorities.
The group said the country’s feed-in tariff (FIT) scheme in place for rooftop solar does not represent a real incentive for owners of illegal rooftop dwellings as they usually rent them out to increase their income.
Their analysis considered demolition costs, solar panel capital and maintenance costs, rental income loss due to the removal of illegal additions, and benefits from solar FITs. “Government incentives are strategically devised to bridge the gap between rental income derived from illegal additions and the net expenses associated with solar deployment,” they stated, adding that filling the gap created by the rental income loss represents a substantial share of the overall transition costs, significantly influencing the decision-making of property owners.
The researchers emphasized that an incentive scheme aimed to replace illegal roof dwellings with rooftop PV arrays will have to inevitably include funds to compensate the owners of the roofs for the income losses. The required government subsidy should be calculated based on market supply curves for illegal rooftop rental housing based on real-world rental data.
Their findings were presented in the paper “Transitioning from illegal rooftop dwellings to solar PV: Market-based incentive design and techno-economic analysis,” published in Energy Strategy Reviews. “Our study provides a practical framework for market-based incentives in the context of Taiwan’s four largest special municipalities, it is essential to acknowledge that its applicability and effectiveness may vary in different geographical settings,” the researchers concluded.
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