Energy Policy

Current state

Taiwan Power Company has dominated the power market in Taiwan for decades, including: power plants, power grids, power distribution and retail. Now only eight private businesses take part in the supply of power with the approval of the Ministry of Economic Affairs.

According to the "Energy Brochure" issued by the Ministry of Economic affairs, the policy of electricity industry liberalization will eliminate the domination of Taiwan Power Company in power market by permitting all the private businesses to participate in power market in Taiwan. We expect that the market will be more efficient by doing so.

The Electricity Act included promoting electricity industry liberalization and developing renewable energy, which came into force in 29 January 2014 in Taiwan.

Electricity industry liberalization

Future electricity market structure of Taiwan

Future electricity market structure of Taiwan

Legal basis

According to article 1,3,20 of The Electricity Act : This Act is enacted for the purpose of developing electric power, regulating electricity supply, promoting the electricity enterprises, maintaining reasonable electricity prices, and enhancing public well-being of the country . Also “electricity business right” is the right to exclusive operation of the business of electricity within a specified region .While in the event that two or more electricity enterprises have filed an application for operation in the same region, the approval shall be granted to the application that arrives first.

Also according to article 18, 9, and 58 : Electricity enterprises shall not commence construction until said permit has been granted. Electricity enterprises’ whole or part of electricity generated is provided for general use within the operation region or is resold to other electricity enterprises.  Central power station operators` wholesale electricity generated to other electricity enterprises, and the relevant electricity enterprise shall submit an application with details and reasons provided to the central competent authority for an extension.

There will be more and more private power plants in Taiwan in the future, Taiwan Power Company will be responsible for power grids and large power plants. Private power plants could sale electricity to consumers via the grids of Taiwan Power Company.

Schedule of Electrical Liberalization

According to the "Energy Brochure" issued by the Ministry of Economic affairs the schedule of electricity industry liberalization is decided as follows:

  1. Before August 2014:

Revise related law and sub-law of how to implement The Electricity Act.

  1. Before February 2016:

Accept the application of private power plants, and establish the foundation to deal with the nuclear power plants and promote renewable energy.

 

The structure of power supply

Generation: increased year by year

According to the statistical data of Taiwan Power Company power supply in Taiwan was 200.6 billion kWh in 2006, and it was 219.1billion kWh in 2015, with an increasing trend of 2.03 billion kWh per year, or CAGR of 1.01%. The trend only decreased during 2008 to 2009 when the financial crisis occurred. And it will be 242.2 billion kWh in 2025 according to the trend.

graphic1

Generating capacity of Taiwan in the past 10 years
Source: Taiwan Power Company, 2006~2015

Power source: burning fossil fuels and nuclear

79.51% of our power source came from fossil fuels in 2015 in Taiwan, which included: coal 26.96%, gas 26.07% , oil 4.67% from Taiwan Power Company , and coal 9.66% , gas 8.15% , cogeneration 4% from private power plants . Also 16.04% of the power source came from nuclear, which contributed 35.143 billion kWh in 2015. It means 95.55% source of power came from fossil fuels and nuclear in Taiwan in 2015, with the remaining being hydropower 2.03%, wind power 0.69%,solar power0.37%, and pumped storage hydro-generator 1.38%.

Structure of energy source of Taiwan in the past 10 years Structure of energy source of Taiwan in the past 10 years
Source: Taiwan Power Company

Reserve Margin

Reserve Margin as a scale of the annual "supply abundance," Power supply will be in tight situation when Reserve Margin decreasing. The formula is:

Reserve Capacity = Capacity planning net peak - Peak load

 

Percent Reserve Margin

Percent Reserve Margin is a measure of "power supply reliability" each year. The power system is more reliable when the Percent Reserve Margin is increasing , while the cost will increasing at the same time. The formula is :

Reserve capacity rate = spare capacity / peak load * 100%

= (net peak capacity planning - peak load) / peak load * 100%

 

 

Statutory Percent Reserve Margin

Statutory Percent Reserve Margin is a reasonable reserve level of power. It is 30% in Singapore, 20% in Britain, 17% in Korea, 15% in the United States, and 15% in Taiwan. So 15% is the lowest level around the world. While the Statutory Percent Reserve Margin fell to 14.7% in 2014 and fell to 11.5% in 2015 in Taiwan.