August 1, 2017

Developments in Taiwan’s Electricity Market

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經濟部能源局

Bureau of Energy

Table of Contents

I. Overview of Taiwan Power SystemII. Taiwan’s Energy Transition and Renewable

Energy Development PolicyIII. Taiwan’s Electricity Market Reform: Amendment

of the Electricity ActIV. Conclusion

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經濟部能源局

Bureau of Energy

I. Overview of Taiwan Power System

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經濟部能源局

Bureau of Energy

Portfolio of Generation(1)• Taipower Company is currently the only utility in Taiwan.• 75% of total installed capacity comes from thermal power in 2016

• Coal-fired~34.73%, Gas-fired~32.32%, Oil-fired~8.06%

4Reserve Margin(%) 4.7% 16.3% 10.4%

Source: Energy Statistics Handbook(2016), Energy Statistics Monthly Report.

10.81% 6.03% 5.30%

31.54% 39.17% 34.73%

23.77% 10.98%8.06%

5.16% 25.86%32.32%

21.37%11.92% 10.49%

7.34% 6.04% 9.10%

0%10%20%30%40%50%60%70%80%90%100%

1995 2005 2016

Installed CapacityPumped Hydro Power Coal Oil Gas Nuclear Renewable Energy

24,066MW 43,163MW 49,063MW

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Bureau of Energy

Portfolio of Generation(2)• 82% of total electricity comes from thermal power in 2016

• Coal-fired~45.42%, Gas-fired~32.41%, Oil-fired~4.16%

5Source: Energy Statistics Handbook(2016), Energy Statistics Monthly Report.

3.03% 1.69% 1.25%

38.63%53.69%

45.42%

23.38%6.72%

4.16%

4.30% 17.13% 32.41%

26.53%17.58% 11.99%

4.13% 3.20% 4.77%

0%10%20%30%40%50%60%70%80%90%100%

1995 2005 2016

Structure of Power GenerationPumped Hydro Power Coal Oil Gas Nuclear Renewable Energy

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Bureau of Energy

Portfolio of Generation(3)• Gross Power-Generation rises from 243TWh in 2007 to

264TWh in 2016.• In 2016, approximately 23% of electricity is not generated

from Taipower.

6Source: Taipower annual report(2016), Energy Statistics Monthly Report.

 ‐

 50

 100

 150

 200

 250

 300

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

TWh Gross Power‐Generation(by Company)

Taipower Cogeneration Plant IPP Total

Total 264

Taipower 181

IPP 45Cogeneration 38

Taipower, 77%

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Bureau of Energy

Problems of the Power System (1)1. Supply-Demand Mismatch

• Peak demand ~35.86GW in 2016• Demand on the north exceeds the local generation• Part of the power supply in the north comes from

the middle and the south.

7Source: Taipower Company Website.

North,

39%

Middle,

30%

South,

31%

Peak Load(2016)

North,

34%

Middle,

34%

South,

32%

Supply Power Capacity(2016)

經濟部能源局

Bureau of Energy

Problems of the Power System (2)2. Decreasing Reserve Margin• Reserve margin is now lower than the statutory, 15%.• It may become necessary in future to plan an alternative energy

program.

8Source: Taipower annual report(2016).

16.2%

21.1%

28.1%

23.4%

20.6%22.7%

17.5%

14.7%

11.5% 10.4%

0%

5%

10%

15%

20%

25%

30%

 ‐

 5

 10

 15

 20

 25

 30

 35

 40

 45

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Percent R

eserve M

argin (%

)

Installed Capacity and

 Peak Load

 (GW)

Installed Capacity(GW) Peak Load(GW) Percent Reserve Margin(%)

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Bureau of Energy

Solutions of the Power System (1)

Unit Type Under Construction by Taipower(MW)

Under Planning by Taipower(MW) IPP(MW) Total(MW)

Renewables 33 164 6,119 6,3161. Hydro 0 20 0 202. Other 33 144 6,119 6,296

Thermal 6,678 7,096 0 13,7741. Coal 4,000 1,200 0 5,2002. Oil 0 28 0 283. LNG 2,678 5,868 0 8,546

Total 6,711 7,260 6,119 20,089

9Source: Taipower Company Sustainability Reports(2016).

1. Installing New Capacity• Installing new capacity will increase 20,089MW from 2016 to

2026.• One third of new capacity belongs to renewable energy.

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Bureau of Energy

Solutions of the Power System (2)2. Adjusting the Portfolio of Installed Capacity• In 2025, renewable energy will be expected to reach 20.8%

without nuclear power plant no.4.

10Source: Taipower Long-Term Power Development Plan 10302 - Without NPP4

6.1 5.7 5.8 5.8 5.7 5.7 5.4 5.6

12.8 13 14.2 15.9 16.7 18.2 18.7 20.83.7 3.5 3.1 3.1 2.9 2.8 2.7 0.3

34.6 36.8 35.5 35.7 36.5 37.2 40.9 41.8

32.3 32.4 32.8 33 31.9 32 30.4 31.5

10.5 8.6 8.6 6.5 6.3 4.1 1.9 0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2018 2019 2020 2021 2022 2023 2024 2025

Portfolio of Installed Capacity

Nuclear

Coal

Gas

Oil

Renewable energy

Pumped‐storage hydro

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Bureau of Energy

Solutions of the Power System (3)3. Adjusting the Structure of Electricity Generation

• Gradually increasing the renewable energy and gas powergeneration, and reducing the proportion of coal

11Note: The estimations are based on the Taipower Long-Term Power Development Plan 10510 - Without NPP4.

1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.26.9 7.9 9.3 11 12.9 15.2 17.5 201.4 1.4 1.2 1.4 1.5 1.5 1.4 1.732.4 32.8 32.9 33.8 34.8 36

44.450.1

52.2 50.9 49.7 46.9 43.9 40.731.2

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5.8 5.8 5.7 5.7 5.6 5.6 4.4 1.1

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2018 2019 2020 2021 2022 2023 2024 2025

Portfolio of Electricity Generation

Nuclear

Coal

Gas

Oil

Renewable energy

Pumped‐storage hydro

經濟部能源局

Bureau of Energy

II. Taiwan’s Energy Transition & Renewable Energy Development Policy

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經濟部能源局

Bureau of Energy

2015 2016 2017

2016/06/06Energy Transition Policy

2017/01/26Amendment of ElectricityAct

2015/07Greenhouse Gases Reduction and ManagementAct

2015/09/17Intended Nationally Determined Contribution (INDC)

2050 GHGs

(by 2005 level) 50%

2030 GHGsBAU 50%

Nuclear Free 2025

Open Market for Renewable Energy

Introduction of UsersPurchasing Option

The Milestones of Taiwan’s Energy Policy

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Bureau of Energy

The Vision of Energy Transition Policy (1) Core Value of Taiwan’s Energy Transition

Energy Security

EnvironmentalSustainability

Green Economy

Social Equity

Stable –Affordable –Low Risk –

‒Tech. Innovation‒Local Employment‒Green Growth

Clean Energy –

HealthyEnvironment–

‒Empowering People‒Policy Public

Communication‒Market Revolution

ENERGYTRANSITION

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經濟部能源局

Bureau of Energy

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※ Establish a low‐carbon, sustainable, stable, high‐quality andeconomically efficient energy system, and to achieve the“Nuclear‐Free Homeland” vision and renewables 20%, coal‐fired 30%, and gas 50% in the structure of energy distributionby 2025.

Launch Energy Transition and Power Market Reform in June, 2016

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The Vision of Energy Transition Policy (2)

Renewable Energy

2025

20%

• Expansion NG PowerGeneration• Building No.3 LNG Terminal

經濟部能源局

Bureau of Energy

• Renewable energy development in Taiwan is toward increasing renewableenergy supply and raising renewable energy target to achieve 20%renewable electricity generation by 2025.

Power Capacity (MW) Electricity Generation (TWh)

2016 2020(f) 2025(f) 2016 2020(f) 2025(f)

Solar PV 1,210 6,500 20,000 1.1 8.1 25.0

Windonshore 682 800 1,200 1.4 1.8 2.6

offshore － 520 3,000 － 1.9 10.8

Geothermal － 150 200 － 1.0 1.3

Biomass 741 768 813 3.6 5.6 5.9

Hydro Power 2,089 2,100 2,150 6.6 4.7 4.8

Fuel Cell － 22.5 60 － 0.2 0.5

Total 4,722 10,861 27,423 12.7 23.3 50.9

Renewable Energy TargetsRenewable Energy Development(1)

16Source: Bureau of Energy

經濟部能源局

Bureau of Energy

Solar Project Development Target Deployment Strategy

The promoting strategy prioritizes the roof type and specific ground type ahead of the large scale of ground type.

Mid-Long Run Promotion Project (Cumulative 20GW)

SolarProject 2016/07-2017/06(1.52GW)

910 MW

610 MW3GW

17GW

OptimizingInvestmentEnvironment

Expanding Usage

Reaching Potential

2020

6.5GW

20161.34GW

2025

20GW

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Renewable Energy Development(2)

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Bureau of Energy

2‐Year Solar Project for Roof Type (910MW)

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Renewable Energy Development(3)

Rooftop Solar

Project

Government Public Roof

(60MW)

The Others(240MW)

Agricultural Facilities(450MW)

Factories’ Roof

(160MW)

• central governmental bodies• state-owned enterprise• national educational institute• affiliated legal bodies.

• residential/ business rooftop

• factories’ rooftop

• combined solar project installation

經濟部能源局

Bureau of Energy

2‐Year Solar Project for Ground Type (610MW)

Ground-Mounted Solar

Project

• Applicable facilities (1,814MW) dam (8%), detention pond (40%) ponds (40%)

Salt industries’land

(230MW)

Water bodies (150MW)

Landfill and brown field

(30MW)

Severe subsided area

(200MW)

• Council of Agriculture release 18 severe subsided area with total 1,253 hectares (835MW)

• National salt lands (excluding wetlands) (535MW)

• Landfill which remain suspended, closed or restoration condition (622MW)

• Highly contaminated agricultural and industrial land (1,133MW )

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Renewable Energy Development(4)

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Bureau of Energy

short-term2016

mid-term2020

long-term2025

682 MW

Demo. Turbines

8 MW

Demo. Wind Farms &

Zones of Potential

520 MW

ZonalDevelopment

3,000 MW

onshore

offshore

800 MW 1,200 MW

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Renewable Energy Development(5)Wind Power Development Target

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Bureau of Energy

恆春4.5 MW (3x)

四湖28 MW (14x)

湖西5.4 MW (6x)

中屯4.8 MW (8x)

大潭15.1 MW (8x)

新竹香山12 MW (6x)

台中港36 MW (18x)

台中電廠6 MW (3x)

彰工62 MW (31x)

王功23 MW (10x)

雲麥46 MW (23x)

金沙4 MW (2x)

觀園30 MW (20x)

石門3.96 MW (6x)

林口6 MW (3x)

蘆竹7.2 MW (8x)

觀威43.7 MW (19x)

桃威4.6 MW (2x)

豐威11.5 MW (5x)

春風1.75 MW (1x)

崎威6.9 MW (3x)

龍威44.1 MW (21x)

通威27.6 MW (12x)

大鵬 (苗栗)42 MW (21x)

中威82.8 MW (36x)

鹿威96.6 MW (42x)

麥寮2.64 MW (4x)

竹南 (苗栗)7.8 MW (4x)

state‐owned

private

清風2.3 MW (1x)

安威2.3 MW (1x)

龍港11.5 MW (5x)

• Onshore (by the end of Jan 2017)

State-owned: 169 WTs / 294 MW

Private: 177 WTs / 388 MW

Total: 346 WTs / 682 MW(14.3 % of all RE)

2016 Production: ≈ 1,445 GWh(11.4 % of all RE)

FormosaDemo

Turbines

Current Status of Wind Power

Renewable Energy Development(6)

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經濟部能源局

Bureau of Energy

Off-Shore Wind Power (3000 MW)

Phase 3 Zonal development

Phase 1 Demonstration incentives

Phase 2 Explore potential site

【Phase 1 】Demonstration Incentives for Offshore Wind Power System (2012)

• Accomplished 4 demonstration unit installation in 2016, 3 demonstration wind farm will be accomplished by 2020.

【Phase 2 】Application for Selected Offshore Wind Power Site (2015)

• Release 36 potential sites for investment prior to zonal development phase.• Installers must complete Environmental Impact Assessment process by the end of 2017,

and acquire planning permit prior to December 31st 2019.

【Phase 3 】Offshore Wind Power Zonal Development (planned to  announce by Dec. 31st 2017)

• Stimulate technological and industrial development through projects with economic of scale.

• Encourage resources sharing inside developing zone to accelerate installation to bring down the cost. 22

Renewable Energy Development(7)

經濟部能源局

Bureau of Energy

區外

區外

232-239.7 MW

區外

632-707.8 MW

251 MW

450 MW

• Potential sites have been prepared for future reference ~ 20 cases

151.8-159.3 MW

410 MW

555.45-736 MW

598 MW

570 MW

613 MW

642.5 MW

648-736 MW

666-760 MW

648-760 MW

468-512 MW

612-696 MW

500 MW

475 MW

812 MW

305 MW

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Renewable Energy Development(8) Current Status of Offshore Wind Power Development and Planning

• total planned capacity ~ 10.2 GW

• will be expected to drive NT $1,843.2 billion, of which domestic investment account for 53% (about NT $984.5 billion).

經濟部能源局

Bureau of Energy

III. Taiwan’s Electricity Market Reform: Amendment of the Electricity Act

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Bureau of Energy

• International Practices

Generation Grid Retail

Open Competition

Nature Monopoly

FreeChoice

Introduce competition in generation market, to enhance operation efficiency, technology innovation, and service quality. 

Make sure the fare use of T&D grid, and the  transparence of network information

Introduce competition in retail market, to give end user the right to choice 

Purpose of the Amendment(1)

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Bureau of Energy

• One premise and three goals• "multiple supplies, fair usage, and free choices" market

under the premise of power supply stability.

Fair usage for the electricity grid

Multiple supplies andgreen energy first

Free power purchasing choicesfor users

Premise

Power supply stability

Goals

Purpose of the Amendment(2)

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經濟部能源局

Bureau of Energy

• The Framework of Electricity Market (Before)

Independent Power Producer

•9 IPPs, 7,710 MW•renewable energyTaipower Generations

•existing power plants (31,651MW)•power plants in constructions•approved power plants for  construction

Common Users in Operation Regions(Electricity Price Regulation)

Power Grid(Transmission & Distribution)

Self‐use Power Generation Equipment 

(cogeneration, renewable energy, and others)

Taipower CompanyVertical Integrated Power Company

(Public utility)

(Operation regions：Taiwan、Penghu、Kimen、Martzu)

Electricity Supply Obligation

Planning of the Amendment(1)

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經濟部能源局

Bureau of Energy

• The Framework of Electricity Market (Amended)• Establish of the Electricity Regulatory Authority(ERA), and 3 committees

Planning of the Amendment(2)

Electricity Mediation Committee

Electricity Regulatory Authority(ERA) 

Electricity Reliability Committee

Electricity Tariff Committee

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Existing traditional generation companies

Users (fully release the users’ power purchasing choices)

Renewable energygeneration company

price is regulated

Renewable energyretailing company

wholesale

New traditional generation companies

price is not regulated

Transmission and distribution company 

Utility retailing company

wholesalewholesale

Directsupply

wheeling

Generation Sector

T&DSector

RetailSector

經濟部能源局

Bureau of Energy

Amendment of the Electricity Act• Green Electricity Comes First Electricity generated from renewable energy can be sold in 3 different

ways: wholesale, wheeling, and direct supply.“Wheeling”: transferred through transmission and distribution grids to the end user.“Direct Supply”: connecting directly to the users and thereby supplying power.

• Unbundling of Power Sector and Grid Sector Taipower company should be transformed into a holding company. The company of generation and the company of transmission,

distribution, and retailing (which have the transmission and publicretailing utility licenses) should be established under the holdingcompany.

Unbundling should be completed in 6~9 years after the amendment.

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Planning of the Amendment(3)

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Bureau of Energy

IV. Conclusion

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經濟部能源局

Bureau of Energy

Conclusion(1)• Due to a lack of indigenous energy resources, Taiwan relies on

imported energy resources for 97.53% of its needs in 2015. Fossilfuels play a major role in the energy supply structure, having atendency of excessive concentration.

• As an isolated power system, Taiwan Power network has not yetbeen connected to other power systems. Taiwan face morechallenges in balancing supply and demand, as well as theadoption of renewable energy.

• The structure of electricity generation in 2016: coal-fired 45.42%,LNG 32.41%, renewable energy 4.77%.

• Taiwan's current energy policy is developing clean energy andincreasing the share of low carbon energy in electricity generationsystems

• will be expected to reach renewables 20%, coal-fired 30%,and gas 50% in 2025.

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經濟部能源局

Bureau of Energy

Conclusion(2)• In order to achieve the goal of 20% renewables in the structure of

energy distribution in 2025, the government have made theElectricity Act amendment to promote the electricity marketreform.

• As well, “renewable energy precede” increase the flexibility ofrenewable energy generator’s choice.

• Opening of the renewable energy may attract more foreigninvestment in renewable energy sector and the establishment ofrenewable energy.

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Thank You for the Listening

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