Developments in Taiwan s Electricity Market August 1, 2017 1
Table of Contents I. Overview of Taiwan Power System II. Taiwan s Energy Transition and Renewable Energy Development Policy III. Taiwan s Electricity Market Reform: Amendment of the Electricity Act IV. Conclusion 2
I. Overview of Taiwan Power System 3
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% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 5.16% 25.86% 23.77% 31.54% 39.17% Reserve Margin(%) 4.7% 16.3% 10.4% Source: Energy Statistics Handbook(2016), Energy Statistics Monthly Report. Installed Capacity Pumped Hydro Power Coal Oil Gas Nuclear Renewable Energy 7.34% 6.04% 9.10% 21.37% 11.92% 10.49% 24,066MW 43,163MW 49,063MW 10.98% 32.32% 8.06% 34.73% 10.81% 6.03% 5.30% 1995 2005 2016 4
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% Structure of Power Generation Pumped Hydro Power Coal Oil Gas Nuclear Renewable Energy 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 4.13% 3.20% 4.77% 17.58% 11.99% 26.53% 4.30% 23.38% 38.63% 17.13% 6.72% 53.69% 32.41% 4.16% 45.42% 3.03% 1.69% 1.25% 1995 2005 2016 Source: Energy Statistics Handbook(2016), Energy Statistics Monthly Report. 5
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. TWh 300 250 200 150 Gross Power Generation(by Company) Total 264 Taipower 181 Taipower, 77% 100 50 IPP 45 Cogeneration 38 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Taipower Cogeneration Plant IPP Total Source: Taipower annual report(2016), Energy Statistics Monthly Report. 6
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. Peak Load(2016) Supply Power Capacity(2016) South, 31% North, 39% South, 32% North, 34% Middle, Middle, 30% 34% Source: Taipower Company Website. 7
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. 45 30% Installed Capacity and Peak Load (GW) 40 35 30 25 20 15 10 5 28.1% 23.4% 22.7% 21.1% 20.6% 17.5% 16.2% 14.7% 11.5% 10.4% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 25% 20% 15% 10% 5% 0% Percent Reserve Margin (%) Installed Capacity(GW) Peak Load(GW) Percent Reserve Margin(%) Source: Taipower annual report(2016). 8
Solutions of the Power System (1) 1. Installing New Capacity Installing new capacity will increase 20,089MW from 2016 to 2026. One third of new capacity belongs to renewable energy. Unit Type Under Construction by Taipower(MW) Under Planning by Taipower(MW) IPP(MW) Total(MW) Renewables 33 164 6,119 6,316 1. Hydro 0 20 0 20 2. Other 33 144 6,119 6,296 Thermal 6,678 7,096 0 13,774 1. Coal 4,000 1,200 0 5,200 2. Oil 0 28 0 28 3. LNG 2,678 5,868 0 8,546 Total 6,711 7,260 6,119 20,089 Source: Taipower Company Sustainability Reports(2016). 9
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. 100% 10.5 8.6 8.6 6.5 6.3 4.1 1.9 0 90% 30.4 31.5 80% 32.3 32.4 32.8 33 31.9 32 70% 60% 50% 34.6 36.8 35.5 35.7 36.5 37.2 40.9 41.8 40% 30% 3.7 3.5 3.1 3.1 2.9 2.8 2.7 0.3 20% 12.8 13 14.2 15.9 16.7 18.2 18.7 20.8 10% 6.1 0% 5.7 5.8 5.8 5.7 5.7 5.4 5.6 2018 2019 2020 2021 2022 2023 2024 2025 Source: Taipower Long-Term Power Development Plan 10302 - Without NPP4 Portfolio of Installed Capacity Nuclear Coal Gas Oil Renewable energy Pumped storage hydro 10
Solutions of the Power System (3) 3. Adjusting the Structure of Electricity Generation Gradually increasing the renewable energy and gas power generation, and reducing the proportion of coal 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Portfolio of Electricity Generation 5.8 5.8 5.7 5.7 5.6 5.6 4.4 1.1 52.2 50.9 49.7 46.9 43.9 40.7 31.2 50.1 44.4 36 32.4 32.8 32.9 33.8 34.8 1.4 1.4 1.2 1.4 1.5 1.5 1.4 1.7 6.9 7.9 9.3 11 12.9 15.2 17.5 20 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 2018 2019 2020 2021 2022 2023 2024 2025 26 Nuclear Coal Gas Oil Renewable energy Pumped storage hydro Note: The estimations are based on the Taipower Long-Term Power Development Plan 10510 - Without NPP4. 11
II. Taiwan s Energy Transition & Renewable Energy Development Policy 12
The Milestones of Taiwan s Energy Policy 2015/07 Greenhouse Gases Reduction and ManagementAct 2050 GHGs (by 2005 level) 50% 2015 2016 2017 2015/09/17 Intended Nationally Determined Contribution (INDC) 2016/06/06 Energy Transition Policy 2017/01/26 Amendment of ElectricityAct 2030 GHGs BAU 50% Nuclear Free 2025 Open Market for Renewable Energy Introduction of Users Purchasing Option 13
The Vision of Energy Transition Policy (1) Core Value of Taiwan s Energy Transition Stable Affordable Low Risk Tech. Innovation Local Employment Green Growth Energy Security Green Economy Clean Energy Healthy Environment Environmental Sustainability ENERGY TRANSITION Social Equity Empowering People Policy Public Communication Market Revolution 14
The Vision of Energy Transition Policy (2) Launch Energy Transition and Power Market Reform in June, 2016 Establish a low carbon, sustainable, stable, high quality and economically efficient energy system, and to achieve the Nuclear Free Homeland vision and renewables 20%, coalfired 30%, and gas 50% in the structure of energy distribution by 2025. Renewable Energy 20% Expansion NG Power Generation Building No.3 LNG Terminal 2025 15 5
Renewable energy development in Taiwan is toward increasing renewable energy supply and raising renewable energy target to achieve 20% renewable electricity generation by 2025. Wind Renewable Energy Development(1) Renewable Energy Targets 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 onshore 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 Source: 16
Renewable Energy Development(2) 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) 2020 6.5GW Optimizing Investment Environment Expanding Usage Reaching Potential 2025 20GW 17GW 2016 1.34GW 910 MW 610 MW 3GW 17
Renewable Energy Development(3) 2 Year Solar Project for Roof Type (910MW) Government Public Roof (60MW) central governmental bodies state-owned enterprise national educational institute affiliated legal bodies. factories rooftop Factories Roof (160MW) Rooftop Solar Project The Others (240MW) residential/ business rooftop Agricultural Facilities (450MW) combined solar project installation 18
Renewable Energy Development(4) 2 Year Solar Project for Ground Type (610MW) Salt industries land (230MW) National salt lands (excluding wetlands) (535MW) Landfill and brown field (30MW) Landfill which remain suspended, closed or restoration condition (622MW) Highly contaminated agricultural and industrial land (1,133MW ) Ground- Mounted Solar Project Water bodies (150MW) Severe subsided area (200MW) Council of Agriculture release 18 severe subsided area with total 1,253 hectares (835MW) Applicable facilities (1,814MW) dam (8%), detention pond (40%) ponds (40%) 19
Renewable Energy Development(5) Wind Power Development Target short-term 2016 mid-term 2020 long-term 2025 onshore 682 MW 800 MW 1,200 MW offshore Demo. Turbines 8MW Demo. Wind Farms & Zones of Potential 520 MW Zonal Development 3,000 MW 20
Renewable Energy Development(6) Current Status of Wind Power Onshore (by the end of Jan 2017) State-owned: Private: Total: 169 WTs / 294 MW 177 WTs / 388 MW 346 WTs / 682 MW (14.3 % of all RE) 2016 Production: 1,445 GWh (11.4 % of all RE) 金沙 4 MW (2x) 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) 中屯 4.8 MW (8x) 湖西 5.4 MW (6x) 四湖 28 MW (14x) 恆春 4.5 MW (3x) state owned private 觀園 30 MW (20x) 大潭 15.1 MW (8x) Formosa Demo Turbines 蘆竹 7.2 MW (8x) 石門 3.96 MW (6x) 林口 6 MW (3x) 觀威 43.7 MW (19x) 桃威 4.6 MW (2x) 豐威 11.5 MW (5x) 春風 1.75 MW (1x) 龍港 11.5 MW (5x) 崎威 6.9 MW (3x) 竹南 ( 苗栗 ) 7.8 MW (4x) 龍威 44.1 MW (21x) 大鵬 ( 苗栗 ) 42 MW (21x) 通威 27.6 MW (12x) 中威 82.8 MW (36x) 安威 2.3 MW (1x) 清風 2.3 MW (1x) 鹿威 96.6 MW (42x) 麥寮 2.64 MW (4x) 21
Renewable Energy Development(7) Off-Shore Wind Power (3000 MW) Phase 1 Demonstration incentives Phase 2 Explore potential site Phase 3 Zonal development 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 31 st 2019. Phase 3 Offshore Wind Power Zonal Development (planned to announce by Dec. 31 st 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(8) Current Status of Offshore Wind Power Development and Planning Potential sites have been prepared for future reference ~ 20 cases 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). 648-736 MW 666-760 MW 648-760 MW 598 MW 642.5 MW 570 MW 613 MW 232-239.7 MW 812 MW 305 MW 區外 區外 251 MW 151.8-159.3 MW 410 MW 555.45-736 MW 468-512 MW 612-696 MW 500 MW 450 MW 475 MW 區外 632-707.8 MW 23
III. Taiwan s Electricity Market Reform: Amendment of the Electricity Act 24
Purpose of the Amendment(1) International Practices Generation Grid Retail Open Competition Introduce competition in generation market, to enhance operation efficiency, technology innovation, and service quality. Nature Monopoly Make sure the fare use of T&D grid, and the transparence of network information Free Choice Introduce competition in retail market, to give end user the right to choice 25
Purpose of the Amendment(2) One premise and three goals "multiple supplies, fair usage, and free choices" market under the premise of power supply stability. Premise Power supply stability Goals Multiple supplies and green energy first Fair usage for the electricity grid Free power purchasing choices for users 26
Planning of the Amendment(1) The Framework of Electricity Market (Before) Taipower Company Vertical Integrated Power Company (Public utility) Taipower Generations existing power plants (31,651MW) power plants in constructions approved power plants for construction Independent Power Producer 9 IPPs, 7,710 MW renewable energy Self use Power Generation Equipment (cogeneration, renewable energy, and others) Power Grid (Transmission & Distribution) Electricity Supply Obligation Common Users in Operation Regions (Electricity Price Regulation) (Operation regions:taiwan Penghu Kimen Martzu) 27
Planning of the Amendment(2) The Framework of Electricity Market (Amended) Establish of the Electricity Regulatory Authority(ERA), and 3 committees Electricity Regulatory Authority(ERA) Electricity Tariff Committee Electricity Mediation Committee Electricity Reliability Committee Generation Sector T&D Sector Retail Sector Direct supply Renewable energy generation company wheeling wholesale Renewable energy retailing company price is not regulated Existing traditional generation companies wholesale price is regulated New traditional generation companies Transmission and distribution company Utility retailing company wholesale Users (fully release the users power purchasing choices) 28
Planning of the Amendment(3) Amendment of the Electricity Act Green Electricity Comes First Electricity generated from renewable energy can be sold in 3 different ways: wholesale, wheeling,anddirect 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 public retailing utility licenses) should be established under the holding company. Unbundling should be completed in 6~9 years after the amendment. 29
IV. Conclusion 30
Conclusion(1) Due to a lack of indigenous energy resources, Taiwan relies on imported energy resources for 97.53% of its needs in 2015. Fossil fuels play a major role in the energy supply structure, having a tendency of excessive concentration. As an isolated power system, Taiwan Power network has not yet been connected to other power systems. Taiwan face more challenges in balancing supply and demand, as well as the adoption 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 and increasing the share of low carbon energy in electricity generation systems will be expected to reach renewables 20%, coal-fired 30%, and gas 50% in 2025. 31
Conclusion(2) In order to achieve the goal of 20% renewables in the structure of energy distribution in 2025, the government have made the Electricity Act amendment to promote the electricity market reform. As well, renewable energy precede increase the flexibility of renewable energy generator s choice. Opening of the renewable energy may attract more foreign investment in renewable energy sector and the establishment of renewable energy. 32
Thank You for the Listening 33