Energy Transition in Taiwan: Overview of Renewable Energy Integration Status
With Predictions of Impacts of the Coming Referendums
Introduction and Current Status
Basic Statistics of the Power System in Taiwan
Annual Electricity Consumption: 271 TWh (2020)
Peak Demand Load: 38.696 GW (27.07.2021 13:40)
Avg. Renewable Share: 6% (Preliminary Estimation for 2021)
Max. Instantaneous WWS Share: 20.34% (14.11.2021 12:00)
Max. Daily WWS Share: 10.26% (17.10.2021)
Why is Taiwan important?
Taiwan is densely populated, an isolated island (no possibility of interconnection), and there are many natural disasters that the energy system must cope with (typhoons, earthquakes, floods, etc…).
Goals of Energy Transition in Taiwan
2025:
20% Renewable Energy in Electricity Share
20 GW Solar PV, 5.7 GW Offshore Wind, 1.2 GW Onshore Wind
2035:
20.7 GW Offshore Wind
2050:
Net Zero Emission
The 2025 Goal for Solar PV is within Reach
On average, about 1/3 of the new solar PV capacity in a year is connected to the grid in December, before the price level for the FiT scheme drops. This gives us a reference to estimate how much solar PV capacity will actually be installed this year.
(12/11 Update: official estimation of solar PV capacity by end of this year is 7.7 GW)
Offshore Wind is Catching Up
Total wind capacity just passed 1 GW in October.
At least 2 projects that should be online this year has been delayed due to pandemic restrictions; whether or not the progress next year can catch up will be crucial.
Important projects to expect next year:
- Yunlin Phase 1 & 2 (640 MW)
- Greater Changhua Phase 1 (900 MW)
In total, we should see 2 GW new offshore wind capacity in 2022.
Features of Energy Transition in Taiwan
2 important features: A not complete market and the partisan nature of the issue.
Power Market Only for Renewable Energy
Other than the public utility, only renewable energy generation company and retailers can sell electricity to customers (since 2019).
Most renewable energy projects still choose the traditional FiT scheme, but some large industrial users are signing PPAs with large RE power plants.
According to the 2017-ratified amendment of the electricity act, the national public utility will be split to at least a retailer, a TSO/DSO, and a generation company no later than 2025.
The amended electricity act explicitly stated that there shall only be 1 system operator which will be a national utility and operate both the national wide transmission and distribution grid. On the other hand, there can be multiple public generation companies and public retailers.
It is not clear whether a wholesale energy market will exist then, or if private companies can sell electricity to customers with conventional power plants.
Taipower’s own attitude has been against the introduction of a wholesale energy market and the split of its conventional power plant assets to multiple companies.
Ancillary Service Markets Will Come First
Flexibility services from power plants, batteries and demand response can be traded in a day ahead control reserve market recently.
A capacity market to ensure long-term adequacy will be introduced in 2023.
Energy Transition is a Partisan Issue
Ever since the current renewable energy targets were set by the democratic progressive government in 2016, the Chinese nationalists have been criticizing the “recklessness” and “disruptiveness” of them.
Members of the Chinese nationalists are directly involved in one of the energy related referendum that is about to take place on 18th December (reconstruction of NPP 4); they are also co-opting the other (halt of Datan LNG terminal project).
Reconstruction of NPP 4: What Will Happen If Passed?
Since the construction license for NPP 4 has expired last year, Taipower will need to reapply for a new one under the latest regulations should the referendum be passed.
This includes a more thorough geological survey and environmental impact assessment, which will be time consuming because there is new evidence that a (at least) 2 km long fault (potentially active) is right under the power plant and a (at least) 90 km long active fault is very close to the power plant.
It is estimated that these preliminary tasks will take a decade to complete, and even if the site is deem safe enough and with the most optimistic estimation of construction schedule, the power plant will not generate any electricity until 2036 the earliest.
Thus, this referendum does not directly affect the short and midterm energy transition plans. However, passing it will mean a diversion of discourse and resources in energy policy for the next 15 years at least.
It should also be noted that Chinese nationalists and the relevant organizations have been criticizing the renewable energy expansion policy in order to promote their referendum campaign. Variability of solar and wind remains a common talking point to bring up.
Their message of a nuclear power plant being able to come online very soon also hampers the recognition of renewable expansion as the sole short term solution to climate action within the society.
Halt of Datan LNG Terminal Project: What Will Happen If Passed?
Without any counter measure, the halt of the project will cause conventional gas supply shortage in Northern Taiwan.
This will hamper the fuel-switching process (from coal to gas) that is planned to continued to around 2030–35 until renewable energy begins to replace conventional gas.
This may also cause power system reliability issues after 2025 if the gas pipeline capacity constraints and power transmission constraints do not allow gas or electricity to enter from the south.
These potential impacts can theoretically be solved by an accelerated deployment of renewable energy, energy storage, and targeted time-of-use pricing in industrial areas, especially in the north.
For example, if the PV capacity reaches 25 GW and offshore wind capacity reaches 8.4 GW by 2025, impacts on coal reduction can be completely neutralized.
This is the “good ending”: the passed referendum accelerates energy transition in the short term while avoiding a potential stranded asset in the long term.
However, we must be very cautious, especially when renewable energy has been on the blame for the 2 blackout events in May; such acceleration might not be feasible in the current political atmosphere.
Instead the government might act more conservatively, extend the services of some coal and diesel power plants in the very short term and still initiate a replacement LNG terminal project before 2030.
This is the “bad ending”: we end up increase the risk of the terminal becoming a stranded carbon asset in the long term and decrease the environmental benefits it can bring by fuel switching in the short term.
Recent Polls of the Referendums
Since mid November, most polls have shown that there are slightly more people that oppose the referendum than agree with it, and the rate of opposition has also been gradually increasing in polls conducted by the same organization, although the margin is most of the time razor-thin.
Unlike the referendum for NPP 4, the support for this referendum is stronger and more consistent. Currently only in 1 out of all the polls is the opposition rate greater. We should therefore start seriously thinking of ways to avoid the “bad ending”.
Conclusion
Taiwan can still achieve its 2025 renewable energy expansion goals, but the future power market structure and detailed long term renewable goals remain unknown, and the pace of energy transition will remain highly dependent of the development in the political arena.
Short term events such as energy-related referendums serve as double edge swords. Supporters of energy transition should try their best to make most of these contingencies and let renewable energy be the winner at the end of the day, no matter what outcome awaits us.
