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Will Energy Transition Raise Electricity Rates in Taiwan?

published: 2018-01-10 13:17

Taiwan’s government is actively promoting energy transition. Will this policy intensify power supply and move up electricity rates? The Bureau of Energy from Ministry of Economic Affairs (BOE, MOEA) recently expressed that it has already carefully calculated whether the electricity supply in Taiwan will be stable and how much electricity will cost in the process of energy transition. Electricity rates depend on fuel prices and on whether power generation technology is mature. According to BOE, Taiwan’s electricity rates are the 7th lowest worldwide; even if its electricity rates rise in the future, the industries and households are expected to be able to afford the price rise.

BOE stressed that the goal of energy transition policy by 2025 is to make Taiwan nuclear power free, ensure that renewable energy will account for 20% of all power generation, gradually reduce the dependence of coal, and increase the portion of natural gas power generation. The plan will help reduce air pollution.

MOEA states that the Financial Times (FT) has recently acknowledged Taiwan’s ambition to raise its energy transition efforts and to promote the development of renewable energy. Meanwhile, it also acknowledged that there will be difficulties during the transition. FT interviewed international renowned NGOs, industrial representatives and foreign business consultants. This piece of news is thorough and not biased.

For the most part, FT's news positively affirms the Taiwan government efforts to push for energy transition and stabilize its power supply. However, some domestic media in Taiwan have partially quoted FT's news report in a misleading way. Although the MOEA responded with a thorough explanation, the domestic media has not used MOEA's latest updates.

In response to the Financial Times article, MOEA said that Taiwan’s energy transition is a long term process. The government will absolutely ensure the stable power supply in the process, according to MOEA. In the future, when approving major investment plans or calculating electric vehicle policy's power demand, the government's core principle will be stable power supply.

In order to maintain operating reserve rate at above 6% in 2018 and keep operating reserve above 10% from 2019 to 2025, MOEA will pay attention to the following tasks. First, it will maintain and repair the existing power generation units and power transmission and distribution systems. Second, it will begin upgrading Taiwan’s power plants. Third, it will plan for natural gas terminal and renewable energy station construction. Fourth, it will manage all of the risks associated with these operations. If there is any anomaly in an ongoing project, such as an engineering project falling behind schedule, MOEA will trigger a forewarning and deal with the issue instantly.

MOEA further expressed that while the initial investment of renewable energy projects in Taiwan might be high, according to the international energy industry's learning curve, costs of offshore wind power generation is lower than that of coals. On the other hand, cost of solar power generation is competitive to that of natural gas.

So as to lower future energy costs in Taiwan and enhance energy security of Taiwan, a critical measure would be to actively develop renewable energy. As renewable energy is domestically generated, the cost will be stable in the long term and is expected to fall gradually. On the other hand, imported fossil energy price can be easily affected by international affairs and its price is likely to steadily rise in the long term.

Using offshore wind power generation as an example, MOEA pointed out two notable progresses in Taiwan. First, by the end of April 2017, two companies had finished setting up demo wind turbines and successfully began to operate them commercially, despite typhoons, earthquakes and Northeast monsoons. Meanwhile, offshore wind farm projects with accumulated capacity of 10GW have passed environmental impact assessment reviews. Thus, eventually, 3GW wind farm projects are expected to get accomplished by 2025, and the power capacity could even surpass 5.5 GW, which would be higher than the original goal.

The government has been actively adjusting its mindset of renewable energy. Rather than considering it as cost, renewable energy is being viewed as a method to attract investment, increase exports, provide job opportunities, upgrade the industry, and transform the industry. There are many companies investing in and developing the renewable energy businesses. Offshore wind power generation and solar power generation are expected to be worth trillions of NT dollars in Taiwan in the future.

MOEA announced in the past that households whose monthly electricity usage is below 330 kWh will not experience electricity rate rise, so people can rest assured.

On a whole, on the absolute premise of stable power supply, the MOEA will lead energy transition in Taiwan, reduce air pollution emission, and achieve the energy transition goal on time.

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