Constructing a Stable and Sustainable Future for Taiwan's Power Development

In line with the global trend toward energy transition, Taiwan's electricity market is undergoing gradual reform, presenting a range of challenges and opportunities. Taiwan Power Company (Taipower), as the primary power supplier in the country, holds a pivotal role in this transformative process. Yao-Ting Wang, General Manager of Taipower, addressed key issues related to the liberalization and future evolution of the electricity market, strategies for ensuring grid stability, effective management of renewable energy sources, and the overarching challenges associated with Taiwan’s energy transition.

Yao-Ting Wang, General Manager of Taipower

Advancing Energy Transition by Promoting Power Trading Platforms and Smart Grid Infrastructure

To foster the development of Taiwan's electricity market, Taipower has been actively promoting the establishment of aggregators via its Ancillary Service Trading Platform. This initiative is particularly focused on enhancing the participation of Virtual Power Plants (VPP) and Distributed Energy Resources (DER) within the market framework. Wang highlighted that, in recent years, Taipower has dedicated significant efforts to establishing this ancillary service platform while simultaneously encouraging the formation of aggregators. These aggregators primarily engage in electricity trading activities and effectively consolidate resources across more than 23 industries, including sectors such as refrigeration, retail, manufacturing, and electronics. By leveraging demand response resources, these aggregators participate in the platform, managing their resources in accordance with bid results to provide critical ancillary services to the power system. This approach not only mitigates peak load pressures but also significantly enhances grid stability.

Since its official launch in November 2021, the ancillary service trading platform has seen participation from up to 89 qualified traders, with a total qualified ancillary services trading capacity reaching 1,537.9 MW. Wang indicated that the market is maturing and that the further opening of the electricity market will be pursued under regulatory guidelines, allowing more emerging participants to enter the market.

Taipower has been making strides in both the power trading market and the implementation of Advanced Metering Infrastructure (AMI). By 2023, over 2.7077 million AMIs have been installed, setting the stage for intelligent utilization of electricity consumption data. Furthermore, Taipower is actively driving the integration of Energy Management Systems (EMS) to streamline data from different energy sources and the grid, thus enhancing the overall power resource distribution.

"Taipower will continue advancing the development of charging infrastructure and supporting the growth of the electric vehicle industry through the implementation of intelligent charging management systems," stated Wang. "Furthermore, the company aims to leverage electric vehicles as localized, grid-scale energy storage solutions, enhancing overall grid efficiency and stability."

Meanwhile, Taipower intends to incorporate concepts such as VPP and Vehicle-to-Grid (V2G) to tackle the electricity imbalance caused by renewable energy through market mechanisms. Wang emphasized that Taipower will persist in reviewing system operations, cooperating with regulatory authorities to devise and execute measures to ensure a stable power supply and the sustainable development of the electricity industry.

The Challenge of Shifting from "Generation Following Load" to "Load Following Generation

To ensure stable power supply, the Ministry of Economic Affairs (MOEA) formulated the "Promoting Power Supply Reliability 999" program in 2005, using the Loss of Load Probability (LOLP) as a key indicator. This program aimed to control the annual LOLP to no greater than 0.1%, ensuring a power supply reliability of 99.9%. The program recommended a reasonable reserve margin of 16%, and the Premier directed the reduction of the reserve margin to 16% in the same year to ease the pressure of purchasing electricity form private sectors. Following this, Taipower planned its power development accordingly. Additionally, a study commissioned by Taipower in 2010 suggested that, to maintain 99.9% power supply reliability, the reserve margin should be lowered to 15%, considering the uncertainties of load forecasting and the commercial operation dates of new units. MOEA established 15% as the system target in 2012.

The rapid development of renewable energy presents Taipower with challenges in effectively managing the intermittency of these energy sources. Due to the intermittent nature of renewable energy, the power system's operational model must be adjusted accordingly. The traditional "generation following load" model that has guided Taipower's power management is gradually being impacted by the emerging trend of "load following generation," posing new challenges for Taiwan's power market.

Wang pointed out that the challenges of grid transformation and climate change, along with the changing timeframes of power supply risks, may make the traditional reserve margin standards (10% to 15%) inadequate to accurately reflect real-time risks and costs. Therefore, it is essential to comprehensively assess the risks of power capacity shortages throughout the year and establish planning principles for energy resource adequacy.

"In response to these challenges, Taipower has developed several strategies, including using traditional thermal power units as backup resources and continuously adding fast-response or quick-start gas units to adapt to the volatility of renewable energy. This ensures that when renewable energy output is insufficient, power can be quickly supplemented, maintaining stable grid operation," Wang explained.

When it comes to dispatching strategies, Taipower will dynamically adjust the operational model of pumped-storage hydroelectricity, shifting to pumping during daylight hours when renewable energy is abundant and generating power at night. This approach efficiently utilizes renewable energy during peak periods, like solar power, and reduces dependence on traditional power sources. Furthermore, through the power trading platform, Taipower will actively procure diversified private resources, such as energy storage systems and self-generation facilities, to provide rapid ancillary services, enhancing grid resilience.

Taipower has already established the Distributed Renewable Energy Advanced Management System (DREAMS) to oversee renewable energy. This system monitors the real-time operational status of solar photovoltaic systems and analyzes data to minimize the impact of integrating renewable energy into the grid. It considers factors such as the timing and location of overall supply and demand within the power system, strengthens infrastructure development in renewable energy hotspots, and establishes comprehensive management mechanisms to ensure the stable and efficient integration of renewable energy into Taiwan's grid.

The Power Industry's Path Must Beyond Traditional Models to Keep Up with Global Trends

As Taiwan's visibility and influence on the international stage gradually increase, international exchanges have become more frequent, bringing the challenges Taiwan faces in power development into sharper focus. Wang pointed out that as Taiwan advances its energy transition, It is essential to prioritize carbon reduction and address various challenges, such as economic growth, unique environmental conditions, and limited energy options.

As Taiwan's industries and technology continue to advance, and with the move towards electrification, the demand for electricity in industries, transportation, and residential areas is increasing. Taiwan's significant role in the global semiconductor supply chain, as well as its development in AI applications, semiconductor processes, and data centers, has led to a pressing need for stable, high-quality, green, and low-carbon electricity. Wang believes that the power sector must closely monitor and assess the evolving changes in industry and technology development and accordingly adjust power supply plans to meet future electricity demands, striking a balance between industrial growth and clean energy objectives.

"Taiwan faces challenges in developing large-scale green energy facilities due to limited land space, high land costs, and complex environmental assessment and land use change procedures.," Wang explained. It is crucial to address how to efficiently use space, improve land use effectiveness with limited land resources, and support green energy developers in securing funding and strengthening the domestic green energy supply chain. This can be achieved through the implementation of national financing guarantee mechanisms and the enhancement of localization policies.

Wang also emphasized that enhancing the independence of the grid and the energy self-sufficiency rate is a crucial aspect that cannot be overlooked. Unlike continental countries such as Australia, the United States, and Europe, Taiwan is an island nation with its own independent grid and high electricity demand, but with limited options for energy sources. Currently, Taiwan's reliance on imported energy is as high as 97%. Therefore, accelerating renewable energy development and increasing the proportion of self-generated energy have become strategies that Taiwan must pursue. At the same time, during the transition to renewable energy, gas-fired units, energy storage facilities, and demand response must also play critical roles.

In addition to energy transition, the net-zero transition is another major challenge faced by all countries. Wang pointed out that as the proportion of renewable energy continues to increase, the importance of enhancing grid resilience and integrating demand-side resources is becoming increasingly prominent. In light of the key trends of electrification and decarbonization, the power industry needs to transition from traditional closed operating models. Wang proposed that collaboration with the government, industry, transportation sectors, commercial and residential sectors, as well as international companies and academic research institutions, is crucial to collectively advance regulatory support, financial investment, infrastructure development, and advanced technology research and development. This will help establish an ecosystem connecting upstream and downstream supply chains and cross-industry cooperation, ultimately achieving the goal of net-zero transition.