Driving Energy Transition Forward Towards Net-Zero Goals

By Xin-En Wu, Mei-Hsu Shih

Amid the global trends of carbon reduction and net-zero emissions, Taiwan cannot stand apart, especially as the energy sector is one of the primary sources of carbon emissions. Actively promoting energy transition has become an inevitable trend. Additionally, the domestic demand for green electricity continues to grow, with companies expecting a more diverse and dynamic green electricity trading environment. To enhance the flexibility of energy transition and development, the Ministry of Economic Affairs (MOEA) recently amended the Electricity Act, including provisions to relax current restrictions on green electricity trading. In response to the development of renewable energy, the amendments place emphasis on strengthening the power system, grid-connected energy storage, and demand response as emerging power resources.

Cheng-Wei Yu, Director General of the Energy Administration, MOEA

"From past energy transitions to the recent focus on net-zero emissions, the government has made numerous efforts and adaptive measures. These initiatives reflect Taiwan's commitment to environmental sustainability and enhancing international competitiveness," said Cheng-Wei Yu, Director General of the Energy Administration, MOEA. He also discussed Taiwan's progress in integrating Distributed Energy Resources (DER) and Virtual Power Plants (VPP), and shared insights on the government's policies and regulatory framework to promote green energy and distributed resources, offering perspectives on the future development direction of Taiwan's power sector.

Attracting Private Resources for Joint Green Energy Development

To promote the development of emerging resources such as Distributed Energy Resources (DER) and Virtual Power Plants (VPPs) in Taiwan, the domestic ancillary service trading platform was officially launched in 2021. Currently, it has established four types of day-ahead ancillary service products: regulation reserve, spinning reserve, supplemental reserve, and Energy-shifting with enhancement dynamic regulation (E-dReg). The primary goal is to attract private resources to work together in ensuring power security and stability.

"As of August 9, 2024, the registered capacity for Taiwan's frequency regulation reserve ancillary service has reached 782.5 MW, with energy storage devices accounting for 767.3 MW and demand response contributing 15.2 MW. The registered capacity for spinning reserve ancillary services is 139.3 MW, including 3.5 MW from self-generation facilities and 135.8 MW from demand response. Additionally, the registered capacities for supplemental reserve ancillary services and energy-shifting combined dynamic regulation reserve ancillary services are 330.5 MW and 297.7 MW, respectively, all sourced from energy storage devices," noted Yu.

The participation of private qualified traders also demonstrates market enthusiasm. To encourage smaller-scale resources to enter the electricity trading platform, operators only need to have a dispatchable capacity of at least 1 MW, pass relevant specifications and testing verification, and hold a 'Professional Personnel Qualification Certificate' to become a qualified trader. As of August 9, 2024, a total of 90 companies have participated in this platform, reflecting a high level of enthusiasm from the private sector for market involvement. "We look forward to more private companies joining, working together to enhance power supply stability and develop emerging domestic resources, creating a win-win situation." Yu said.

Strengthening and Enhancing Policy and Regulatory Frameworks

Addressing how to ensure that small-scale energy producers and various industries can effectively participate in the energy market, Yu highlighted that considering Taiwan's limited land, dense population, environmental protection concerns, and geographical constraints, developing large-scale power plants is challenging and not the optimal choice.

To expand green energy development, Taiwan's power generation structure has begun shifting from centralized large-scale power plants to distributed energy resources. This shift will help promote the growth of green energy and demand response, but it will also introduce challenges related to the increased complexity of the power system. Therefore, strengthening policy initiatives and regulatory mechanisms, as well as continuously promoting the participation of small-scale resources, has become a crucial issue.

"Since the 2017 amendments to the Electricity Act, Taiwan's green electricity retail market has offered more diverse trading options. The ancillary service trading platform, launched in 2021, has provided a pathway for distributed resources such as Virtual Power Plants (VPPs) and demand response to participate in the market. The Energy Administration collects and analyzes market operation data, regularly publishes market oversight reports, and conducts ongoing reviews of market operations to ensure the fairness and integrity of the electricity trading platform," stated Yu.

In terms of policies and regulations, the MOEA completed a draft revision of certain provisions of the Electricity Act in July 2024. The revisions primarily focus on introducing categories for new electricity resources—such as renewable energy, grid-connected energy storage, and demand response—that are not yet clearly defined and regulated under current laws, aiming to create a more robust environment for the development of the power market.

Additionally, to facilitate the participation of small-scale resources in grid dispatch, the Energy Administration has initiated pilot programs such as the 'Campus Automated Demand Response' and 'Residential and Commercial Automated Demand Response (ADR).' These initiatives aim to lower the barriers to participation for users, encouraging low-voltage customers to contribute small-scale demand response resources to grid dispatch, collectively working towards enhancing system stability.

Enhancing Grid Resilience and Digitalization to Meet Future Challenges

As Taiwan's international visibility and influence continue to rise, its power market faces new challenges and opportunities. Yu noted that against the backdrop of the international community's ongoing push for AI development and net-zero carbon trends, the power system will encounter significant transformation and challenges. For instance, Taipower Chairman Wen-Sheng Tseng recently highlighted during a meeting of the Presidential Office's Climate Change Response Committee that Taiwan may face issues such as doubling electricity demand, changes in demand patterns, and regional supply-demand imbalances. Therefore, it is crucial to accelerate the development of power generation sources and enhance grid resilience to ensure the reliability of the domestic power supply.

Yu further explained, "In terms of strengthening grid resilience, the National Development Council (NDC) laid out the 'Taiwan 2050 Net-Zero Emissions Pathway and Strategy Overview' in March 2022. Through its 'Power System and Energy Storage Key Strategy,' the plan promotes the development of distributed grids and the enhancement of grid resilience. Simultaneously, efforts will be made to push for grid digitalization, increase operational flexibility to enhance grid responsiveness, and utilize ICT and IoT technologies to facilitate system integration. Additionally, to address the challenges posed by renewable energy variability, the government will expand the deployment of energy storage and other flexible resources to improve grid resilience and ensure the reliable stability of the power system."

"In terms of grid cybersecurity upgrades, the trend towards digitalization of grid equipment necessitates a more comprehensive and flexible framework design for ICT security, which will be essential for future applications involving large-scale equipment and cross-platform grid integration. The government will continue to invest in developing grid ICT technologies to support improvements in grid reliability and resilience," Yu emphasized.

Taiwan is actively pursuing an energy transition and reforming its power market to meet international carbon reduction and net-zero challenges. In this process, both the government and businesses need to work together to promote green energy development, ensure a stable power supply, and achieve a win-win situation for environmental sustainability and economic growth.