TAIWAN POWER INDUSTRY
SECTOR REPORT

Introduction

Taiwan is an island that is densely populated but which is endowed with very poor natural resources (particularly fossil fuels). Despite this handicap, Taiwan has managed to achieve very high economic growth and national income. Since energy plays a vital role in its national economic development, the Taiwanese authorities established the Energy Commission under the Ministry of Economic Affairs in November 1979 to formulate and implement national energy policy. The Ministry evaluates energy demand and supply, established an energy database system, promotes energy conservation programs, funds research and development and encourages international energy co-operation.

Energy Consumption

Energy consumption in Taiwan increased from 24.71 million kiloliters of oil equivalent in 1978 to 81.12 million kiloliters in 2002. The annual average growth rate during this period was 6.1% while that for the GDP was 7.3%; energy demand elasticity was 0.84. Per capita energy consumption increased from 1,456 litres of oil equivalent in 1978 to 3,725 litres in 2002, for an annual average growth rate of 4.8%.

Energy Supply

The total amount of energy supply in Taiwan increased from 28.82 million kiloliters of oil equivalent in 1978 to 92.35 million kiloliters in 1999, with an annual average growth rate of 6.0%. Since Taiwan is not endowed with rich land-based energy resources, the ratio of indigenous energy to total energy supply actually decreased from 20% in 1978 to 4% in 1999 while that of imported energy increased from 80% in 1978 to 96% in 1999.

Power Development

The Taiwan Power Company (known as Taipower or TPC) is responsible of the development, generation, supply, and marketing of electric power in the Taiwan area. The operation and performance of the company is under supervision of the Commission of National Corporations (CNC), the Ministry of Economic Affairs (MOEA). Taipower is owned by the Central Government 66.72%, the Taipei City Government 27.42%, the remaining 5.86% are belong to some institutions and individuals.

Current government policy encourages private sector industrial plants to develop co-generation systems and to sell their surplus power to Taipower. Development of additional private sector generating capacity has been limited in recent years; the rate of reserve capacity has been under 8% since 1990, way below the desired 15%-20% margin. For this reason and global trend towards privatisation, the MOEA has began opening the industry to the private sector with the aim of achieving a competitive business environment and a stable electricity market.

The central government announced in 2002 that Taipower is scheduled to be privatised by December 2005. Taipower is consulting the relevant experts to work on their plans for the energy privatisation.

Independent Power Producers

In 1992, the government decided to liberalise its policy and open the power generation business to the Independent Power Producers (IPPs).

In preparation for the implementation of the IPP scheme, Taipower studied the IPP practices that were adopted by the United States. The framework of IPP guidelines had been planned and discussed since 1993, and the draft was submitted to the Energy Commission of the MOEA to review.

“The Main Points in Handling Independent Power Projects”, announced in September 1994, provided the principles under which Taipower would release part of its monopoly over the electricity generation market in Taiwan which in turn would allow for the establishment independent power plants. According to the Main Points, the opening scheme of generating units is confined to thermal and hydro power generation and excludes nuclear power. The capacity available to the IPPs is approximately 20% of the total power capacity of Taiwan.

Following the first and second rounds of private power plant projects, eleven private power plants have been approved by Ministry of Economic Affairs with a total installed capacity of 10,300 MW. In 2001, only four power plants were constructed as scheduled.

For the third round, the Taiwan government is to favour liquefied natural gas (LNG) fuel generation. LNG accounts for 20% of local ongoing private power projects, with installation capacity amounting to 1,850MW.

General Power Development

The status of electric power development at the end of 2003 was as follows:

· Taipower had a total of 60 power plants, of which 39 were hydropower, 18 thermal, and 3 nuclear.
· The total installed capacity of Taipower was 29,634MW of which 4,422 MW was hydro, 20,068 MW was thermal, and 5,144MW was nuclear.
· The peak load in 2000 was 25,854MW, a 7.2% increase over 1999, and the average load was 17,818 MW, an 8.6% increase over 1999.
· Energy production by Taipower in 2000 totalled 156,511 GWH, an 8.6% increase over the previous year, of which 7% came from hydro, 40% from coal-fired, 18% from oil-fired, 10% from gas-fired, and 25% from nuclear plants.

Conclusion

Assuming an average annual growth in GNP of 6.3% over the next two decades, total energy demand in Taiwan is forecast to increase to 112.4 million kiloliters of oil equivalent in the year 2010. Electric power’s share of total energy demand is expected to increase from 42% to 56% over the same period.

The development of power from hydro and new energy sources will lead to a slight increase in indigenous energy supply, but is only to reach 6% by 2010. Imported energy will therefore still account for 94% of supply. Oil’s share of total energy supply will decrease from 53% to 39%; natural gas’s share will jump from 5% to 16%; and nuclear power will increase from 13% to 14%.

The Taiwan government and the state enterprise - Taipower are well aware of the challenges they are facing – increased demand for pollution management, shortage of power supply and financial difficulties. With demand for power continually increasing, and periodically block-out, Taipower has launched several projects designed to support future development, such as IPP project, Liquid Natural Gas power plants and etc.. In addition, considerable funds have been budgeted for building new power plants to maximise the output of the installed capacity.

Commercial Section

British Trade & Cultural Office
9F, 99 Jen-Ai Rd Sec.2, Taipei
Tel: 886 2 2192 7008
Fax: 886 2 2394 8673

January 2005

LIST OF CONTACTS

Taiwan Power Company

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 2365 8000
Fax: +886 2 2368 8005
Contact: Mr C. C. Lin, Chairman

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 2365 8001
Fax: +886 2 2369 7470
Contact: Mr Edward Chen, President

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 2365 1234 ext. 6247
Fax: +886 2 2365 0816
Contact: Mr K. C. Lee, Vice President for Production Dept and System Operation
Dept.

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 2365 1234 ext. 6253
Fax: +886 2 2365 0816
Contact: Mr S. K. Lee, Vice President for Design & Construction Dept. and Dept. of
Nuclear & Fossil Power Projects

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 2365 1234 ext. 6243
Fax: +886 2 2365 0816
Contact: Mr K. M. Chen, Vice President for Finance Dept. & Supply Dept.

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2365 1234 ext. 6251
Fax: +886 2365 0816
Contact: Mr M. T. Tsai, Vice President for Nuclear Operation Dept. & Nuclear Safety
Dept.

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2365 1234 ext. 6249
Fax: +886 2365 0816
Contact: Mr C. T. Lee, Vice President for Safety & Health Dept. & Personnel Dept.

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 2365 1234 ext. 6255
Fax: +886 2 2365 0816
Contact: Mr M. L. Lee, Vice President for Business Dept. & Information System
Dept.

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 2365 1234 ext. 6245
Fax: +886 2 2365 0816
Contact: Mr T. H. Lee, Vice President for Power Supply & System Planning Dept.

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 2367 7967
Fax: +886 2 2367 1675
Contact: Mr Victor Y. C. Laio, Chief for Nuclear Engineering Dept.

242 Roosevelt Rd., Sec. 3, Taipei
Tel: +886 2 322 9401
Fax: +886 2 2391 0281
Contact: Mr S. C. Huang, Chief for Dept. of Nuclear & Fossil Power Projects

Bureau of Energy, MOEA
13F, 2 Fuhsiung N. Rd., Taipei
Tel: +886 2 2772 1370
Fax: +886 2 2776 9417
Contact: Mr H. C. Yeh, Executive Secretary

Atomic Energy Council, Executive Yuan
No. 80, Cheng Kung Rd., Sec. 1, Taipei
Tel: +886 2 2232 2000
Fax: +886 2 8231 7800
Contact: Mr Ming-sheng Ou Yang, Chairman