The Energy Committee membership consists of industrial energy users, producers, and other related industry participants. Created last year, the Committee seeks to work with the Taiwan government on energy issues in a collaborative manner with the objective of assuring that everyone in Taiwan benefits from a well-conceived national energy roadmap.
The main objectives of the Committee are to: (1) work closely with government agencies to ensure that Taiwan’s power supply remains stable, reliable, and competitively priced; and (2) facilitate energy-project development in order to advance the mutual interests of energy consumers and producers alike.
The same concerns and issues that were set out in our 2017 White Paper are even more relevant today. Events that have transpired since last year’s White Paper was issued add to the urgency of the need for Taiwan to have stable, reliable, and competitively priced energy available. Accordingly, the suggestions and themes set out this year mirror and augment the two suggestions and recommendations from our 2017 paper.
Stable and reliable power supply is essential to the public as a whole, high-technology companies, and other industrial users. Unreliable or overly costly power supply is not only likely to damage or restrict industrial energy users’ manufacturing activities, but also to hamper Taiwan’s overall economic growth. Power cuts, as well as power dips (voltage drops) of just a fraction of a second, could result in significant asset damage and production losses for high-tech industries.
More importantly, energy independence is a matter of national security. The government must therefore devise a robust roadmap and timeline for a clear and feasible energy strategy to meet the country’s future energy consumption needs.
Suggestion 1: Ensure continued power-supply adequacy, security, reliability, and cost competitiveness.
Our specific recommendations this year build upon those from 2017 and are as follows:
A. Enlist outside experts and develop a National Energy Plan. The Committee urges the government to gather advice from energy experts and other outside professionals for the formulation of a clear, feasible, and executable energy plan. The Plan should be formulated, reviewed, and formally adopted at a national security level, above the level of individual government stakeholder agencies which may have differing priorities that could inhibit progress. The energy issue should be addressed holistically by gathering a group of professionals and experts in each sector to carefully analyze, review, and finalize a feasible long-term plan. To ensure that Taiwan’s power supply is adequate and secure, we suggest that preparation of the National Energy Plan include at least the following steps:
Assess the risks of increasing the portion of liquefied natural gas (LNG) to 50%, as the importation of LNG might be negatively impacted by bad weather and military blockades.
Construct and bring the planned LNG receiving terminals online in a timely manner to ensure sufficient storage facilities to feed the planned combine-cycle power projects.
Fulfill the commitment to build wind and solar power-generation facilities sufficient for renewable energy to account for 20% of the total.
Ensure that adequate back-up capacity and reserve margin of base generation is in place to avoid the risk of seasonal power shortages or weather influences affecting the planned 20% renewable energy portion, which is naturally unstable.
Develop contingency plans (for example, retain the ability to have certain nuclear power units remain available) in case the planned construction program does not progress according to plan, or that national security or emergency events occur during the transition to the 2025 nuclear-free energy scenario and beyond.
Address air pollution issues (PM2.5, SO2, NOX, heavy metals, etc.) resulting from fossil-fuel power generation in view of potential public health problems and higher costs of medical care.
Balance the management of carbon dioxide (CO2) emissions from fossil-fuel power plants and Taiwan’s obligation to support global warming abatement.
Ensure safe power transmission and distribution (power grid safety).
Locate power-generation facilities across the whole island to minimize risks from power distribution and allow each region to regulate controls over total emissions.
Ensure that the Taiwan Power Co. (Taipower) continues to invest to improve its power supply reliability and quality.
B. Create an Energy Task Force and czar. As the planning, generation, supply and distribution of energy involves a variety of central-government agencies plus municipal governments, the Committee urges the government to appoint an Energy Task Force headed by a professional and highly capable “Energy Czar” with sufficient authority to oversee and manage the implementation of energy policies and coordinate the work of different agencies. This Energy Task Force and czar should report directly to the Premier and seek guidance from the President in terms of National Security concerns to ensure the necessary authority to clear hurdles and drive the energy program forward. It would be the primary government body to implement the National Energy Plan.
C. Develop a robust implementation roadmap. As part of its mandate, the Energy Task Force should develop a comprehensive implementation roadmap to reflect the agreed-upon activities required to support the National Energy Plan in ensuring adequate, reliable, and cost-competitive sources of energy. Taiwan is entering a period of increasing uncertainty regarding the cost and reliability of its energy supply and needs a consolidated roadmap for managing the transition in an orderly way. Although the Committee supports the utilization of renewable energy sources like wind and solar, experience in other markets has shown that transitioning too quickly toward renewable energy places significant upward pressure on energy costs, which is a concern for large power users and could detrimentally affect Taiwan’s ability to promote industrial investment from both foreign and domestic sources. The roadmap should coordinate and manage the progress of the needed actions and activities across all the relevant government and private-sector stakeholders.
D. Stay the course. The benefit of a well-planned roadmap is that it sets out a clear path to achieving the energy goals in a structured and time-phased manner. It also assumes that the plan has received the needed approvals and support from all relevant stakeholders (government agencies, private sector, and state enterprises). As a result, once the Energy Plan and roadmap are approved, any deviations should be minimized. Government must of course consider public opinion, but it needs to be firm in executing the plan. It also needs to recognize that opposition opinions or protests are inevitable throughout the program. The Energy Task Force’s mandate should also include ensuring that opposition and protests are taken seriously but in an expeditious manner so as not to delay the plan.
E. Offer competitive energy prices and broader energy-saving incentives. Energy-intensive industries are directly exposed to competition from neighboring countries with better energy cost structures. Since competitive energy prices will enhance overall global competitiveness, Taiwan will need to offer broader energy-saving incentives, such as more flexible demand-response programs, tax incentives for investment on energy-efficient equipment and appliances, inducements for industry to shift production to off-peak hours and adopt other energy-saving schemes, etc.
Suggestion 2: Facilitate the development of energy projects by clarifying and modifying government procedures, expediting infrastructure build-up, and fostering a domestic supply chain.
The government has put forward an ambitious policy to transform Taiwan’s energy mix, with the goal that by 2025 power generation will be fueled 50% by LNG, 30% by coal, and 20% by renewable sources, chiefly wind and solar. Meeting the government’s targets will require unimpeded progress on a broad range of new energy projects. Our specific recommendations this year for achieving that goal build upon those from 2017 and are as follows:
A. Incorporate greater flexibility in the government procurement process. Project owners should allow innovative approaches to be submitted and not set proscriptive specifications that exclude innovative or emerging technologies or approaches that could result in more efficient projects and improved delivery schedules.
B. Foster more public-private partnerships (PPP). To help drive innovation, the government should consider undertaking more PPP opportunities to expand the development of energy-related projects. In other countries, the private sector plays a key role in the development of infrastructure projects such as power-generation plants. In Taiwan, those opportunities are limited. More such opportunities should be considered, with an appropriate tariff and concession period provided to attract private developers. Additionally, efforts should be made to streamline the regulatory process to support the timely completion of public-private development projects. This aspect is another area that should come under the authority of the Energy Task Force, so as to ensure delivery of the PPP projects in accordance with the National Energy Plan and roadmap.
The Energy Committee is eager to engage with the government, providing its support in the constructive development and achievement of Taiwan’s energy policies and plan in order to ensure a continued supply of sufficient, reliable, and cost-competitive energy to the country.