The 12 months since the 2021 Taiwan White Paper was published have been challenging for Taiwan’s energy sector. Two country-wide power outages in May 2021 – the first triggered by equipment failure at the Hsinta Power Plant and the second a week later by a spike in energy demand – raised further questions about the resiliency of Taiwan’s power network. These questions resurfaced in March 2022 when another malfunction at Hsinta triggered rolling blackouts, affecting over 5 million households and businesses. It should come as no surprise that in AmCham’s 2022 Business Climate Survey, energy supply issues were identified as the highest priority for government action, and members expressed particular concern about power supply sufficiency and Taiwan’s progress in developing renewable energy.
The major outages occurred at an early stage of Taiwan’s ambitious energy transition plans, a process that risks increasing grid instability as coal and nuclear baseload capacity are progressively reduced. The Committee was pleased that the December 2021 referendum cleared the way for development of CPC Taiwan Corp.’s much-needed third Liquefied Natural Gas (LNG) terminal. However, the addition of new offshore wind, solar, and gas facilities to the energy mix has been severely delayed, in part due to COVID- 19-related issues. Meanwhile, Taiwan’s electricity demand, fueled by brisk economic growth, is expected to grow by 2.5% annually until 2027, according to the Bureau of Energy (BOE). The Committee’s view is that rapid and robust action is required to address the intertwined issues of grid resiliency and supply/demand margin.
The Committee welcomes the intention to reorganize the Ministry of Economic Affairs (MOEA) as the Ministry of Economic Affairs and Energy and hopes that this restructuring will lead to greater high-level focus on energy matters, with the ministry acting as the single point of authority and accountability within the government for the energy sector. But such a reorganization is merely the start of addressing the many challenges ahead, and the Committee is clear that a “business as usual” approach will not be sufficient to meet Taiwan’s short- to medium-term energy needs.
Looking further ahead, the Committee welcomes the Taiwan government’s renewed commitment to achieving carbon neutrality by 2050 and the publication of its roadmap to 2050. We also welcome President Tsai Ing-wen’s ambition to strengthen public and private cooperation in the energy sector as part of the four key goals for achieving the 2050 net-zero target.
The Committee recognizes that Taiwan faces unique challenges in achieving decarbonization of its power sector while maintaining reliable and affordable electricity supplies. We look forward to deepening our interactions with the BOE and other relevant government authorities to support them in the journey toward decarbonization. Many Committee members have world-leading expertise in the full range of technologies that are likely to play a part in achieving Taiwan’s 2050 goal, including carbon capture storage and use, battery storage, carbon-free fuels such as hydrogen and ammonia, further expansion of renewables, and pumped hydro storage.
This year’s paper includes forward-looking suggestions in four critical areas for Taiwan’s future energy needs: grid stability, regulatory barriers to renewable energy development, rapid expansion of LNG to power capacity, and decarbonization.
Suggestion 1: Build a resilient power grid to sustain Taiwan’s energy transition.
The Committee is committed to supporting Taiwan in maintaining reliable power supplies as it transitions to more sustainable electricity generation. Fundamental to this change is investing in a more resilient power grid to enable further development of renewable energy. To achieve this goal, the Committee suggests the following measures:
1.1 Accelerate grid infrastructure upgrades and promote load-balancing technologies with suitable incentives.
Such technologies include battery energy storage systems (BESS), the adoption of which can be incentivized through feed-in tariffs, and smart energy management systems, potential incentives for which include tax relief or build-operate-transfer (BOT) types of arrangements. The Committee proposes that Taiwan consider accelerating the adoption of hybrid renewable energy solutions that combine BESS with clean energy. In addition to alleviating the challenges of deploying intermittent renewable energy sources, BESS deployment can ease potential investor concerns regarding generation curtailment in the event of excess power beyond the corporate buyers’ actual consumption – an issue expected to arise in connection with the influx of offshore wind energy to the grid beyond 2026.
1.2 Establish a reserve capacity market and pricing mechanism.
The Committee believes Taiwan needs a long-term power development plan incorporating various stakeholders’ needs for energy as it moves toward net-zero. This plan would not only address grid stability but would also have a profound impact on the
corporate PPA market for green energy. Under the current regulations, Independent Power Producers (IPPs) selling renewable energy (>5MW) to corporate buyers need to provide “reserve capacity” to the Taiwan Power Co. (Taipower), which may be through the procurement of such capacity. However, there is no established market or pricing mechanism for reserve capacity in Taiwan. The lack of such a market and limited visibility of Taipower- maintained inputs to the reserve capacity calculation will increase the cost of clean energy and make it more difficult, especially for Taiwan’s SMEs, to access competitively priced green energy.
Suggestion 2: Remove regulatory barriers hindering Taiwan’s renewable energy development.
Despite inclusion of the issue in the last two White Papers, little progress has been made in streamlining the regulatory approval process for new energy projects. For example, it took on average six months for recent offshore wind energy projects to obtain an Electrical Enterprise License (EEL), a critical permit to trigger revenue streams. The Committee urges Taiwan to improve the efficiency of the review process, in particular by eliminating unnecessary processes like re-verifying third-party technical certifications. In addition to shortening the EEL permitting procedure, we urge the following policy directions to help expedite Taiwan’s development of offshore wind energy:
2.1 Adhere to international standards to enable Taiwan to become a regional center for renewable energy technology and services.
After many years of effort, the Bureau of Standards, Metrology and Inspection (BSMI) has announced new offshore wind farm certification measures for Taiwan in three major areas: site survey and design, manufacturing and construction, and operations and maintenance. The Committee understands Taiwan’s ambition to develop local capacity in this new industry sector.
However, when globally applicable certification standards are already available, including DNV and EU certification measures, creating separate Taiwanese specification standards will increase market entry barriers and deter technology innovation. To prevent difficulties in acquiring permits due to diverse technical specification review procedures, the Committee urges BSMI to communicate extensively with experts, scholars, and industry to reconsider the necessity of introducing unproven technical specifications that would pose significant additional risks to the projects.
The Committee also urges the authorities to ensure that Taiwan’s regulations and policy directives on environmental, social, and governance (ESG) principles for finance and investment are fully aligned with relevant internationally accepted guidelines and standards. We welcome the recent efforts the Financial Supervisory Commission (FSC) to draft a Taiwan Sustainability Taxonomy and encourage the FSC to expand the Taxonomy to cover activities in the ICT and energy industries.
2.2 Establish an integrated permitting process and a clear and transparent stakeholder management mechanism to maximize offshore wind energy development.
Currently, the permitting processes for offshore wind projects involve the Environment Protection Administration, Ministry of the Interior, and Ocean Conservation Administration. Consistent standards in line with international norms should be adopted during each permitting process instead of accepting ad hoc requests from review panel members, a practice that will only increase the burden of the government, financing agencies, and developers. The Committee suggests that the government establish an integrated permitting mechanism where one government agency and/or mechanism is responsible for all offshore-related permits. While settling fishery compensation claims is one of the regulatory requirements for offshore wind projects at the development phase, the Committee strongly suggests that the government introduce a clear, rapid, and transparent mechanism or formula for dispute resolution to prevent excessive and unreasonable claims from delaying offshore wind energy development.
2.3 Invest in advanced planning and construction of fundamental infrastructure and utilities for renewable energy industry growth.
The inadequacy of infrastructure for offshore wind project development is most apparent in the Port of Taichung. As construction on most projects takes place this year, insufficient dock spaces and bridge and road loading capacity for the transport of large and heavy components have become obvious and urgent issues that need to be addressed. To enable the offshore wind industry to maximize its role in Taiwan’s energy transition, the Committee urges the government to invest in critical supporting infrastructure, such as port facilities. Further details on this suggestion are addressed in the Infrastructure and Engineering section of the White Paper.
Suggestion 3: Expand natural gas usage to ensure a successful energy transition.
The Committee continues to believe that development of gas power in place of coal is an essential step toward ensuring rapid and substantial progress in cutting carbon emissions. Expanding the use of natural gas needs to be undertaken in parallel with the advancement of technologies for low or near zero-carbon power generation. As the government prepares for a low-carbon future, it is equally important to ensure a sufficient, affordable, and reliable energy supply, which is critical not only for Taiwan’s economy but also the world’s tech supply chain.
Given the time needed to build renewables and implement energy efficiency improvements, gas-to-power represents an efficient solution for emissions reduction and ensuring reliable power supply. Gas power plants can come online quickly, and their power output levels can be adjusted up or down to balance supply and demand as needed. This flexibility is critical to maintaining grid stability as more non-dispatchable wind and solar resources are deployed.
The Committee acknowledges and applauds the government’s efforts to increase the use of natural gas to 50% by 2025. However, the current LNG demand of the fleet of combined cycle gas turbine (CCGT) plants is already close to exceeding the capacity of CPC’s existing LNG import terminals at Yung-An and Taichung. While CPC and Taipower are working on expanding and building their respective LNG import terminals, putting too much pressure on certain terminals might introduce fragility to the overall gas supply system. The Committee therefore recommends that the government expedite efforts to expand LNG and natural gas infrastructure and consider enabling larger LNG carriers to dock.
The Committee also urges the government to revisit its power development plan, particularly the development of IPPs. In recent years, the complexity of environmental issues has represented a major hurdle for the industry. We believe the government would benefit from reviewing the challenges of current market engagement and providing IPPs with a clearer and more transparent path to successful delivery. A clear roadmap could also allow and encourage international developers to invest in Taiwan’s energy market.
Suggestion 4: Accelerate the development of all decarbonization technologies to help achieve Taiwan’s 2050 net-zero emissions goal.
To enable Taiwan to meet its new 2050 net-zero emissions target while ensuring reliable and competitively priced energy, the Committee believes that deployment of decarbonization technologies such as carbon capture and storage, hydrogen, and low-emission fuels should be accelerated. As a critical first step, the Committee suggests Taiwan put in place a supportive policy and regulatory/legal framework enabling these technologies to compete on a level playing field. This may include but is not limited to:
Providing sustained, long-term government support to activate carbon-pricing mechanisms, and the research, development, and deployment of all decarbonization technologies.
Expanding existing incentives, policies, and targets for renewable energy to other decarbonization technologies, such as carbon capture and storage, hydrogen, and low-emission fuels.
The Committee believes that the deployment of such decarbonization technologies requires relevant stakeholders from industry, academia, government, and, most importantly, local communities, to jointly proceed in a coordinated and timely manner to address policy, regulatory, technical, commercial, and community issues. The Committee hopes to see a more active approach by the government in cultivating industry alliances and facilitating open dialogue among parties.
本委員會感謝並讚賞台灣政府將天然氣使用量至2025年提高到50%所做的努力。然而，現行複循環燃氣渦輪（Combined Cycle Gas Turbine, CCGT）電廠機組的液化天然氣需求幾乎已經超過了中油集團現有在永安和台中液化天然氣接收站的容量。儘管中油和台電正在努力擴大和建設各自的液化天然氣接收站，但某些接受站因承受太大壓力而導致整個供氣系統變得脆弱的風險依然存在。因此，本委員會建議台灣政府應盡速擴大建設液化天然氣和天然氣基礎設施，並考量如何讓更大型的液化天然氣運輸船得以進港停靠。