Major Amendments to the Taiwan Electricity Act (2017)
January 16, 2017
Electricity Act amendments (January 2017)
1. General Comments
In Taiwan, the Electricity Act was revised and went to effect on Jan. 11,2017. More than 84 percent of the act has not been changed for 50 years. The amendment this year is a huge progress in the Electricity Act.
Developing “green” energy sources and transforming Taiwan’s existing energy model are top policy priorities in the government’s quest to fully implement the Basic Environment Act. The government hopes Taiwan can achieve energy diversification and autonomy that is environmentally friendly and sustainable, while protecting livelihoods, end users, and the development of innovative industries. That means becoming a nuclear-free country by 2025, and achieving the goals by reducing greenhouse gas emissions to 50 percent below 2005 levels by the year 2050.
These amendments open up the generation, direct sales and supply functions for green energy, including solar and wind power, while establishing a market for diversified energy sources that supports the development of green energy industries without requiring rate adjustments. The Ministry of Economic Affairs formulated a two-stage plan to amend the Electricity Act. First-stage (within1~2.5 years) amendments promote liberalization of the green energy market and open access to the power generation and merchandising. Second-stage (6~9 years) amendments will follow after first-stage operational schemes and mechanisms have matured. The government hopes that step-by-step power industry reform and transformation of the domestic energy model will gradually lead to complete power industry liberalization, while also promoting the development of Taiwan’s green industries.
2. Key amendments
Separate the electrical industry into three parts and manage them individually: In the past, state-owned Taiwan Power Company (Taipower) monopolized the electrical market for a long period of time, which generates and sells electricity on its own. Now, the government divides the industry into three parts, including electricity Generation, Transmission and Distribution, Merchandising.
Generation and Merchandising: Allow sales of to users via wheeling (through Taipower), direct supply, and renewable energy sales firms. It will give users freedom of choice, and allow them to purchase power from public power sales, renewable energy generation, and renewable energy sales enterprises. But for traditional provider of electricity like gas-fired or petroleum-fired industry, they can only sell to Taipower.
Transmission and distribution: Taipower company is the only company that can transmit and distribute electricity for the purpose of ensuring stability of supply.
The government is not fully liberalizing the whole electrical industry. It takes relatively partial and conservative actions.
Split the ownership of Taipower: Within the following 6~9 years (the second stage), Taipower will be transformed into a parent company, with one subsidiary in charge of power generation and another responsible for electricity transmission, distribution and sale.
Diversifying supply: Communities, water conservancy associations, agricultural groups, county and municipal governments, and renewable energy vendors will be allowed to jointly establish renewable energy enterprises, creating a localized, decentralized, community-based electricity industry.
Designate a regulatory agency: The MOEA will designate a regulatory agency to manage and supervise the market. The agency then will establish three committee in charge of electrical power, stipulating that electricity rates charged by public power sales enterprises be subject to regulatory controls, grant electrical license, and establish an energy price stabilization fund to minimize price volatility.
Carbon emission controls: In the amendment, it regulates the carbon emission from electricity generation. They calculate the amount of CO2 emitted per unit of electricity. The proportion of emission standard is set up as follows: 30% for coal-fired power plant, 50% for gas-fired power plant, and 20% for renewable energy. Among them, the carbon emission of coal-fired power is the highest and the emission of renewable energy is almost zero. In such case, the generation from gas-fired power and renewable energy must be elevated so as to fit in the standard by the government.
Reserve Margin: The government regulates a compulsory percentage of electricity for reserve margin. It means a reserving capacity of power in the need of urgent or additional use. To encourage the development of green energy, green energy power plants only need to provide reserve margin after reaching an amount of industrial scale.
Electricity trade platform: After the division work of power grid (within 6~9 years), the platform for electricity trade should be set up to fully disclose trading information, protect the transparency of trade and achieve a fair trade.
For price stabilization: When the prices of international fuels fluctuate dramatically, the fund can be used to stabilize electricity prices. The source of funding money comes from government, electricity industry, private companies, and so on.
For decommissioning nuclear plants: In order to achieve the non-nuclear goal by 2025, the government set up a fund to decommission the existing three nuclear plants.
Rise in penalty: The government is stricter to those who doesn’t comply with the Electricity Law. The amount of the penalty depends on the seriousness of breaking the law. The highest amount can reach to NTD 2.5 million.