A legislator recently asked the government: If there is no “power shortage” as the government says, why does it have to purchase electricity from the private sector? Why does Taiwan Power Co (Taipower) offer private companies as much as NT$10 per kilowatt-hour? Why are energy bills increasing?
In the American Chamber of Commerce in Taiwan’s AmCham Taiwan White Paper this year, it acknowledges the government’s commitment to green energy, but added that emulating the US’ energy policy would give Taiwan a performance boost.
Former US secretary of energy Steven Chu (朱棣文), a Nobel laureate, in 2009 said that reducing peaks in demand is paramount, as 10 percent of generation assets are needed less than 5 percent of the time.
In the Energy Policy Act of 2005, the US Congress ordered the US Federal Energy Regulatory Commission to assess demand response capacity — namely the purchase of electricity from the private sector — and to make an annual report. This amount, including all of the energy accessible for different types of users, reached 30 gigawatts in 2020, or about the net capacity of 30 nuclear generating units.
Aside from power outages in extreme weather, foreign investors do not expect the US to face long-term power shortages due to its policy of purchasing energy from private companies.
Deputy Minister of Economic Affairs Tseng Wen-sheng (曾文生), who is Taipower’s interim chairman, said that Taiwan is not facing a power shortage, while Taiwan Semiconductor Manufacturing Co chairman Mark Liu (劉德音) has said: “We can only believe the government when it says we have enough energy.”
In advanced economies, agencies responsible for providing stable power supply assess reliability across a range of load scenarios, taking into account demand forecasts, current and planned sources of energy and the condition of equipment on the power grid.
If reliability standards are not met, independent power units assess energy prices, and seek sources to be able to meet demand, which bolsters reliability. Taiwan’s power reliability stands at 999, with outages occurring at a rate of less than 0.1 percent.
There are three main categories of outages: Planned outages to install equipment or conduct maintenance; sudden outages, ie, due to accidents; and supply shortages caused by construction delays or to facilitate long-term planning.
This means that shortages lead to outages, but outages are not necessarily because of shortages.
If there is an outage without advanced notice to the public, it affects society to a great extent — especially if it lasts a long time — so power grid resilience is of utmost importance.
Operational stability must account for economic and security considerations. Purchasing energy from the private sector helps to lower the loads major units have to bear, which might keep them from tripping and causing an outage.
Taiwan once had 10 percent of its power generation capacity used less than 3 percent of the time, but as people have resisted power facilities being built in their communities — and amid a situation of equipment sitting idle much of the time or operating on a long-term, but low-efficiency basis — purchasing power from the private sector for NT$10 per kilowatt-hour is not unreasonable at all given the cost of maintenance and fuel, as well as the environmental impact of generating that power during peak times.
Lu Chan-nan is a professor in National Sun Yat-sen University’s Electrical Engineering Department and a former president of the Taiwan Power and Energy Engineering Association.
Translated by Rita Wang
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