Open Energy

 Author / Energy System Analysis Research Group, RSPRC, National Taiwan University

 

1. Energy consumption trends in Taiwan

• Taiwan's energy consumption reached a new high of 86.83 million KLOE in 2018. This represented an increase of 1.83% from 2017, which is higher than the average annual increase of 0.91% over the last five years (2012-2017).^[1] The growth came mainly from the non-energy use sector,^[2]  namely in the refining of petrochemical raw materials, which contributed to as much as 79% of the growth of the national energy consumption in 2018. In addition, the energy intensity in 2018 is 5.16 LOE/Thousand NT$, which is a slight improvement of 1.1% from the previous year, but this is still lower than the average annual improvement of more than 2% over the last few years (Bureau of Energy, 2019a).
• Other than the non-energy use, industrial sector, and the energy sector's own energy consumption, the energy consumption of the rest of the sectors in 2018 was lower than it was in 2017, among which the transportation and agricultural sectors saw the greatest decline in energy consumption. In terms of the sectors that showed the greatest declines in their contributions to the growth in the energy consumption, the transportation and residential sectors made the greatest impact (refer to Table 1) (Bureau of Energy, 2019b).^[3]
• Industrial sector: The energy consumption in this sector increased by 0.71% from the previous year.
  • The energy consumption of non-metallic mineral products manufacturing dropped sharply (-14.62%), while that of plastic products manufacturing declined slightly (-0.82%). However, energy consumption in the other industries has seen a growth trend, among which the energy consumption of pulp, paper and paper products manufacturing grew the fastest, by 5.72% from the previous year, followed by basic metal production (3.29%) and chemical material manufacturing (2.51%) (Bureau of Energy, 2019c).
  • In terms of the contribution to the growth in energy consumption, the chemical material manufacturing and basic metal industry were the main growth drivers in 2018, with the growth in the energy consumption of the two industries completely offsetting the reduction in energy consumption from non-metallic mineral products manufacturing. One reason for this is that fractional distillation plants for light crude oil were inaugurated at Taiwan's major refineries at the start of the year, which resulted in an increase in the petroleum naphtha produced and thereby increased the capacity of downstream chemical material manufacturing. In addition, the stable international steel prices in the steel industry also spurred the demand for steel products, and due to the annual maintenance of the blast furnaces and hot rolling production lines at the major steel plants during the same period last year, this resulted in a shorter base period for comparison, which thus increased the growth rate. As for the Computer peripherals and audiovisual electric products manufacturing industry (hereinafter referred to as the "electronics industry"), the energy consumption grew by an average of 4% over the last 10 years but dropped to 1.62% in 2018, which may be due to the reduced domestic production of mobile device lenses and lower demand for small- and medium-sized LCD panels, thereby offsetting part of the growth (Bureau of Energy, 2019d; 2019c).
  • A closer look at the industrial sector by its energy consumption shows that, as with 2016 and 2017, the consumption of both coal and petroleum products fell in 2018, to a record low over the past five years, while the consumption of natural gas and electricity reached record highs, which provides evidence of a shift in energy use to natural gas and electricity in the industrial sector (Bureau of Energy, 2019e).

• Service sector: The energy consumption in this sector decreased slightly by 0.6% from the previous year, with the energy consumption of the "business service," and the "storage and warehousing industry" seeing the highest growth, while the "hotels and restaurants industry," and "public administration" saw the greatest decline (Bureau of Energy, 2019f).

• Transportation sector: The energy consumption in this sector decreased by 1.84% from the previous year, which can be mainly attributed to highway energy consumption, which saw a significant decline in motor gasoline (Bureau of Energy, 2019g).

               

Table 1. Change in energy consumption and growth contribution to energy consumption by sector, in 2018

Source: Bureau of Energy (2019b), compiled by the research group.

 

2. The power generation structure and proportion of renewable energy generation by types in Taiwan in 2018

• The proportions of coal-fired and LNG-fired power generation are roughly the same as that of 2017, which are 46.3% and 34.6% respectively. The main reason why the proportion of LNG-fired generation did not further increase is that the capacity of existing natural gas receiving stations is saturated. The proportion of nuclear power has risen to 10.12% from 8.3% of 2017, mainly because the Second Nuclear Power Plant's No. 2 reactor was reactivated in June after being overhauled in 2016 and undergoing Atomic Energy Council's review and Taiwan Power Company's grid connection test in 2018 (refer to Figure 1) (Bureau of Energy, 2019h).
• The proportion of renewable energy generation increased slightly to 4.7%. The main reason is that hydroelectric power generation has decreased by 18% from the previous year, although solar PV power generation has increased by 60%, the overall growth of renewable energy generation is limited. According to the original plan, the proportion of renewable energy should have reached 6.7% and the power generated should have reached 18 billion kWh by 2018, however, there is a 30% discrepancy between the actual and the target values (Bureau of Energy, 2019h).
• According to the Ministry of Economic Affairs (2018a), the planned capacity of deployed solar PV should have reached 3000.16MW by 2018, however, the actual installed capacity is 2738.1MW up until December of 2018, which is an achieving rate of 91.3% (Bureau of Energy, 2019i). While according to Taiwan Power Company (2018), the installed capacity of solar PV facilities under review is around 3.5GW as of December of 2018. If such facilities can be successfully reviewed and connected to the grid, it can be expected that the target installed capacity of 2019 will be reached. The planned capacity of wind power (onshore + offshore) is 921.09MW, but the actual value is not as expected (704MW, an achieving rate of around 76%). The possible reasons are complicated administrative regulations and offshore construction operations, results of local elections and referendums in the end of November, and dwindling confidence of wind farm developers caused by the draft feed-in tariff rate announced in December.

 

Figure 1. The power generation structure and proportion of renewable energy generation by types in Taiwan in 2018

Source: Bureau of Energy (2019h), prepared by the research group.

 

3. Trends of electricity consumption and its peak load in Taiwan

• The electricity consumption in 2018 has shown a growing trend with national consumption of 264.39 billion kWh, the growth rate of electricity consumption was 1.15%. Although the growth rate was lower than the previous two years (Bureau of Energy, 2019j), the electricity consumption is approaching the consumption goal (265.71 billion kWh) of 2025 set by the Ministry of Economic Affair (2018a), which is not conducive to the achievement of energy transition and greenhouse gas reduction goals.
• Except for residential sector, the electricity consumption of each sector all increased in 2018, among which the electricity consumption of agricultural sector and industrial sector grew the most, and the growth rate decreased to less than 1% for the electricity consumption of transportation sector and service sector. Residential sector's growth rate of electricity consumption has been continuously decreasing since 2016, and recorded a negative growth rate (-1.11%) in 2018. In terms of the contribution to the growth in electricity consumption, the Industrial sector is still the main source of contribution for the growth (Bureau of Energy, 2019j) (refer to Table 2).

 

Table 2. Growth rate of electricity consumption and growth contribution of total electricity consumption by sector in 2018 (The minus sign indicates reduction)

Source: Bureau of Energy (2019b; 2019j), prepared by the research group.

 

• Industrial sector:
  • The growth rate of electricity consumption was 2.14% in 2018, mainly because the electricity consumption of the major industrial users with contract capacities higher than 800KW increased. In particular, the electricity consumption of users in Taichung and Kaohsiung increased by 5.85% and 2.27%, which contributed the most for the growth. It is worth noting that, in Kaohsiung City, in addition to the growth of electricity consumption of major industrial users, the electricity consumption of industrial users with contract capacities less than 800KW is also high (7.82%), showing the largest growth rate of any locality in Taiwan. This is presumably because the basic metal industry, metal products manufacturing industry and chemical material manufacturing industry located in Kaohsiung drove the growth of electricity consumption (Industrial Technology Research Institute, 2019a; Bureau of Energy, 2019k).
  • If we look into the electricity consumption of each industry, we may find that it decreased in "textile, wearing apparel and accessories industry," "plastic products manufacturing industry" and "non-metallic mineral products manufacturing industry," and it increased in the rest industries. In terms of growth contribution to the industrial sector's electricity consumption, as in 2017, the electronics industry, basic metal industry and chemical material manufacturing contributed the most to the growth of electricity consumption (Bureau of Energy, 2018k) (refer to Figure 2).
  • According to the research of Industrial Technology Research Institute (2019b), for the six major energy-intensive industries (electronics, petrochemical, steel, cement, textile, and pulp and paper industry), production processes accounted for 58% of electricity consumption, while utility equipment accounted for 42% in 2016. In particular, air conditioner and air compressor are major sources of electricity consumption of utility equipment. The growth of Industrial sector's electricity consumption would be curbed if we replace old water chiller and air compressor and enhance the maintenance of existing equipment and power saving of industrial process. As the prices of energy have long been low and the payback period of equipment is long, enterprises are less willing to positively save energy. In order to spur industrial energy-saving and promote industrial transformation, it is required that the government develop regulative policy tools (e.g. regular review and update of mandatory energy efficiency regulations regarding the six major energy-intensive industries, or the implementation of energy tax) and provide financial incentives (e.g. accelerating the implementation of cap-and-trade system on greenhouse gas emissions).

 

 

Figure 2. Growth of electricity consumption of Industrial sector by subsectors, in 2018

Source: Bureau of Energy (2019k), prepared by the research group.

 

• Service sector:

• If the electricity consumption of government agencies is included, then the growth rate is 0.44%;^[4]  If the electricity consumption of government agencies is excluded, the growth rate would be around 1.1%, which is similar to that of 2017. This shows that public sector still contributes the most for the reduction of electricity consumption in service sector. In particular, government agencies' flat rate lighting and the central government are the main sources of energy-saving (Bureau of Energy, 2019j; Industrial Technology Research Institute, 2019a).
• Major users with contract capacities higher than 800KW: The growth rate of electricity consumption is 0.3%, which is higher than that of 2017 (-0.2%), and Penghu County (102%), Nantou County (7.6%) and Yilan County (4.6%) have the highest growth rate of electricity consumption. In terms of growth contribution to electricity consumption, New Taipei City, Taoyuan City and Taichung City are the main contributors. The average electricity consumption of users increased, which led to the growth of electricity consumption in New Taipei City. Although the average electricity consumption of users in Taoyuan City and Taichung City is less than that of the previous year, the number of users increased, the overall electricity consumption in Taoyuan and Taichung City grew. (Industrial Technology Research Institute, 2019a).
• Users with contract capacities less than 800KW: The growth rate of electricity consumption is 1.1%. Around half of the counties and cities in Taiwan are showing growing trends of electricity consumption, among which Hsinchu County (5.5%), Yilan County (5.0%) and Changhua County (4.1%) have the largest growth rate, while the reduction rates of electricity consumption of Pingtung County (-2.7%), Lienchiang County (-1.9%) and Miaoli County (-1.0%) are the highest (Industrial Technology Research Institute, 2019a).
• Small businesses: The growth rate of electricity consumption is 1.7%. Except for Taipei City and Lienchiang County, the electricity consumption of small businesses in the rest localities are showing growing trends, among which Hsinchu County (4.6%), Taoyuan City (3.5%) and Chiayi County (3.4%) have the largest growth rate of electricity consumption (Industrial Technology Research Institute, 2019a).
• On the whole, the electricity consumption of service sector (excluding electricity consumption of government agencies) reduced the most in Lienchiang County (-4.1%), Pingtung County (-1.1%), Keelung City (-0.7%) and Hsinchu City (-0.5%). In 2018, the electricity consumption's growth rate of the users with contract capacities higher than 800KW increased, while that of the rest users slightly lowered than that of 2017 (refer to Table 3). Although the central government had finalized in 2017 the plan to pour in 7.5 billion NT$ for the new power-saving initiative for a period of three years, providing funds to local governments for the promotion of power-saving. However, the local governments received the funds and officially launched the power-saving plan in around April or May of 2018; considering the diffusion time taken for related administrative procedures and announcement of subsidy for equipment, which reduced the time needed for some of the businesses to replace their old equipment, and thus impacted the power-saving efficiency of small- and medium-sized businesses in 2018. Therefore, it is expected that the benefits brought by the new power-saving initiative will become clearer in 2019 and 2020.

 

Table 3. Electricity consumption of Service sector (excluding electricity consumption of government agencies) in 2018

Source: Industrial Technology Research Institute (2019a), prepared by the research group.

 

Figure 3. Composition of electricity consumption growth (reduction) of Service sector by counties and cities, in 2018

Source: Taiwan Power Company (2019a), prepared by the research group.

 

• Residential sector: Residential sector's growth rate of electricity consumption has been dropping continuously since 2016 and recorded a negative growth rate (-1.11%) in 2018. This came mainly from the power-saving in Kaohsiung City, Taipei City, Pingtung County and Tainan City. Counties and Cities with the highest growth rate of electricity consumption are in order Hsinchu County (2.4%), Taoyuan City (1.8%) and Nantou County (1.8%). While the growth contribution to electricity consumption came mainly from Taoyuan City and Taichung City, which probably correlated with the increase in the number of households (Zhang et al. 2019).
• The average load of Taiwan Power Company system in 2018 was 29.933GW, i.e. a decrease of 2.37% from the previous year, while the speak load was 37.057 GW, representing 2.20 % growth rate from the previous year (Bureau of Energy, 2019l). According to Central Weather Bureau (2019), the annual average temperature was 24.2 degrees Celsius in 2018 (using the average of temperature data obtained from the 13 low-elevation stations as Taiwan's annual average temperature), which was slightly lower than that of 2016 and 2017, but still the fifth warmest on record in Taiwan. In May of 2018, the temperature has hit a record high since 1947. Due to the hot and sunny weather and the scarce rainfall throughout Taiwan, the cooling degree hours in May 2018 increased by 156.3 hours, i.e. a growth rate reaching 89.4%, and the amount of sold power during the month of May and June of the year has evidently increased as well. The lowest operating reserve of 2018 also happened in May (29 May), with an operating reserve rate of 2.89%. In addition to the grown consumption of electricity caused by the risen temperatures, some of the power generation units being under maintenance and not able to operate also contributed to the low operating reserve. Thanks to the prompt support of demand response bidding and solar PV, the former alleviated the load in May at maximum by 697 MW/per day, while solar PV generated approximately 1GW/per day (equivalent to the amount of electricity generation by one nuclear power unit), which was a remarkable contribution. All of the top ten highest electricity consumption in history happened during the period of June to September. However, the heat wave arrived in May of 2018, setting a new record of highest consumption of electricity in May, evidencing the impact of extreme weather driven by climate change.
• In June, upon the completion of overhaul and grid connection of many power generation units, the operating reserve rate has remained above 6% in the second half of 2018, coupled with the continuous promotion of demand response bidding measures, although on the day of highest consumption of electricity throughout Taiwan (1 August of 2018, with a peak load of 37.35 GW, higher than the load of 36.45GW happened on "the 815 Taiwan blackout" in 2017), the operating reserve rate still remained at 6.17% (Taiwan Power Company, 2019b). In mid to late August, the rainfall lasted longer in central and southern Taiwan and the weather became cooler, the cooling degree hours in September and October thus decreased by 170.5 hours from the previous year.
• The Taiwan government is now actively promoting the development of LNG-fired and renewable energy, in the hope that these will be the main source of power supply in the future. However, as US-China trade war is bringing Taiwan businesses home, which will drive the demand for electricity, and the greater frequency of heat waves caused by extreme weather, the government needs to carefully review and assess its management strategies for electricity consumption, and continue to positively promote the power-saving plans. For example, the reduced electricity consumption brought by the demand response measures reached 1.18 GW on 14 August of 2018, which is more than the amount of electricity generation by one nuclear power unit, showing that proper demand-side management may alleviate peak load, improve power system load, and reduce the stresses of power development.

 

4. Growing trends of electric vehicles in Transportation sector

• Motor automobiles (including large freight trucks, small freight trucks, large passenger vehicles, small passenger vehicles and special purpose vehicles):

• The number of newly registered automobiles in 2018 throughout Taiwan is 435,000, showing a negative annual growth rate (-2.1%). The reason may be that the policy of offering excise tax reduction on those trading in old motor vehicles for new models has implemented since 2016, which stimulated the auto market, and thus the base number became larger in 2017 (Directorate-General of Budget, Accounting and Statistics, 2019). It is worth noting that the annual growth rate of the number of newly registered large diesel freight trucks in 2018 is 32.98%, i.e. an increase of 8,629 trucks, which is higher than that of the last five years, while the overall number of large freight trucks decreased by 2,430 trucks from 2017. The reason may be the implementation of "14+N strategies of Air Pollution Control Act," which encourages the replacement of old large diesel vehicles by offering subsidies. Nevertheless, there is a significant discrepancy between the number of traded-in vehicles (approximately 11,000) and the target number (25,000) set by the Ministry of Transportation and Communication (2017a).^[5]
• In 2018, the number of newly registered small passenger vehicles is around 384,000, in particular, the number of small diesel passenger vehicles sharply dropped by -37% from the previous year; while the number of new hybrid electric vehicles has largely grown by 211.46%,^[6] i.e. an increase of 6,117 vehicles, however, whether the growth is brought by the schedule of electrification of vehicles announced by the Executive Yuan at the end of 2017 remains to be seen. The nonconventional fossil fuel vehicles (pure electric + hybrid electric vehicles) accounted for around 2.4% of new vehicles, equivalent to that of 2016 and 2017. Combining the vehicles that were newly registered, re-registered, scrapped, cancelled or handed in for cancellation for the calculation of the number of registered small passenger vehicles in 2018, one may find that the proportion of low-carbon fuel vehicles (natural gas vehicle, electric vehicle, and hybrid electric vehicle) has slightly grown to 1.7% from 1.6% of 2017 (in which the number of pure electric vehicles is 1,795), which is a minuscule proportion.
• According to the report "Green Technology Choices" of International Resource Panel (IRP) in 2017, from an overall assessment based on life cycle of products, promoting electric vehicles in countries with high GHG intensities of electricity, such as China, India and some Middle Eastern regions, does not help to reduce greenhouse gas.^[7] Nevertheless, according to the calculation of Taiwan's Industrial Development Bureau based on the reducing trend of proportion of coal-fired generation, the use of electric vehicles is actually more helpful in reducing greenhouse gas emissions than conventional fossil fuel vehicles. According to the Ministry of Transportation and Communication's "Personal-use small passenger vehicle utilization report"(2017b), more than 60% of drivers of personal-use small passenger vehicles are willing to purchase/trade-in their vehicles and use electric vehicles, and their top priority is "sound charging infrastructures." Taking into account the capability of local governments of managing land use and transportation, it requires the collaboration between central and local governments to install charging equipment for electric vehicles corresponding to local transportation patterns and geographic characteristics. Besides, expanding public procurement, eliminating the price differences between fossil fuel vehicles and electric vehicles (including purchase and use costs), integrated development of electric vehicles and vehicle-to-grid (V2G) and monitoring battery recycle and reuse mechanisms, should all be taken into consideration when formulating policies for electric vehicles (IEA, 2018).
• Motorbikes:

• The number of newly registered electric motorbikes in 2018 throughout Taiwan is 82,000, i.e. a growth rate of 87%, which is much higher than the growth rate of the number of newly registered conventional petrol and diesel motorbikes (-19.1%). Electric motorbikes accounted for 10% of new motorbikes, more than double the proportion in 2017. Combining the motorbikes that were newly registered, re-registered, scrapped, cancelled or handed in for cancellation for the calculation of the number of registered motorbikes in 2018, one may find that the number is approximately equivalent to that of 2017, however, the proportion of electric motorbikes has grown from 0.83% to 1.4%. This shows that the promotion of electric motorbikes has achieved certain results, yet the proportion remains minuscule. The combination of power supply station (whether it is for changing or charging batteries) deployment and urban planning will be the key to further promotion of electric motorbikes.
• The six municipalities still dominate in terms of the number of registered electric motorbikes, in order: Taoyuan City (38,720), New Taipei City (28,184), Kaohsiung City (27,110), Taichung City (23,060), Taipei City (19,689) and Tainan City (15,607).

 

5. Brief summary – Tracking the Progress of energy transition

　　In 2016, The new government has pledged to actively develop green energy and launch energy transition initiatives. However, in terms of energy transition, the measures for industrial, residential and commercial energy-saving, installation of smart electricity meters and promotion of electric vehicles should be taken into consideration. It requires the joint participation and promotion of public sector, industries and private sector, to drive the overall transformation of industry and society, and achieve long-term goals of energy transition and national carbon reduction. Table 4 below summarizes the annual progress in 2018 and related mid-term policy objectives, to examine whether the progress meets its targets (marked  green ), requires more efforts ( yellow ), or is behind schedule ( red ).

 

Table 4. Progress checklist of energy transition

Subjects checked	Current status in 2018	Policy Objectives[8]	Progress rating	Comment and analysis
Residential and commercial energy-saving	Growth rate of residential consumption of electricity is -1.11%; Growth rate of service industry's electricity consumption is 0.44%	The annual average growth rate of residential consumption of electricity should reach -1.01% during 2016 - 2020; the annual average growth rate of service industry's electricity consumption should reach 0.89%		The total cooling degree hours in 2018 is lower than it was in 2017, which helped to suppress the growth of residential and commercial consumption of electricity. However, the "residential and commercial power-saving initiative jointly promoted by counties and cities" launched in 2018 has been progressing slowly, which is not helpful in achieving the transition target of zero growth of residential and commercial consumption of electricity.
Industrial energy-saving (including non-energy use consumption)	Growth rate of energy is 0.71%, Growth rate of electricity consumption is 2.14%	The annual average growth rate of energy consumption should reach 0.18% during 2016 - 2020; the annual average growth rate of electricity consumption should reach 0.72%		According to the plans of the Ministry of Economic Affairs, the energy consumption necessary for petrochemical product manufacturing should not increase anymore, but it has largely increased by 5% last year, evidencing the need of structural adjustment to energy-intensive industries and management of energy efficiency to suppress the growth rate of energy and electricity consumption.
Smart electricity meters	230,000 smart electricity meters have been installed, and it is expected that the deployment of communication in 200,000 households will be completed by March 2019.	Complete 200,000 installations by 2018 and accumulatively 1 million by 2020.		Although the amount of installation has reached the goal, for the low-voltage users and small businesses paying time-of-use prices, only 65% of the target installation of smart electricity meter has been completed, plus the deployment of communication is not yet completed, the smart electricity meter policy is yet to fully exert its intended effects.
Solar PV	The installed capacity is 2738.1MW, and 2.733 billion kWh of power has been generated	The planned capacity to be achieved by 2018 is 3000.16W, while the generation target is 3.75 billion kWh		According to Taiwan Power Company (2018), the capacity of the reviewed but not contracted projects combined has reached 3.6GW. By accelerating administrative procedures, it is ensured that by 2019, the installed capacity of solar PV can reach 4.5GW and the power generation can reach 5.6 billion kWh.
Wind power (onshore + offshore)	The installed capacity is 704MW, and 1.679 billion kWh of power has been generated	The planned capacity to be achieved by 2018 is 737MW for onshore wind power and 184MW for offshore wind power, while the generation target is 2.449 billion kWh		In addition to offshore wind power, the Ministry of Economic Affairs also planned to develop onshore wind power which should reach the capacity of 1.2GW by 2025, but the installed capacity of onshore wind power did not continue to grow last year.
Coal-fired	The proportion of coal-fired generation is 46.3%	The original plan is to lower the proportion to 45% by 2018, then to 30% by 2025		The reduction in coal-fired generation is not as good as expected. The power generation of large coal-fired power plants is 6.5% higher than that of Taiwan Power Company's original plan. It is required that the government develop related regulations to align Taiwan Power Company's power generation and purchase structure with the schedule of coal reduction.
Electric motorbikes	Sales of electric motorbikes achieved a 10.1% market share of new motorbikes sales	Electric motorbikes should account for 20% of new motorbike sales by 2020		The current progress meets the policy objectives, however, electric motorbikes only account for 1.4% of all motorbikes.
Electric automobiles (small passenger vehicle)	Sales of nonconventional fossil fuel vehicles achieved a 2.4% market share of new car sales	Nonconventional fossil fuel vehicles should account for 10% of new vehicle sales by 2020		Petrol and diesel vehicles accounted for 97.6% of new small passenger vehicle sales, while pure electric vehicles accounted for 0.16%. Therefore, inter-ministerial collaboration is still required to establish a supportive environment for the promotion of electric vehicles and achieve the intended policy objectives.

Source: Prepared by the research group.

 

 

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