Ensure Flexibility in a New Era of Energy Democracy: By Developing a Sustainable Power Market



Current Challenges

Taiwan's electricity market is in need of two types of reforms: on the one hand, the traditional state-owned integrated power industry needs to be transformed to an environment that promotes new competition in the industry, while on the other, new market regulations need to be developed with immediacy, in response to the development trends of low carbonization, decentralization, electrification, digitalization, and the democratization of the power system. On the legal front, even though regulations such as the 'Greenhouse Gas Reduction and Management Act', the 'Electricity Act', and the 'Renewable Energy Development Act' have been adopted and amended, they still face the following inadequacies:


1. The Dual Problems of Taiwan's Low-Carbon Regulations

  • Taiwan's power plants currently lack carbon emission controls and only the carbon emission factor of electricity generated by the public electricity industry is regulated, meanwhile emissions from thermal power plants are left unchecked, and there are no mechanisms to prevent thermal power plants from participating in the power capacity mechanism, which is akin to ignoring carbon emissions released by the thermal power plants. In addition, due to the incomplete renewable energy certificate system and the lack of economic incentives to encourage the free trade of green energy, the green power market is therefore stuck in a deadlock.


2. The Lack of Incorporation of Power System Flexibility into Market Design

  • The current misconceptions surrounding energy shortages, and the lack of power system flexibility planning for green energy, require social discourse and regulations to be strengthened in order for these issues to be addressed.


3. The Passive Push for Citizen Power Plants

  • In the transformation of the power market, the potential of citizen power plants as a platform for power market transformation has still not been explored, which could include decentralizing power risks, increasing awareness of energy conservation, and social transformation.


4. Inadequate Energy Transition Capacity of Competent Authorities

  • At present, energy transition activities are undertaken by existing governmental organizations, but training of relevant personnel, the operation of the electricity market trading platform, the allocation of responsibilities between ministries, and the experience and skills necessary for transition, such as communication, are lacking.


Proposed Action Plans

To create a sustainable power market, it is important to target the following sectors: electric power generation, transmission and distribution, end consumers and regulatory agencies. The core transformation measures include:


1. Fix the Low Carbon Regulatory Gap

  • It is necessary to develop long-term plans for carbon emission controls for thermal power plants as well as restrictions on thermal power plants participating in the electricity market, in addition to resolving the regulatory conflicts that exist between the feed-in-tariffs, the renewable energy certificate market and standards for electricity sold by the public electricity industry, and even to accelerate the development of the carbon trading system, in order to stimulate the green power market.


2. Establish Requirements for Power System Flexibility

  • In order to achieve a low carbon and decentralized power market, it is necessary to be able to effectively manage the fluctuation and uncertainty of power supply and demand. In order to improve the flexibility of the power system, strengthening the regulation capacity of the power system will be a crucial measure, and in addition to developing more expertise in the regulation of power generation equipment, and in basic equipment such as transmission and distribution networks, electricity market reforms such as the promotion of energy storage devices, demand response systems and the digitization of transmission and distribution networks should be implemented as regulatory measures.


3. Develop a Comprehensive Rollout Plan for Citizen Power Plants

  • In order to put in practice energy democracy as well as enhance local energy autonomy and disaster response capabilities, the threshold for citizen participation should be lowered, and a comprehensive promotion mechanism and support system established, in addition to the integration of inter-ministerial resources and the cultivation of local talents, so as to give rise to multiple benefits, such as that of local creation, and to further establish mandatory scheduled targets and a stable legislative framework, in order that citizens can grow to become all-round players in the electricity market.


4. Strengthen the Transformation Capability of the Electricity Regulatory Authority

  • For the first phase amendment of the 'Green Power First' policy, it is necessary to establish an electricity trading platform, as well as think about how the state-owned power transmission and distribution industry can find its competitive niche as part of the process of the digitalization of the power system. In conjunction with the second phase amendment of the Electricity Act, it is anticipated that there will be a dramatic increase in free competition in the power market, and an independent electricity regulatory authority would therefore need to be established for the regulation of the electricity market.