Reaching Peak Energy in Taiwan

Wind farm in Gaomei Wetlands, Qingshui District, Taichung
Wind farm in Gaomei Wetlands, Qingshui District, Taichung

Can Taiwan maintain reliable – and affordable – electricity prices even as it slashes greenhouse gas emissions?

This is part three of a three-part story on Taiwan’s energy situation:

Among the extensive data available on the website of the Taiwan Power Co. (Taipower) – the state-owned monopoly responsible for power generation, transmission, and distribution – is a 24-hour chart showing the amount of electricity being generated by the network of Taipower’s own power plants plus those of Independent Power Producers (IPP). Updated every 15 minutes, the chart details how much power is being generated from each type of fuel source.

Broad stripes across the bottom two-thirds of the chart vary little by time of day. They represent Taiwan’s baseload capacity – the power that remains on all the time, 365 days a year, to meet the minimal power demand – from such sources as nuclear, coal, and liquefied natural gas (LNG). Above these steady swaths are rising and falling bands representing the contributors to non-baseload power that is turned on to meet the peak-power demands of society. These sources include LNG-, oil- and diesel-fired “peaking plants” and pumped-storage hydropower, as well intermittent renewables such as wind and solar power.

This chart illustrates the challenge Taiwan’s new government faces as it embarks on its ambitious plan to phase out nuclear power, which currently generates roughly 16% of Taiwan’s electricity, while expanding renewables’ contribution from today’s 3% of power generation to 20%, both by 2025. Nuclear power generation hardly varies at all across days or weeks, while renewable energies generate at high volume when conditions are right, such as when the sun is shining or the wind blowing, but then fade to zero when conditions are unfavorable.

The government has committed itself to another goal: slashing greenhouse gas emissions by 20% of 2005 levels by 2030. Neither nuclear power nor renewable energy emit CO2. But other important differences between them will have a significant impact on Taiwan’s energy transformation.

One key difference relates to capacity factor – the ratio of the actual amount of power generated during a given period of time compared with the total potential output. Taipower operates its nuclear power reactors at a very high capacity factor of over 90%, meaning that these facilities are operating at almost full capacity most of the time.  Political and environmental concerns, however, have sidelined two of the six reactors in Taiwan’s three nuclear power plants, and two more reactors will soon go offline as well (see accompanying story). Coal-fired power plants also operate at high capacity, at nearly 90%, while LNG plants operate at a lower level of 69% or more due to LNG supply and cost restraints, according to Taipower.

For renewable energies, the capacity factor is far lower. Due to the frequent rainy and cloudy days in Taiwan (not to mention the lack of sunshine at night), solar-energy facilities on the island operate on average at only 14% of capacity, compared to nearly 30% in the United States, where extensive areas of southwest enjoy exceptional sunlight, according to U.S. Energy Information Agency (EIA) data. Onshore wind fares better at 29%, similar to capacity factors for onshore wind around the world.

Given the low capacity factor for renewable energies, Taiwan would need to massively expand the installed capacity to generate enough power to meet the declared targets. To reach the administration’s goals of 20GW of solar and 3GW of offshore wind, Taiwan’s capacity would potentially need to be expanded to some 61GW or more, at a cost of NT$1.3 trillion.

The intermittent nature of wind and solar power reduces their reliability and could potentially destabilize power grids. In Germany, where solar power makes up around a quarter of installed power-generating capacity, it generates only around 6% of annual power supply. On sunny afternoons, however, it can account for half of Germany’s power generation – such a large amount, in fact, that much of the electricity must be exported through the continent-wide grid to ensure stability.

As an island unconnected to neighboring grids, Taiwan lacks the option of exporting power, and if renewables generated too much for the system to manage, the facilities would need to shut down temporarily. Opponents of renewable energy cite this fact as a major obstacle, but K.H. Chen, founder and chairman of solar-power producer Sinogreenergy, says that grid stabilization would not be a problem until solar power reaches 6 gigawatts (GW) of capacity or greater. Taiwan currently stands at 962.3 megawatts (MW), according to estimates by the government, which recently unveiled a further target of 1.44GW by mid-2018. Advanced weather forecasting and energy-management software being employed in Europe make it possible for grid operators to better anticipate power supply and demand.

Cost is another significant factor. Renewable energy costs have been trending downwards significantly over the past few years as installations and manufacturing capacity have increased. Still, nuclear remains Taiwan’s cheapest power source. According to the most recent available data from Taipower, the utility spends NT$1.11/kWh for nuclear power, compared to Feed-in-Tariffs for 2017 of NT$4.35 for ground-mount solar, NT$6.02 for rooftop solar, NT$2.88 for onshore wind, and NT$5.98 for offshore wind. Taipower’s consumer rates range between NT$1.63/kWh and NT$6.15/kWh, depending on the amount used and time of year, but average around NT$2.8, below the cost of power from renewable energy.

Energy conservation advocates have long pushed for substanial increases in power prices, but so far the government has refrained from taking that step.

In 2015, Taiwan generated 219,103 gigawatt hours (GWh) of power off of 41.03GW of installed power-generating capacity. Taiwan’s power sector depends primarily on fossil fuels, with coal and LNG making up 65% of capacity and 73% of generation. Nuclear power makes up 13% of Taiwan’s power supply and generates 16% of the electricity, while renewable energies, including biomass, hydroelectricity, solar and wind, comprise 8% of installed capacity but generate only some 3% of total electricity.

Mingtan Pumped Storage Hydro Power Plant in Shuili Township, Nantou County Photo by: David
Mingtan Pumped Storage Hydro Power Plant in Shuili Township, Nantou County
Photo by: David

As renewable energies cannot be considered baseload and cannot be added to reserve margins (which by definition must be available on demand), Taiwan would still have to rely very heavily on fossil-fuel power plants, complicating its ability to meet its carbon-abatement commitments.

Taipower is straining to maintain its baseload power supply through upgrades to existing conventional power plants through the adoption of performance-enhancing technologies. Gas turbines at the Tung-hsiao and Tatan LNG power plants are being replaced with high-output combined-cycle turbines. As many as 18 combined-cycle blocks are reportedly now being built, earlier than Taipower anticipated in its power plan released last year.

Further, coal-fired units at Taipower’s Linkou and Dalin plants have been replaced with ultra-supercritical reactors that operate 27% more efficiently than conventional coal-fired reactors. Reportedly these units are also being brought into service earlier than originally anticipated. Moreover, as greater power outputs can be achieved when the air is colder, Taipower is even experimenting with chilling the air pumped into its power plants.

Meeting peak-power requirements will nevertheless continue to be a major challenge. On May 31 this year, Taipower found itself with a reserve margin of a mere 1.64%, and with global temperatures continuing to rise, similar episodes can be expected to recur.

Fortunately, solar power generates at peak capacity during summer afternoons, potentially alleviating the pressure on the system. Further, offshore wind operates at some 40% capacity in Europe. Considering Taiwan’s excellent wind resources, an even higher capacity factor may be possible here, causing industry sources to suggest the potential for employing offshore wind as baseload.

Demand-response networks such as those operated by global player Enercon can likewise diminish the pressure on peak demand. Demand-response is a system of voluntary power rationing in which companies that opt to participate are paid to shut down operations during peak hours.



  1. An absolutely fascinating series that offers fantastic perspective to anyone seeking to understand the stark reality facing Taiwan’s power industry and the fantastic opportunity available to any in a position to assist. Thank you.

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