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Privatization and Liberalization of the Electric Power Industry in Taiwan

Privatization and Liberalization of the Electric Power Industry in Taiwan. Energy Commission Ministry of Economic Affairs October 5, 2001. Contents 1. Electricity Supply Industry Structure 2. Privatization of Taipower 3. IPP Programs 4. The Envisage of the Forth Round IPPs

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Privatization and Liberalization of the Electric Power Industry in Taiwan

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  1. Privatization and Liberalization of the Electric Power Industry in Taiwan Energy Commission Ministry of Economic Affairs October 5, 2001

  2. Contents 1. Electricity Supply Industry Structure 2. Privatization of Taipower 3. IPP Programs 4. The Envisage of the Forth Round IPPs 5. Basic Structure of Liberalization 6. Energy Policy Requirements 7. Revise of Electricity Law

  3. 1. Electricity Supply Industry Structure Taiwan Power Company • Industry Structure • Self-generation • co-generation • renewables IPPs 8 projects, 7,220 MW • Power Generation • 70 plants, 27,445 MW. 25yrs PPA Transmission Avoided cost For self-use Distribution Supply obligation self-use users Customers

  4. Power System (2000) 1st Nuclear 2nd Nuclear Linkou Hsiehho N Ever Power IPP Shenao Kuokuang IPP Peak Capacity: 29,124 MW Peak Load: 25,854 MW Rserve: 3,270 MW 12.6% Hsintao IPP Tunghsiao HopingIPP Taichung Starenergy IPP Takuan Hydro Mailiao IPP Mingtan Pumped Storage ChiahuiIPP Penghu SunbaIPP IPP ( 2,250 MW) Nuclear ( 5,144 MW) Hsinta Thermal (17,818MW: coal 8100; oil 5404; gas 4314 MW) Nanpu Hydro ( 4,422 MW) Talin Extra High Voltage Substation 345 kV Transmission Line 3rd Nuclear

  5. 2. Privatization of Taipower • Timetable:The deadline for Taipower to finish privatization was set as June 2001 but has failed. • Procedure: Taipower will be privatized by the program of “massive share offering to citizens” with keeping its original integrated business including generation, transmission and distribution. • Preconditions: The Legislature requires that Taipower won’t proceed privatization until the legislation of new Electricity Law is approved. • A tentative plan for Taipower to privatize is made. It suggests that the initial public offering will be completed in one year after the pass of Electricity Law and the government’s shares will be released down to no more than 50% in the next three years for privatization. It is likely that Taipower won’t be privatized by the end of 2005.

  6. 3. IPP Programs • Policy Objectives • To meet power demand at reserve margin of 20% • 1st & 2nd rounds (1995): 10,260 MW (1997-2002); • 3rd round (1999): 2,840 MW (2003-2004) • To balance regional supply and demand • To prepare for power liberalization • 1st & 2nd rounds: competitive bidding (base load, medium load) • 3rd round: fixed price, first come first serve (gas fired, medium load) • To follow clean energy policy

  7. First Round IPP Projects

  8. Second Round IPP Projects

  9. Third Round IPP Projects

  10. Status of IPP Projects

  11. 4. The Envisage of the Forth Round IPPs • Rules on applications for a preparatory permit • Required capacity: • 1. Year 2007: 1000 MW, gas fired and in the North only • 2. Year 2008-2009: 3200 MW ( 1500 MW reserved for TPC) • Requisitions (Construction planning plus the following 6 documents): • 1.Environment Impact Assessment • 2.General agreement from local government • 3.Agreement of fuel supply • 4.Agreement of power interconnection • 5.Agreement of land use • 6.Letter of intent on financing

  12. Rules on Power purchase • Purchase prices: • The Price will be decided by bidding process held by Taipower . • Dispatch rules: • 1. Year 2007, medium load • 2. Year 2008-2009, base load • Transmission constraints: • Taipower should announce its transmission constraints in one month since this program is implemented.

  13. 5. Basic Structure of Liberalization Wholesale Integrated Utility • Generation • Existed Plants • Under-construction • Approved Projects • Future Projects • Generators • 1st, 2nd round IPPs • 3rd round IPPs • (Non-utility) After PPA terminated • Generators • IPP's new units • NewIPPs • (Non-utility) Self-generators ISO transmission Direct Supply Bilateral Contract Distribution Supply Obligation Self-use Users Contestable Customers Direct Users Captive Customers (regulated tariff) (Unregulated tariff) (Unregulated tariff)

  14. 6. Energy Policy Requirements Integrated Utility Wholesale Generation • Generators • 1st, 2nd round IPPs • 3rd round IPPs • (Non-utility) • Generators • IPP's new units • NewIPPs • (Non-utility) Self-generators §required to install hydro and nuclear power. §require to have gas- fired and renewable capacity through: 1.installation, or 2.PPA. ISO §Exempted from the obligation when its capacity less than the assigned Direct Supply §Generators are required to have gas-fired and renewable capacity through: 1.installation, 2.purchase by PPA, or 3.pay fund Bilateral Contract Supply Obligation Contestable Customers Direct Users Self-use Users Captive Customers

  15. 7. Revise of Electricity Law • To allow Taipower to be vertically integrated and independent of the privatization process. • To allow new industries such as generation, transmission, and distribution to enter the market as soon as the law is passed. • To establish the Independent System Operator(ISO). • To allow electricity customers to choose their suppliers. • To require electricity industries to install certain percentage of clean energy capacity. • To require Integrated utility and distribution company have the obligation of guaranteed supply of electricity. • To allow generators to supply power directly to nearby users through private power lines.

  16. THANK YOU

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