March to the Second Wave of Energy Transition Taiwan: Profound Energy Conservation and Diverse Green Energy Approaches

The concept of sustainability is interconnected; the transformation process requires an increased focus on cross-disciplinary discussions to uncover order within it.

Interviewed and written｜Xin-En Wu / Emily Wang

Following the conclusion of COP28 (United Nations Climate Change Conference) in December 2023, Sun-Han Hong, the member of Legislative Yuan, attended the conference in Dubai, promptly called upon the Ministry of Economic Affairs in the Legislative Yuan to implement international alignment in response to the resolution of "Triple Green Energy, Double Energy Efficiency." Hong submitted a proposal to the Ministry of Environmental Protection, advocating for establishing a cross-ministerial platform to monitor new net-zero technologies.

Hong expressed his aspiration to drive the development of the energy-saving industry. "The concept of sustainability is interconnected, and the transition process must rely on more cross-disciplinary discussions to identify order," stated Hong.

Cultivating an Energy-Efficient Industry to Forge Blue Ocean Strategy

Globally, in the context of energy and climate policies, there is a widespread acknowledgment that "energy conservation" holds the utmost priority. The International Energy Agency (IEA) stated that "energy efficiency serves as the first fuel toward achieving net-zero carbon emissions." Within the 2050 global energy conservation and carbon reduction plans, the projected contribution of improved energy efficiency to the overall carbon reduction is as high as 37%, surpassing even renewable energy and other carbon reduction technologies. In a report by the International Renewable Energy Agency (IRENA), it is highlighted that a doubling of energy efficiency is imperative by 2030 to maintain progress on the path to limiting global temperature increase to 1.5°C.

Compared to the necessity of building new power plants and making substantial investments in additional energy sources, enhancing energy efficiency undoubtedly emerges as the fastest and most cost-effective measure to reduce emissions. With a history of attention to energy conservation issues, Hong sees energy efficiency as a new frontier and hopes to establish a robust energy-saving industry in Taiwan.

Energy efficiency goes beyond the simple act of turning off lights. In the era of achieving net-zero, conserving each kWh represents a reduction in power generation by the same amount. This proves to be the most cost-effective strategy for attaining carbon reduction goals.

However, does the current government's energy-saving subsidy strategy truly effectively assist businesses in cost reduction and contribute to achieving the nation's set energy-saving goals? Hong remarks, "There are some doubts within the industry, questioning whether the implemented energy-saving measures and equipment replacements have left any room for additional energy efficiency."

Towards the end of November 2023, Hong hosted a seminar, convening professionals, industry experts, representatives from civil society, and cross-departmental stakeholders to explore avenues for achieving deep energy conservation. Attendees expressed their expectations for leveraging government policies and regulations to identify greater energy-saving potentials, thereby stimulating the development of the energy-saving industry. However, for energy conservation to yield tangible results, Hong believes the government should move beyond mere equipment subsidies. Instead, designing incentives based on the actual effectiveness of energy conservation should be prioritized. Therefore, the primary goal is to "develop a complete hardware and software foundation with visualized energy-saving outcomes."

Hong referenced Vice President William Lai's statement during the national press conference on "Net Zero Transformation, Sustainable Taiwan," highlighting that through innovative technology, energy conservation is not about restricting electricity usage but rather about smart electricity utilization.

Therefore, acquiring tangible energy-saving benefits starts with transparent energy information. By implementing an "Energy Management Information System (EMIS)," property owners can access real-time data on equipment and system energy consumption, pinpointing the potential for energy conservation. The Climate Change Administration under the Ministry of Environment may consider designating "deep energy-saving measures" as an approved category for voluntary emission reduction plans eligible for carbon fee incentives. It is recommended that businesses be mandated to establish and utilize EMIS systems to verify energy-saving and carbon-reduction achievements.

Broadening Green Financial Initiatives through the Establishment of Verification Units

As businesses historically focused on enhancing the energy efficiency of individual equipment, government subsidies have also been directed solely towards the replacement of specific devices. To achieve optimal energy savings, adopting a holistic perspective encompassing the entire system is imperative. Hong offers an example: "Typically, the most power-intensive components in factories include air compressors and air conditioning systems, encompassing chillers, pumps, cooling towers, and more. Based on past experiences, the energy efficiency improvements at the system level can easily surpass a minimum of 10% enhancement." Drawing from the expertise of professional industrial energy consultants, there is significant potential to achieve a 30% reduction in energy consumption by implementing systematic energy-saving measures starting from the managerial level.

Facilitating the development of the energy-saving industry involves guiding financial investments into energy-saving projects. According to the "International Energy Efficiency Scorecard" released by the American Council for an Energy-Efficient Economy (ACEEE) in 2022, Taiwan holds the 8th position. ACEEE recognizes Taiwan's notable performance across four major indicators: National Efforts, Building, Industry, and Transportation, highlighting the substantial potential for further enhancement in energy-saving investments (per capita energy efficiency spending). Hong proposes the expansion of initiatives such as "Green Finance" and "Credit Guarantee Fund" as pivotal drivers for increased investments, thereby facilitating profound energy conservation.

To ensure and enforce energy efficiency, the establishment of a third-party verification unit and mechanism is imperative. The creation of an Energy Technical Services center, through collaborative efforts with public and private partners, facilitates the formation of a well-equipped team to implement comprehensive guidance, audits, and assessments for deep energy conservation within industries. Hong emphasizes that driving more profound energy conservation enables industries to achieve improved energy efficiency, increased production capacity, and yield rates and enhances international competitiveness. Additionally, it contributes to the development of Energy Service Companies (ESCOs), fostering the creation of green economic value contingent upon the infusion of resources.

From a regulatory perspective, Hong suggests a reevaluation of the "Energy Administration Act" to establish a regulatory environment supportive of profound energy conservation. Hong recommends expanding the scope of "Energy Users Setting Energy Saving Goals and Implementation Plans," particularly for users consuming over 800 kW, thereby enhancing electricity-saving targets. Additionally, a new section should be dedicated to energy data management, balancing expanded application value and rights protection. Implementing "Energy Industrialization and Industrial Energy Conservation" is the future direction of effort. Hong advocates achieving comprehensive energy conservation goals by incentivizing the public and industries through policy resources, ensuring that the more energy is conserved, the more government subsidies and support are obtained.

Advancing Diversified Green Energy: Elevating Hydrogen Technology

Increasing green energy and diversifying the energy landscape are strategies adopted by countries worldwide in response to the net-zero trend. During President Ing-Wen Tsai's administration, Taiwan initiated its first energy transition, aiming to reduce coal reliance, increase gas usage, promote green initiatives, and move away from nuclear power. Democratic Progressive Party (DPP) presidential candidate William Lai advocates for a second energy transition, emphasizing the development of diverse green energy sources. Leveraging Taiwan's geographical resources, Lai proposes an accelerated development of forward-looking energies such as geothermal, hydrogen, biomass, and marine energy. Hydrogen energy, in particular, emerges not only as a crucial bridging technology for the future transition to net-zero but also as a key strategic component in the international renewable energy landscape.

The demonstration project for 5% hydrogen-mixed power generation was initiated by Taipower at the Hsinda Power Plant in Kaohsiung in February of last year. The project primarily involved retrofitting the third gas turbine engine in the existing gas turbine unit 3. Additionally, new equipment for blending hydrogen and natural gas was constructed to establish Taiwan's first power generation unit capable of co-firing hydrogen.

By the end of 2023, Taipower completed the retrofitting and construction, entering the verification phase for hydrogen co-combustion. It is anticipated that by 2024, the demonstration of achieving the 5% hydrogen-mixed power generation target will be accomplished ahead of schedule. Plans involve incrementally increasing the co-combustion ratio to 15%, extending the initiative to other units and power plants, and aligning with ongoing technological developments. Assuming a stable source of hydrogen, Taipower aims to retrofit the five gas turbine combined-cycle units within the Hsinda Power Plant progressively, anticipating significant carbon reduction effects.

Consequently, Taipower collaborates with Academia Sinica to advance the "methane pyrolysis" technology. The methane pyrolysis technique involves the decomposition of methane into hydrogen and solid carbon. The produced hydrogen can be directly utilized for power generation, offering a low-carbon and stable power source. Solid carbon serves as a raw industrial material, construction material, or alternative energy source. This technology has the potential to further reduce the carbon emissions associated with natural gas power generation. Moreover, compared to burning natural gas for power generation followed by carbon capture and storage, it presents a more cost-effective and higher-yielding alternative. The Linkou Power Plant, operated by Taipower, utilizes mixed ammonia technology in its coal-fired generating units. Initial trials at a 5% rate are expected to result in an annual carbon reduction of 9,000 metric tons, representing a crucial avenue toward achieving net-zero emissions.

Hong emphasizes the global trend of actively developing and implementing crucial emerging technologies, urging Taiwan to promptly align itself with this progression. At the end of 2022, Academia Sinica issued "Strategic Recommendations for Science and Technology Actions towards Net Zero Emission," advocating for Taiwan's investment in 5 key technologies: methane pyrolysis, deep geothermal, ocean energy, efficient photovoltaic systems, and biomass carbon sequestration. This strategic approach aims to actualize net-zero technologies, steering Taiwan's energy and industrial transformation.

Speeding Up the Advancement of Geothermal Energy: Enhancing Regulatory Framework for Geothermal Section

Concerning the advancement of geothermal energy, the "Renewable Energy Development Act Amendment Draft" underwent its third reading at the close of May 2023, incorporating the creation of a designated "Geothermal Section." This addition establishes regulatory frameworks for exploring, developing, and applying water rights and operational aspects of geothermal energy. Additionally, it addresses potential conflicts with the Hot Spring Act while prioritizing protecting indigenous rights. The amendment clarifies the administrative procedures for geothermal development, aiming to accelerate the promotion of geothermal power generation.

Geothermal energy remains unaffected by weather conditions, ensuring stable power generation that can operate nearly 24 hours a day throughout the year. In addition to its resilience, geothermal energy is regarded as a low-impact environmental resource. Not only does it occupy a small land footprint, but it also conserves water by extracting heat without consumption. Employing a closed system, geothermal power harnesses hot water from production wells conducts power generation through heat exchangers, and seamlessly returns the water underground, thus minimizing water resource wastage.

The potential of geothermal energy in Taiwan is vast, with initial estimates from domestic and international research indicating a high development potential of up to 40GW, considering deep-seated geothermal reservoirs. The current installed capacity for geothermal power generation is at a nascent stage, amounting to 7.29MW. Presently, private entities have submitted applications for geothermal power generation at 9 locations to local governments and the Energy Administration, encompassing a total of 24 proposed sites. Ranging from the Datan Mountain Range, Qingshui and Renze in Yilan, Ruisui in Hualien, Hongye, Chihpen, Jinlun in Taitung, and others, these 24 sites collectively represent an installed capacity of 61.75MW, underscoring their pivotal role in Taiwan's energy transition.

Due to the higher investment risks associated with the preliminary exploration and drilling phases of geothermal development, Taiwan lacks sufficient exploration capacity. A more comprehensive and precise understanding of the geological layers is essential, compounded by inadequate data accuracy, which constitutes a significant factor leading to slow or stagnant progress in development.

Furthermore, in the past, geothermal energy development has been subject to regulations outlined in the "Hot Spring Act," "Water Act," and other pertinent statutes. Applicants for geothermal exploration permits or geothermal development permits are still required to adhere to procedures outlined in the "Urban Planning Law," "Regional Planning Act," "The Forestry Act," "National Park Law," "Geology Act," "Disaster Prevention and Response Act," "Soil and Water Conservation Act," and other relevant regulations. This intricate process is time-consuming and poses challenges to the development efforts.

In response, the Ministry of Economic Affairs founded "The Single Service Window for Taiwan Geothermal Power" in June 2022. This initiative seeks to guide industry players and local governments in optimizing central government resources, sharing exploration risks, coordinating the establishment of administrative procedures conducive to geothermal development, and hastening the widespread installation of geothermal power generation equipment.

In late May 2023, the third reading of the amendment draft to the "Renewable Development Act" was passed, providing regulations for the exploration, development, application for water rights, and operation of geothermal energy. Additionally, it addressed conflicts with the Hot Spring Act. Hong proposed that, in cases involving indigenous lands or tribes and adjacent public lands, joint tribal consultations should be conducted. Developers must adhere to indigenous consultation procedures to be integrated into a particular section, ensuring the protection of indigenous rights.

The Renze Geothermal Power Plant has commenced operations recently, while the Sihuangziping Geothermal Demonstration Power Plant has entered commercial operation. Additionally, groundbreaking has taken place for the Liuhuangziping Geothermal Demonstration Power Plant. These developments signify a transformative future for Taiwan's baseload renewable energy sector.

Taipower Company Undertakes the Significant Task of Energy Transformation

Within the context of Taiwan's energy transition challenges, Taipower plays a crucial role. Since the revision of The Electricity Act in 2017, Taipower has shouldered the fundamental responsibility of guaranteeing a stable domestic power supply. Over the past 2 years, it has not only upheld stability in the domestic price levels. Taipower has also absorbed fluctuations in electricity prices, establishing itself as an indispensable partner in policy advancement.

In the middle of last year, there were queries from various sectors regarding the amendment of The Electricity Act in 2017, which mandated Taipower to initiate Electricity liberalization. The requirement involved the separation of Taipower into 3 distinct sectors: power generation, transmission and distribution, and electricity sales, to facilitate open-market competition. However, starting in 2022, the government announced the 2050 net zero carbon emission policy. Hong perceives this new directive as an unforeseen task initiated during the amendment of The Electricity Act in the preceding year. Consequently, there is an argument that the government now necessitates Taipower to shoulder the role of a state-owned enterprise in facilitating or undertaking policy tasks.

Furthermore, considering the current landscape of the power industry, the prevailing trends, and the significant shift in the temporal backdrop since 2017, Taipower confronts dual challenges concerning its operational capabilities and financial viability. Hong highlighted that the primary focus of the 2017 legislative amendments was to facilitate the free buying and selling of renewable energy. However, insufficient precision was applied in anticipating the subsequent development patterns. There was a lack of foresight regarding the significant shift of numerous decentralized power generation facilities into the electricity industry. Consequently, at the time of the legislative amendments, the default assumption remained that the "electricity industry" referred to Ground–mounted PV Systems or large-scale facilities like wind power, with magnitudes reaching tens or hundreds of billions, and consequently subjected to heightened regulatory scrutiny.

Thus, he advocates initiating amendments to "The Electricity Act," comprehensively cataloging and organizing diverse electricity industry types, scales, and characteristics, including potential future multifaceted commercial application models. Subsequent adjustments should then be made to the regulatory subjects, methods, and thresholds outlined in "The Electricity Act," allowing for the feasibility of decentralized and diverse electricity industries.

"Environmental changes are rapid, and grasping the relevance and impact of this matter (or issue) on Taiwan's pursuit of net-zero and energy transition within a limited timeframe poses its challenges, with a learning curve to overcome. Meeting the challenge of achieving net-zero emissions by 2050 is not sufficient relying solely on existing technologies, but we are already progressing on this path," stated Hong.