The only electricity enterprise in Taiwan, Taiwan Power Company (Taipower) is under an obligation to serve power supply, so Taipower develops power proactively to meet the power demand. In the early days, self-generated electricity could smoothly meet the power demand. In 1968, Taipower started to purchase power from reservoir power plant to cooperate with the government in developing water resources. In 1988, Taipower started to purchase the surplus electricity from cogenerators. In 1991, because of the difficulty of power development, self-owned power supply fell short of the legally reserve capacity and led to power rationing. In order to satisfy the gap between power supply and demand, private operators were given permission to establish power plants. Over the past few years, the government has encouraged domestic operators to establish renewable-energy-based generating system and Taipower coordinates its effort to purchase the renewable energy preventing global warming getting worse. The following descriptions are the cause of power purchase:
Reservoir Power Plant
In order to utilize water resources, Taipower has purchased power from the hydroelectric generating unit attached to water conservancy facilities, Shihmen Reservoir, Yixing, Tsengwen and Feitsui reservoir included, established by the government and Department of Irrigation and Engineering since 1968.
There were various incentives legislated by the Government in 1988 to encourage the energy user to install cogeneration system, for it was considered an efficient way to increase the thermal and total thermal ratio of the productive process. Taipower purchases surplus electricity from cogeneration to achieve the goal of utilizing resources effectively.
Independent Power Plant (IPP)
The difficulties of power development resulted in the reserve capacity ratio below 7% from 1991 to 1996 and even lead to power rationing. In order to meet the power demand, relieve power supply pressure and plan to liberalize the electricity market afterwards, Ministry of Economic Affairs (MOEA) has permitted private operators to establish power plants since 1995.
Due to the scarcity of resources and the aim of efficient utilization, Renewable Energy Development Act was enacted in 2009. The government stipulated feed-in-tariffs to encourage operators to establish renewable power generation system and Taipower coordinated its effort to purchase the renewable energy with favorable price.