Formulation of Purchase Price
Renewable energy purchase price will be made in accordance with the "Renewable Energy Development Act," its sub-laws and agreements.
Applicable to a uniform price system (wind and solar power):
Purchasing fee = Purchasing rate (NT$/Per kWh) × Generation of Power Equipment (kWh)
Applicable to two-part tariff (Reservoir Power Plant)
Purchasing fee = Capacity fee + Energy fee
Capacity fee = Capacity rate × Purchased capacity
Energy fee = Energy rate × Generation of Power Equipment (kWh)
Independent Power Plant (IPP)
||Price Determination Method
||Winning bidder whose price is lower by comparison with basic price of each unit
Ever Power, Chia-Hui, Hsin-Tao
||Taipower's announced price
Kuo-Kuang, Star Energy, Sun-Ba, Hsing-Yuan
||Taipower organizes the bidding after the selection held by the MOEA.
Remark: Regardless the bidding basic price or the announced price, the power generation cost (avoided cost) of the equivalent power supply unit (coal or combined cycle unit of natural gas) of Taipower is determined by the setting-up relevant parameters, such as depreciation period and return on investment.
The Structure of Purchasing Rate
In order to stabilize the operation of IPPs, Taipower adopted fixed rate to capital expenses in agreements, and a mechanism for annual adjustment of fuel cost, operating and maintenance cost and subsidies.
- Capital expense: The cost of constructing a power plant is calculated by the estimated cost of capital (the discount rate) based on the average cost of discounted agreements for 25 years. The discount rate is calculated by the prime rate of Bank of Taiwan on the day of the electricity price bidding (or the announced electricity price)
- Fuel Costs: The coal power plants are adjusted annually according to the cost of coal-fired heat value last year; the LNG power plants are adjusted according to the latest cost of the natural gas price from CPC.
- Fixed (or variable) operating and maintenance costs are adjusted by annual Wholesale Price Index.
- Power development subsidies are adjusted by the average purchasing price last year and the standard contributory of "Enforcement Guidelines for Promote Power Development Operations and Assistance Operations of Taiwan Power Company."
The above-mentioned pricing mechanism of the IPPs power purchase rate is clearly stated in the agreement, as the basis of power purchase and sale. The formal agreement and its template are reported to the Competent authority (MOEA) for verification.
The fee is calculated by the announced purchasing rate (transmission, distribution and operating fee is considered) of the Regulation of Cogeneration.
Non-firm capacity of Peak period
Purchasing rate = Energy rate
Purchasing fee = Energy rate (NT$/ Per kWh) × Generation of Power Equipment (kWh)
Firm capacity of Peak period
Purchasing rate = Capacity rate + Energy rate
Purchasing fee = Capacity rate (NT$/Per kW) × Reliability-firm Capacity (Per kW) + Energy rate (NT$/ Per kWh) × Generation of Power Equipment (kWh)