Ma Welcomes the dawning of a new era for Taiwan's Power sector
It may already feel like ancient history, but the soon-to-be-ended office of Taiwan's former President, Chen-Shui Ban, was witness to one of the most turbulent times in Taiwan's recent history.
Chen's presidency was typified by frosty relations with mainland China, which included daily missile threats and political propaganda.
Taiwan's power sector also became a victim of Chen's presidency as the island's power plants suffered from swelling power demands and market fluctuations.
Despite intergalactic scuffles reminiscient of a page from a Star Wars film script, the cross-strait relations saga seems to be drawing to a close with Taiwan declaring the Kuomintang's Ma Ying-jeou as President.
During his race for the presidency, Ma signalled a dramatic policy shift for Taiwan by announcing his intention to boost Taiwan's cross-strait relations with China.
The Kuomintang's stunning election victory on March 22nd, marked a key milestone in cross-strait relations, but is Ma the man to patch things up and lift Taiwan's power sector from the doldrums?
Taiwan's power sector is in the doldrums due to high power demands, a reliance on imports, fluctuating energy prices, economic red-tape, icy cross-strait relations with mainland China and the legacy of former President Chen Shui-Ban.
Taiwan's power struggle
Taipei 101 is struggling to live up to its job description as the night-light of Taipei as Taiwan's grid battles to cope with its dwindling electricity resources and escalating power demands.
Taipower, as the sole grid operator pumps 75 percent of the island's electricity into Taiwanese homes, sustaining the lifestyles of 23 million people island-wide.
In early 2008, during the term of former President Chen Shui-Ban, Taiwan's government failed to process a series of power plant permits due to applicants demanding inflated prices, which the state-owned Taipower subsequently refused to pay.
"The problem isn't in us but in the companies, the prices they ask for are too high," said Clint Chou, a spokesperson from Taipower. However, if the bidders succeeded in getting permits from the government, they would have been tasked to build power plants and sell electricity to Taipower.
Taiwan's escalating power demand took a turn for the worse this year, climbing to a record high and decreasing spare capacity at peak demand times to 5.13%, a percentage which was well below the government's goal of 16 percent.
Taiwan's power sector is made up of an eclectic mix of energy sources including 55% coal, 18% nuclear, 17% natural gas, 5% oil and 5% renewable energy. But, the island's unhealthy reliance on oil and gas imports is making Taiwan increasingly sensitive to energy price fluctuations.
In terms of this alarming trend, Taiwan's government is taking the proactive approach by pushing for 10% of its energy resources to come from renewables by 2010, thus doubling its current quota of 5%. But, the long list of problems facing Taiwan's power scenario begs the question, will Taiwan cope with its swelling power demand and put its besieged power sector back on-line?
The resurgence of Taiwan's power sector seems to be taking shape with the introduction of new developments in the realms of wind, solar and nuclear power.
Taiwan has an embarrassment of riches in terms of wind power resources, with huge on-shore and in particular off-shore capabilities. Taiwan is in the process of installing a number of American and German built wind farms on the island. Solar power is beginning to show some promise as a new energy source for Taiwan's power sector and is likely to add a key element to its growing mix of renewables, which makes up 5% of its energy sources. Nuclear power is the star of the show in Taiwan's bold new energy mix and is the leading energy source in Taiwan's plans for the future of its power sector. Taipower currently operates three nuclear power stations in Taiwan, with a fourth nuclear power station due for completion in 2009.
It's not easy being green
"It's not easy being green" may be the catchcry of Kermit on the children's programme Sesame Street, but Taiwan's power sector it seems is thinking the same thing.
Taiwan's ecosystem suffers from a dearth of pollution problems due to its high population density and smog-producing factories and vehicles in cities including Taipei, Tainan and Lin Yuan.
Water pollution is still a serious issue for the island's ecosystem with up to 90% of Taiwan's sewage being dumped into its waterways.
Starting to feel the pinch from Taiwan's substantial pollution problems, the government introduced the mandatory use of unleaded petrol and started the Environmental Pollution Agency to ease the environmental pain. The decline in soil pollution and waste disposal proves that there are some positives for Taiwan's ecosystem. Soil pollution has been reduced by the removal of heavy industry and waste disposal looks to be a thing of the past with the advent of Taiwan's recycling move ment.
Fuelling Taiwan's comeback
Taiwan's liquified natural gas imports look set to increase by as much as 43 percent this year, helping to relieve the stress caused by Taiwan's surging power demands.
"Natural gas imports have gone from an oversupply to a shortfall," said Jane Liao, General Manager of CPC Corp, who is planning to increase its gasoline prices by NT$2.4 (8 cents) per litre.
In order to meet the challenges of Taiwan's surging fuel costs, Taipower is planning to raise its prices by as early as June 2008, marking its second increase in 25 years.
Taipower is required to boost its tariffs by as much as 48 percent this year, due to surging fuel costs and electricity prices, if it fails to do this it will record a loss of NT$130 billion ($4.3 billion).
Taipower has plans to seek government approval for the tariff increase after Ma takes office on the 20th May. Should this tariff increase be appproved, it will mark a sign of things to come for Taiwan under Ma's new government.
Since his March 22nd election victory, Ma has been speaking on a platform of bold policy initiatives, including the scrapping of fuel-price caps, the expansion of nuclear power and the inclusion of an energy tax.
Ma, in a radical new plan, wants Taiwan to rely on nuclear stations for 20 percent of Taiwan's electricity, a move which could significantly reduce Taiwan's emissions.
"Under the principle of saving energy and reducing carbon-dioxide, nuclear energy may be an inevitable choice," said Kuomintang's economic advisor, Steve Hsieh.
Ma's new way of thinking is becoming popular in Taiwan, considering former President Chen's strategy to phase out nuclear power as a result of government scare campaigns about radioactive waste.
In 2050, Taiwan's carbon dioxide emissions are predicted to drop to as low as 50 percent of its 2000 levels. In January 2008, coal contributed 46 percent to Taiwan's electricity mix, in comparison to the 23 percent sourced from Taipower's nuclear power stations. While nuclear power is the way of the future for Taiwan's growing power sector, it will only account for 5 percent of Taiwan's total power capacity by 2025. However, the portion of coal-fired power could rise to as much as 50 percent.
Kuomintang returns power
The spirit of Chiang Kai-Shek seems to be alive and well in the new-look Kuomintang, but can Ma learn from the teachings of the Kuomintang's legendary sage and bring balance to Taiwan's power sector?
Ma's decisive March election victory marked a key milestone in the resurgence of Taiwan's power sector. Ma's radical policies look set to revolutionise Taiwan's power sector through a decrease in red-tape via the liberalisation of the power sector and an increase in potential investment from the mainland.
Should Taiwan at last bridge this cross-straits gap, Taiwan's power sector will stand to benefit from mainland China's extraordinary potential and economic growth. "The KMT's promised policy agenda could introduce favourable economic and geopolitical dynamics in the next four years," said Aninda Mitra, VP/Senior Analyst from Moody's Sovereign Risk Unit. However, Ma seems to be in a difficult position as he must learn to balance Taiwan's economic prospects with mainland China and the defence of Taiwan's de-facto state of sovereignty. Since the Communists expelled the Kuomintang in 1949, Taiwan's Republic and China's PRC have battled over claims to Taiwan's sovereignty. "There's only one China in the world and Taiwan is an inalienable part of Chinese territory," said Qin Gang, spokesperson of the Chinese Foreign Ministry.
However, Ma's exciting blueprint for Taiwan's future looks destined to boost cross-strait relations and bring Taiwan's power sector back from the brink.