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Taipower plans to switch to liquefied gas at Tatan

Taiwan Power Co (Taipower, 台電), producer of three-quarters of the nation's electricity, will start using gas at its NT$122.7 billion (US$3.9 billion) Tatan plant next year, two years earlier than planned, to reduce the cost of burning diesel.

The plant, which will be the country's second-largest and account for a tenth of generating capacity by 2010, will start producing power in July using diesel, before switching to gas next year, Taipower vice president Lee Jiin-tyan (李錦田) said in an April 7 interview in Taipei.

State-owned Taipower will have gas transported from the country's south to make the early switch from diesel, which costs more than twice per unit of electricity. The plan supports a government goal of doubling the use of liquefied natural gas (LNG) in Taiwan, Asia's third-largest importer of the fuel, by 2010.

"The early start in gas use will help slow the growth of carbon dioxide emissions" in Taiwan, Liang Chi-yuan (梁啟源), a research fellow at the Institute of Economics at the Academia Sinica, said yesterday. "It may also be an economic consideration, because diesel is more expensive than natural gas."

Burning diesel costs Taipower as much as NT$7 for each kilowatt-hour of electricity it produces, compared with about NT$2.5 for natural gas, said Lee Chuan-lai (李傳來), a spokesman for the utility.

Taipower said in February it may post its first-ever annual loss of NT$16 billion this year because of higher fuel costs. The government hasn't allowed the utility to raise charges since 1983. The company sold electricity at an average of NT$2.05 per kilowatt-hour last year when it made a profit of NT$6.9 billion.

Fueling the Tatan plant, in the north of the country, will help increase Taipower's gas consumption 16 percent by 2007 from this year's projected level, according to the company's 10-year plan, supporting government objectives at the same time.

"We're sticking to our goal of increasing LNG use to 13 million tonnes in 2010 and 16 million in 2020," Wang Yunn-ming (王運銘), deputy director-general of Bureau of Energy, said by telephone on April 8.

Burning natural gas instead of diesel produces about 20 percent less carbon dioxide. Taiwan accounts for about 1 percent of global emissions of so-called greenhouse gases, according to the bureau.

State-owned Chinese Petroleum Corp (中油), Taiwan's only natural gas producer and importer, bought about 6.5 million tonnes of LNG abroad last year. More than 90 percent of Taiwan's natural gas is imported in liquid form, which reduces it to one-six hundredth in volume, for transportation by tanker to destinations not connected by pipeline.

The Tatan plant will have capacity of 4,384 megawatts from two generators that can burn either natural gas or diesel and four using only gas. The company had planned to use diesel at Tatan until 2008 when Chinese Petroleum starts operating an LNG import terminal that will serve the plant.

Instead, the Tatan plant will burn gas transported from Chinese Petroleum's LNG terminal in southern Taiwan, the only one in the country, Lee Jiin-tyan said.

"We're starting to use gas early because we promised Tatan residents we'll burn gas there. If we keep burning diesel, we may face protests," he said.

Chinese Petroleum is building a NT$24.8 billion LNG terminal in western Taiwan that will be completed by the end of 2009, said Liao Tsang-long (廖滄龍), a spokesman for the state-owned oil and gas company.

Taipower and Chinese Petroleum signed a 25 year contract in July 2003 for fuel supply to the Tatan power plant, which will need 1.68 million tonnes of LNG a year once all its generators come on line.

Taipower operates 17 gas-fired generators that have a total capacity of 6,100 megawatts, about 18 percent of Taiwan's installed electricity capacity.

Chinese Petroleum supplies natural gas to these plants on an annual-contract basis, Lee Jiin-tyan said.
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