Energy policy has two main principles — reasonable rates and a stable supply. Despite coming under considerable pressure, the government has resisted increasing rates.
However, following the area-by-area rolling blackouts that were imposed earlier this month, businesses and the public are not impressed by the government’s efforts.
Furthermore, the persistently insufficient reserve margin, as well as the recent massive power outage, have reinforced people’s impression of electricity shortages.
There are two ways to make the electricity supply more reliable: improve the electricity supply structure, and maintain a reasonable power reserve.
Taiwan Power Co (Taipower) sets its operating reserve low. Under such conditions, it has instituted an emergency voluntary demand response system, which electricity companies in other countries consider to be the most effective option. This functions as a virtual power station that serves to reduce electricity consumption and increase the reserve margin.
According to system requirements, Taipower notifies users before 6pm on the day before curtailing electricity supplies, advising them to reduce power use. The minimum suppression contract capacity is 50 kilowatts. This system has been in force for two years.
Although it has been extended to include real-time (on-the-day) bidding, as well as day-ahead bidding, only those classified as high-voltage users or higher can submit bids, while those who opt for three-period, peak-time adjustable time-of-use rates cannot take part.
Furthermore, due to insufficient publicity, many factory operators do not know or understand how to take part in the program and because of various limitations imposed by Taipower and its unwillingness to offer sufficient incentives, such users are not willing to change their production schedules and electricity-use habits.
Consequently, there has been little growth in the use of emergency peak load reduction and it played no role in responding to the N-6 whole-plant generator shutdown.
If we hope to enlist the help of electricity users to improve electricity-supply security by avoiding inadequate operating reserves, we must be willing to cover the additional construction costs needed to achieve that degree of electricity-supply security.
There is no need to worry too much about participants taking advantage of the system. At this time of energy resource transformation, there is a need to buy back power capacity at reasonable rates, because if the system does not provide adequate real-time operating capacity response, it will cause the system frequency to fall too low, making it necessary to restrict electricity supplies.
This month’s rolling blackouts showed how great an effect the rare event of a shutdown of all generators in a major power station combined with inadequate rapid-response operating reserves would have.
If as many generators were to shut down in winter, when there is a relatively light load, it would have an even more serious effect. When the system frequency falls to a certain level, generator protection measures cause a shutdown. If the low-frequency situation were to persist, it would set off a chain of shutdowns, the result of which would not just be local rolling blackouts, but a nationwide power outage.
Power grids are one of the greatest systems that humankind has created. The system operates like the interconnected gears of a machine. Electricity generation and consumption must be kept in regular equilibrium to stay within the frequency range needed by high-technology industries.
Electricity generation and consumption are changing all the time. They involve many kinds of interconnected equipment. With the influence of the weather, it is inevitable that breakdowns happen from time to time. Maintaining 100 percent reliability would be too costly.
However, if there are sufficient preventive mechanisms and an adequate margin of generation and transmission capacity, it will help reduce the extent and duration of power shortages.
This month’s rolling restrictions lasted three hours. As a result, Taipower must pay customers a combined NT$360 million (US$11.9 million) in compensation.
If there were an online rapid-response virtual power station system through which the entire public could instantly reduce its electricity consumption, the rebates would certainly be less than the compensation and fewer users would have been affected.
Electricity rate schemes with high incentives can be designed to cover peak-load days. The experience of US power companies that have implemented such schemes shows that they can produce a 10 to 20 percent reduction in participating users’ electricity demand during peak periods. The size of the reduction depends on the amount of the rebate offered, how much electricity-use information is provided to users and whether direct load is applied.
Providing users with real-time data about their electricity use is a highly effective way of cutting demand. Installing “smart” meters can help reduce peak load by unlocking users’ latent capacity for strategic planning and the psychological response that results when users see data about their electricity use in real-time can prompt them to obtain power-thrifty electrical equipment, enabling further voluntarily reductions in their consumption.
It would be a good idea to use some of the surplus in Taipower’s coffers to set up a fund to expedite installation of smart meters.
The Ministry of Economic Affairs could propose a scheme whereby, when the system operating reserve falls too low, Taipower can buy back electricity, flexibly adjusting incentive prices based on how low the reserve margin rate has fallen.
This instant response would reduce the effects of shortages.
However poor a government’s performance, it will try its utmost to avoid electricity shortages. Energy resource policies are going through big changes and power companies might not be able to guarantee a reasonable reserve margin rate while they are developing new resources.
One way to cope with this would be to adjust and improve the demand bidding system and open it up to wider participation. It could act as a virtual emergency reserve power station that allowed everyone’s participation.
Another good policy would be to speed up the construction of private power stations, whose owners could help others by helping themselves, so that everyone could work together to get through this difficult period.
Lu Chan-nan is a professor in National Sun Yat-sen University’s electrical engineering department.
Translated by Julian Clegg
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