Section 5: Taiwan Smart Grid Stakeholder Analysis
5-1. Taiwanese Government
Smart grid project is one of the focused areas for the National Reduction of Carbon and Energy Plan in Taiwan. Execution Yuan approved the AMI installation plan from the Ministry of Economic Affairs. On date 7th August, 2012, Execution Yuan ordered the formation of Smart Grid Promotion Team to organize the further enhance the development of smart grid in Taiwan. Smart Grid Promotion Team composed officials and research professionals mainly from the Ministry of Economic Affairs, National Science Council, and Atomic Energy Council. The organization structure is shown in figure 5-1.
Table 5-1. Smart Grid Promotion Team’s Division of Work
Source: Taiwan Bureau of Energy (2012)
Members Tasks
Bureau of Energy Plan and implement Smart Grid policy
Industrial Development Bureau Integrate and promote Smart Grid industry
Taipower Install and execution Smart Grid infrastructure
Bureau of Standards, Metrology and Inspection
Establish Smart Grid standard and evaluation platform
Department of industrial technology Introduce and research Smart Grid Technology
Department of Planning and Evaluation
Execute Smart Grid & AMI project, National Energy project Institute of Nuclear Energy
Research
Execute Microgrid pilot program
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Figure 5-1. Structure of Smart Grid Promotion Team
Source: Taiwan Bureau of Energy (2012)
We can see in figure 5-1 and table 5-1 that the members of the promotion teams mainly comprised of government organizations. This shows that the government is getting their hands on the deployment of smart grid. However, some of the problems like bureaucracy and ineffective management practices still exist in the government organizations of Taiwan. My concerns are that there might be problems with interest represented by different groups of people. However, in the SVM it is clear that all stakeholders must be involved in the process. There are also some external independent consultancies which are not listed here. It is good to have a clear structure of the government
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profitable business always involved unethical practices like lobbying and unfair trade. I hope that Taiwan government is able to provide an independent auditing body to observe the development of smart grid to make sure that resources are used on the right place.
Smart grid project is part of the national energy master plan. This has made it easier for IBM to think of its strategy. The fact that there is only one utility company that IBM has to assist with. It is in IBM’s best interest to enter into the Taiwan smart grid market. Allow me to say that due to the special relations between Taiwan and America, and the fact that IBM is an American company might have raised concerns about the privilege granted to IBM to operate in the Taiwan smart grid development. However, that is just my own conclusion based on the close relations between the two countries at least on the governmental level. While the government must also provide necessary assistance to IBM for to unlock the full potential, the government must clearly observe how these governmental organizations coordinate with each and to see whether IBM is acting in the best interest of the citizens of Taiwan.
5-2. Taiwan Power Company
Taiwan Power Company’s (Taipower) core business as the name suggested is to integrate the generation, transmission and distribution of electricity for the territory of Taiwan. Taipower is among the 20 largest utility companies in the world as the company is responsible for performing all activities in the respective value chain. It operates all the way from the generation of electricity from the top to distribution of electricity to the bottom.
Namely, Taipower is the only electrical utility and the sole energy provider in
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Taiwan. In Taiwan, electric utility industry is operated on the basis of regulated market.
Taipower operates in accordance to the energy policy of the Taiwan government. Taiwanese people have always been against employing nuclear power plants as source for energy generation. The risks have become more apparent after the Fukushima nuclear disaster. To avoid the same thing from happening, Taiwan government has introduced sets of transitional energy policy. The policies are set around the improving energy efficiency, reducing dependency on nuclear power, and lowering the level of carbon emission.
Taiwan Smart Grid Industry Association was founded on September 2009, established to facilitate the development of the smart grid industry in Taiwan.
Taipower has been working closely with the association to accelerate the development of smart grid in Taiwan. On the other hand, after soliciting opinions from industry ministries, Bureau of Energy Ministry of Economic Affairs has planned the program of "Promotion of smart meter infrastructure ".
The program was approved by the Execution Yuan on 23rd of June 2010, and announced the official launch of AMI Provision Plan. AMI projects are now also included in the Industrial Green Energy Program in the ICT Energy industry.
According to the research, AMI can effectively reduce the peak load, save electricity and reduce carbon dioxide emissions, promote energy conservation and carbon reduction. Europe and other developed countries have already committed to planning and setting of AMI. In Taiwan, the AMI market is divided as 69KV and above users and general home users. From the Bureau of Energy’s planning, the AMI installation to the 23,000 high voltage users which consumer country’s 58% of electricity has to be completed first. The other 42%
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makes up the low voltage home users, and is accounted for much larger investment. For that reason, the target number for installing the lower voltage AMI is 6 million households out of 12 million households. From the estimation of Bureau of Energy, AMI can work to control the peak load, saving 975 million kWh of electricity, and reduce 4.39 million tons of CO2 emission. AMI can make the energy more efficient for the entire country.
Since there are only 23,000 sets of high voltage AMI that needs to be installed, Taipower planned to quickly finish the installation by the end of year 2012. As for the installation of low voltage AMI, Taipower has finished the installation of 10,000 households between the year 2011 and 2012. Taipower will start large-scale deployment, and is expected to build one million low voltages AMI from year 2013 to 2015. The installation will expand further up to 5 million households in 2016. Taipower has listed $1.69 billion NTD to build 23,000 high voltages AMI; and $31.7 billion NTD for the installation of 6 million low voltages AMI.
Figure 5-2. Roadmap of Taipower’s Vision on Smart Grid
Source: Lin, Faa Jeng.(n.d.), Overview of Microgrid Research in Taiwan, National Central University
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The Smart Grid Maturity Model has become a reliable framework for utilities to follow to assess their smart grid developments. Taipower must take into the consideration of using this model if they want to be cost-effective and at the same time be able to gain external assistance to deploy the smart grid in Taiwan. When it comes to the strategy planning for the smart grid, Taiwan Power Company must be aware of the fact that most of the grid infrastructures have become obsolete, the percentage of line lost rates from the year of 2007 to 2011 are 4.75%, 4.58%, 4.86%, 4.73%, 4.72%50. The total amount of money lost throughout these five years is close to $120 million NTD51. There are 74, 832 uninformed power outages in Taiwan from the year of 2006 to 2010.
Taipower is accounted for as much as half of these power outages.
Compensations are paid out to the effected consumers ranging from $ 2million to 9 million NTD. That money is mostly paid for the reasons of damaging the home appliances due to uninformed power outages. All of those losses have posed further financial burdens on Taipower. It is clear that Taipower has to improve the traditional grid infrastructure to the smart grid in order to overcome financial difficulties. As for the pilot demonstration projects is probably a cost-effective approach for the deployment of smart grid. The political situation in Taiwan is a complex issue. Policies often change as the result of elections, but it takes a long time for the energy structure reformation. Demonstration project could be used to deliver short term results to present the grid performance in a designated area. This could provide information that the government needs to regulate the market but also to convince the ruling party that it is worth to deploy smart grid. In the way that if the smart grid fails then
50 Taiwan Legislature Yuan, Legislation Yuan Official Report, vol 100 issue 24, pg.361
51 Taiwan Legislature Yuan, Legislation Yuan Official Report, vol 100 issue 24, pg.361
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small amount of money would be lost but if it succeed then it will be able to act as the basis for the future development of smart grid. The impact to the society would also be minimized in case the plan fails.
From the Taiwan power company’s point of view, it has tremendous debt accumulated over the years to support the government’s energy policy that simply wasn’t rational. It used to be that Taipower has to subsidize the electric power for the industries with their own money which has result in debts of 100s of billions NTD that simply could not be paid back with. The other thing is that the electric price never reflects the fluctuation of cost of natural resources on the international market. Rather, the undervalued tariffs have become a way to earn votes for politicians during the elections. This has posed financial difficulties in Taipower. This has also led to the discussion of deregulating the energy sector in Taiwan to let Taipower to be run privately and maybe the tax would not have to be paid twice. For now, Taipower also has to pay corporate taxes to the government; this has made people worry that the debt would only get bigger and bigger.
Also the fact that, Taiwan is very concern about the human rights, therefore the welfare of employees have always been a very important concerns for the corporations in Taiwan just like the rest of the countries where employee safety should be introduced to prevent any kinds of injuries at work from happening. Taiwan is a country that is constantly hit by typhoon and earthquake. When that happens power outage will occur as the electric transmission and distribution grids are damaged. There are less young people that are willing to work for Taipower as it is very hard work and HR is facing
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problem with passing the know-how to the next generations because there simply are no fresh bloods. Senior electric engineers still have to go on mission to fix the broken parts of grid despite the severe conditions and the risks that might occur from the work. All of these reasons have make grid automation an important task for Taipower to pursuit in order to reduce the unnecessary casualties that might happen during each truck rolls. The demand for more renewable energy systems and the retirement of the existing three nuclear power plants and the public resentment towards the construction of the fourth nuclear power plants all have created pressure for Taipower to adopt smart grid to make energy more efficient at the same time to provide tariffs that will be reasonable to maintain the customer satisfaction.
5-3. Chinese Government
Chinese government is well aware of the fact that it is also in their responsibility to maintain the energy security. China still remains as the world’s biggest manufacturing factory. It is clear that the energy would have to be sustainable in order to drive the economy going forward in a stable fashion.
But the market itself is facing many other problems like very little competitions in the domestic market as the market is still not matured. The tariffs are still made administratively from the government. In the rural areas the electric power coverage is still low. But for a visionary company like IBM, overcoming these difficulties would be able to create both business and social values to present their own CSV approach. So Taiwan seemed to be very good place for IBM to work with, Taiwan is relatively smaller in size, by improving the smart grid system in Taiwan might help IBM to prove itself an expert to deal with the
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energy problems in the developing countries and China might be more likely to partner with IBM to include it into the China smart grid project. Taiwan is and will be the jumping board for IBM to enter into the China smart grid market.
5-4. Energy Consumers
From the consumers point of view, the cheaper the energy is the better and the fact that the consumption level has tripled over the years. People have become very spoil when it comes to energy consumption. Taiwanese people are very deamding that want everything to be convenient, but that all requires electricity. Sadly, most people do not even know the idea of smart grid or if Taipower has any energy plan that would assist them to contribute more to help to sustainable the energy usage. So they turn to using home appliances that are claimed to be able to help them to save money and that has became part of our attitude when it comes to attitude towards energy issue. Just like it was said in the IBM’s Global Utility Consumer Survey that most of us still think of the idea that saving energy is related to saving money. This has all proven that the deployment of smart grid and smart meter requires the intellectual skills and will for participation of all parties involved. It is logical to think that consumers must have enough knowledge about smart grid and smart meter to evaluate the potential benefits and possibly to adapt. Technology has the power to change the world as we have seen again and again over time.
Problem like accessibility to technology and the ability to buy those technologies still remains a big gap between the current and the desired state.
While you might be thinking that it is easy for a company to make responsible investments, it is really not. Tasks have to be indentified in accordance to the
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social problems and needs. Through the process of planning, testing, reviewing, correcting, implementing, monitoring, evaluating and concluding, companies have to be always stay tune on every single stage as mentioned in order to stay in touch with the real world. One cannot isolate itself from the outside world, which could lead to catastrophic results.
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