October 2024
Taiwan's Ministry of Economic Affairs Announced Draft Amendments to the Electricity Act Aiming at Stimulating Green Energy Trading and Enhancing the Resilience of the Power Grid
October 2024
Grace Chou and Vincent Kuo
To achieve the goal of net-zero transition, countries are actively developing renewable energy. In response to changes in electricity supply methods and the structure of the electricity trading market, Taiwan's Ministry of Economic Affairs (hereinafter referred to as “the MOEA”) announced a draft amendment to certain provisions of the “Electricity Act" on July 19, 2024. The announcement period lasts for 60 days, starting from July 20, 2024, and ending on September 17, 2024. The key points of the draft amendment are summarized as follows:
1. A new category of electricity suppliers is introduced so that non-traditional forms of electricity suppliers are incorporated into the regulatory framework.
With the increasing share of renewable energy, there is a gradual rise in alternative forms of electricity supply, which are distinct from traditional electricity supply methods. In light of this, the draft amendment introduces a new category: “specific electricity supply enterprise” and prescribes the definitions of this type of enterprise and energy storage systems. Enterprises that participate in the electricity trading platform (hereinafter referred to as “the ETP”) through demand response measures, the installation of energy storage systems, or other forms of electricity supply will be subject to regulation and supervision to facilitate the orderly operation of the electricity trading market. The relevant provisions of the draft amendment are summarized as follows:
(1) “Specific electricity supply enterprise” refers to non-public utilities that participate in the ETP through demand response measures, the installation of energy storage systems or other forms of electricity supply. Furthermore, energy storage systems are defined as equipment that stores electrical energy and stabilizes the power system, including the components, power conversion systems, and energy management systems.
(2) Specific electricity supply enterprises that supply electricity through the installation of energy storage systems or other facilities (such as electric vehicle charging stations) must apply for approval and record-keeping with the electricity industry regulatory authority prior to installation. Upon completion of the installation, they are required to submit documentation to the electricity industry regulatory authority to apply for an Electricity Enterprise License (hereinafter referred to as “the EEL”) and may only commence operations after obtaining the EEL. It should be noted that enterprises that have already been participating in the ETP through demand response measures, the installation of energy storage systems, or other forms of electricity supply prior to this amendment must also apply for an EEL with the electricity industry regulatory authority within one (1) year of the implementation of this amendment. Failure to apply for or to obtain an EEL by the deadline will result in the prohibition of participation in the ETP.
(3) Specific electricity supply enterprises shall obtain prior approval from the electricity industry regulatory authority before ceasing or terminating their operations.
(4) In the event of various disasters, emergencies, or when a fire or other extraordinary calamity occurs near their electrical facilities, the specific electricity supply enterprises shall report to the MOEA, the municipal government, or the county (city) government in accordance with the matters to be reported, time limits, methods, and procedures prescribed by the MOEA.
2. Amend the definition of renewable energy electricity retailing enterprise to allow mutual sale of electricity among renewable energy electricity retailing entities.
The current Electricity Act stipulates that renewable energy electricity retailing enterprises may only sell electricity to the end users. The draft amendment removes that restriction, allowing the renewable energy electricity retailing enterprises to sell electricity to each other, thereby stimulating the renewable energy electricity trading market.
3. Remove the restriction that prohibits electricity transmission and distribution enterprise from engaging in other electricity-related operations.
The Electricity Act, amended in 2017, stipulated that the electricity transmission and distribution enterprise may not engage in electricity generation or retailing, requiring the Taiwan Power Company (hereinafter referred to as "Taipower") to transform into a holding company after the division of its generation and transmission/distribution operations, with its subsidiaries for electricity generation, transmission/distribution and retailing. However, in light of the rapidly changing international political and economic landscape, and the substantial funding required for various power generation and grid construction projects, the MOEA decides to remove the aforementioned requirement in this draft amendment. This allows Taipower to maintain an integrated electricity business model and to continue enhancing power grid resilience and ensuring stable power supply through effective integration of resources across electricity generation, transmission/distribution and retailing.
4. Add provisions stipulating that the electricity industry regulatory authority shall review the operational model and effectiveness of the ETP based on the development and demand of the electricity trading market, and may require the operators of the ETP to implement measures to enhance operational neutrality.
The proposed amendment to the Electricity Act is expected to stimulate the development of the renewable energy electricity trading market. However, the industries must pay attention to relevant regulations to avoid penalties imposed due to violation of the laws. Our firm will continue to monitor the developments in the Electricity Act and relevant regulations governing renewable energy industry.
The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners. All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.
Grace Chou and Vincent Kuo
To achieve the goal of net-zero transition, countries are actively developing renewable energy. In response to changes in electricity supply methods and the structure of the electricity trading market, Taiwan's Ministry of Economic Affairs (hereinafter referred to as “the MOEA”) announced a draft amendment to certain provisions of the “Electricity Act" on July 19, 2024. The announcement period lasts for 60 days, starting from July 20, 2024, and ending on September 17, 2024. The key points of the draft amendment are summarized as follows:
1. A new category of electricity suppliers is introduced so that non-traditional forms of electricity suppliers are incorporated into the regulatory framework.
With the increasing share of renewable energy, there is a gradual rise in alternative forms of electricity supply, which are distinct from traditional electricity supply methods. In light of this, the draft amendment introduces a new category: “specific electricity supply enterprise” and prescribes the definitions of this type of enterprise and energy storage systems. Enterprises that participate in the electricity trading platform (hereinafter referred to as “the ETP”) through demand response measures, the installation of energy storage systems, or other forms of electricity supply will be subject to regulation and supervision to facilitate the orderly operation of the electricity trading market. The relevant provisions of the draft amendment are summarized as follows:
(1) “Specific electricity supply enterprise” refers to non-public utilities that participate in the ETP through demand response measures, the installation of energy storage systems or other forms of electricity supply. Furthermore, energy storage systems are defined as equipment that stores electrical energy and stabilizes the power system, including the components, power conversion systems, and energy management systems.
(2) Specific electricity supply enterprises that supply electricity through the installation of energy storage systems or other facilities (such as electric vehicle charging stations) must apply for approval and record-keeping with the electricity industry regulatory authority prior to installation. Upon completion of the installation, they are required to submit documentation to the electricity industry regulatory authority to apply for an Electricity Enterprise License (hereinafter referred to as “the EEL”) and may only commence operations after obtaining the EEL. It should be noted that enterprises that have already been participating in the ETP through demand response measures, the installation of energy storage systems, or other forms of electricity supply prior to this amendment must also apply for an EEL with the electricity industry regulatory authority within one (1) year of the implementation of this amendment. Failure to apply for or to obtain an EEL by the deadline will result in the prohibition of participation in the ETP.
(3) Specific electricity supply enterprises shall obtain prior approval from the electricity industry regulatory authority before ceasing or terminating their operations.
(4) In the event of various disasters, emergencies, or when a fire or other extraordinary calamity occurs near their electrical facilities, the specific electricity supply enterprises shall report to the MOEA, the municipal government, or the county (city) government in accordance with the matters to be reported, time limits, methods, and procedures prescribed by the MOEA.
2. Amend the definition of renewable energy electricity retailing enterprise to allow mutual sale of electricity among renewable energy electricity retailing entities.
The current Electricity Act stipulates that renewable energy electricity retailing enterprises may only sell electricity to the end users. The draft amendment removes that restriction, allowing the renewable energy electricity retailing enterprises to sell electricity to each other, thereby stimulating the renewable energy electricity trading market.
3. Remove the restriction that prohibits electricity transmission and distribution enterprise from engaging in other electricity-related operations.
The Electricity Act, amended in 2017, stipulated that the electricity transmission and distribution enterprise may not engage in electricity generation or retailing, requiring the Taiwan Power Company (hereinafter referred to as "Taipower") to transform into a holding company after the division of its generation and transmission/distribution operations, with its subsidiaries for electricity generation, transmission/distribution and retailing. However, in light of the rapidly changing international political and economic landscape, and the substantial funding required for various power generation and grid construction projects, the MOEA decides to remove the aforementioned requirement in this draft amendment. This allows Taipower to maintain an integrated electricity business model and to continue enhancing power grid resilience and ensuring stable power supply through effective integration of resources across electricity generation, transmission/distribution and retailing.
4. Add provisions stipulating that the electricity industry regulatory authority shall review the operational model and effectiveness of the ETP based on the development and demand of the electricity trading market, and may require the operators of the ETP to implement measures to enhance operational neutrality.
The proposed amendment to the Electricity Act is expected to stimulate the development of the renewable energy electricity trading market. However, the industries must pay attention to relevant regulations to avoid penalties imposed due to violation of the laws. Our firm will continue to monitor the developments in the Electricity Act and relevant regulations governing renewable energy industry.
The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners. All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.
