IEEJ：April 2018○ｃIEEJ 2018
Special Bulletin
A Japanese Perspective on the International Energy Landscape (372)

April 23, 2018

At the 14th Japan-Taiwan Energy Seminar
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn April 19, the 14th Japan-Taiwan energy seminar took place in Taipei. Since the firstone in 2001, the seminar has been held alternately in Taipei and Tokyo. In the latest seminar as wellas earlier ones, Japanese and Taiwanese energy policy and industry stakeholders and energy experts
such as those from think tanks participated to frankly discuss Japanese and Taiwanese energy
problems and bilateral energy cooperation.
About 50 Taiwanese participants in the seminar included Bureau of Energy
Director-General Lin Chuan-neng and other senior BOE officials, executives of energy companies
such as state-run oil and electricity firms, and experts from think tanks including the Industrial
Technology Research Institute, the Institute of Nuclear Energy Research and the Taiwan Institute ofEconomic Research. Following opening remarks by Director-General Lin and Masakazu Toyoda,
chairman of the Institute of Energy Economics, Japan, participants discussed Japanese andTaiwanese challenges and bilateral energy cooperation in four sessions – (1) general energy policies,(2) power market reform, (3) new technologies such as hydrogen, electricity storage and smart
energy systems, and (4) LNG problems. In each session, the Japanese and Taiwanese sides madetheir respective presentations before active discussions based on the presentations. In the following, I
would like to summarize the points that were particularly impressive for me at the seminar.
First, I strongly felt that Taiwan is stepping up efforts to phase out nuclear power plants
under the present administration. Two years after the inauguration of the Tsai Ing-wen administration,
Taiwan is considering and implementing strategies under the administration’s energy policy callingfor a nuclear-free homeland. Taiwan now has three nuclear power stations operating six reactors withcapacity totaling 5.2 GW. Nuclear power generation had been positioned as a baseload power source
but has recently reduced its share in the power mix. Taiwan plans to cut nuclear energy’s share in thepower mix from the still high level of 9% in 2017 to zero in 2025. It has decided not to use theexisting three nuclear power stations and the fourth one that is close to completion after construction
costing nearly 1 trillion yen. Taiwan’s nuclear power generation has achieved good performance interms of safety and capacity factors. However, the Taiwanese people have been strongly concerned
about nuclear safety. Amid growing anti-nuclear movements after the Fukushima accident in Japan,
the current Taiwanese administration has decided to pursue a nuclear-free homeland.
The decision has been significant for overall energy policies and became the mostimportant point in the first session dealing with general energy policies. In the other three sessions aswell, the nuclear energy problem was a key background factor. How will Taiwan (1) promote power
market reform, (2) develop and diffuse advanced technologies to expand renewable energy as an1

IEEJ：April 2018○ｃIEEJ 2018
alternative to nuclear energy, and (3) secure stable supply of LNG expected to play a greater role inpower generation, while proceeding with the nuclear phaseout? With such question in mind, theTaiwanese side was apparently willing to learn lessons from and promote energy cooperation withJapan that has energy policy challenges similar to those in Taiwan and has faced and tried to resolve
various problems.
Energy policies must be designed to simultaneously achieve the so-called 3E’s – energy
security for the state and its people, environmental conservation and economic efficiency. For Japanand Taiwan, nuclear safety must be added. Their policies thus must pursue the 3E’s plus S. National
strategies and initiatives to achieve the 3E’s plus S must meet national conditions. As a matter ofcourse, therefore, any national decision should be respected.
The energy turnaround to eliminate nuclear power generation in 2025 will be a major
challenge for Taiwan. In exchange for cutting nuclear energy’s share in the power mix from 9% in2017 to zero in 2025, Taiwan plans to expand renewable energy’s share from 5% to 20% and gas’s
share from 39% to 50% while lowering coal’s share from 39% to 30%. At the seminar, theTaiwanese side explained policies and plans to substantially expand renewable energy over the next
eight years. We understood that Taiwan gives priority to increasing solar photovoltaics generation
capacity to 20 GW and wind power generation capacity to 4.2 GW by 2025. Through discussions atthe seminar, I felt that Taiwan sees technology development for power storage and demand side
management as important for the expansion of intermittent renewable energy.
As LNG is planned to become the most important baseload power source with its powermix share rising to some 50% due to the nuclear phaseout in 2025, Taiwan’s LNG procurement isexpected to expand by 6.75 million tons or about 40% from 16.79 million tons in 2017 to 25.34
million tons in 2025, according to a Taiwanese report at the seminar. When all Japanese nuclear
plants were shut down after the Fukushima accident, LNG power generation accounted for about
50% of total generation, making stable LNG procurement a very important challenge. Then, Japansuffered from the so-called Asian premium on LNG prices indexed to rapidly increasing crude oil
prices. Given the Japanese experience, stable LNG procurement at competitive prices is likely tobecome a key challenge for Taiwan. While the LNG market remains a buyer’s market withoversupply, future developments are uncertain. Stable LNG procurement will remain a key challengeboth for Taiwan and Japan. Then, cooperation between LNG consuming countries including Japanand Taiwan will remain important along with dialogue between LNG consuming and producingcountries.
Regarding the 3E’s, the target power mix for 2025 indicates that Taiwan intends to achieveenergy security by raising its energy self-sufficiency rate through the expansion of renewable energyeven with nuclear power generation being phased-out and to suppress carbon dioxide emissions byexpanding renewable energy, reducing dependence on coal and promoting energy conservation.
However, the combination of the sharp nuclear and coal decline and the substantial renewableenergy and LNG expansion is likely to boost overall power generation costs. Particularly, theexpanding share for intermittent renewable energy will bring about the problem of costs for
integrating intermittent power supply into power grids, leading Taiwan to consider how to hold down
total cost increase in the electricity system. The Taiwanese side is keenly interested in Japan’s
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IEEJ：April 2018○ｃIEEJ 2018present energy policy discussions covering these points. It is significant for Japan and Taiwan topromote their dialogue and cooperation to realize well-balanced energy policies and mixes for the3E’s.

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