BMI View: Taiwan's power sector is undergoing something of a shake-up, with the government havingdisavowed earlier hefty investments in nuclear expansion and has, instead, pledged to push ahead withrenewables, with the latter now targeted to comprise 20% of total power generation by 2025. However,until or unless anything other than small scale renewable projects get off the ground, we believe that powersector expansion will be largely driven by the thermal sector, with overall power generation picking upspeed from an annual rate of 1.2% in 2016 to 1.9% in 2017 and 3.0% in 2020, after which the rate will dip,before picking up fresh speed towards the end of the forecast period.
Key Trends And Developments
Although there have been delays in upgrading coal fired thermal infrastructure, this segment remains theprincipal engine of sector growth. These factors mean that growth in generation and output has beenlimited over the last couple of years. We estimate that total generation rose by just 1.9% in 2015 (to247.0TWh) and 1.2% in 2016 (to 250.1TWh). However, growth in power generation should now pick upspeed. Linkou Unit 1 and Linkou Unit 2 came online in 2016, while Unit 3 is set to start operating inmid-2019. As a result of the Linkou overhaul - and other coal-fired projects coming online - powergeneration should pick up pace over the coming years. We forecast thermal generation to rise 7.0% in2018 to 216.1TWh and a further 5.3% in 2019 to 227.6TWh. Over the period 2020 to 2026, thermalgeneration should increase at annual rates ranging between 2.9% and 7.0%, taking total generation withinthis particular segment to 320.8TWh by the end of the forecast period.
We anticipate that total generation (i.e. including all categories, not just thermal) will rise 2.6% in 2018to 261.6TWh and 2.8% in 2019, to 269TWh. Sector growth should then sit in a range of 2.8% to 3.9%per annum over the period 2020 to 2026 inclusive, when we anticipate that generation will reach335.4TWh.