Taiwan seeks coal-fired power plants to plug shortfall

Taiwan is seeking private companies to invest in the island's power generation sector with a preference for coal-fired plants, in an attempt to boost supply amid concerns of blackouts that could affect thousands.

Delays in upgrading old power stations, the construction of new plants and additional sub-stations due to opposition from local residents could push the island's power reserve ratio margin to between 10-12 percent after 2010, officials say.

Taipower said this week the reserve margin during peak hours this summer was expected to fall to 14.5 percent, that is below a target of 16 percent, which is considered sufficient to handle peak loads and reduced supply in case of accidents or maintenance, which could lead to blackouts.

To address the problem, the island will select two-to-three companies to provide a total of 1,980 megawatts of power early next year after the period to submit bids closes on Dec. 5, said Chan Wen-hong, the official at the energy bureau overseeing the project.

"There is a priority on coal, but if bidders do not offer coal or coal-fired bidders are unsuccessful, then the next preference is for gas," said Chan.

High prices of liquefied natural gas and problems with supply have prompted the government to opt for coal, although officials admit that environmental concerns about pollution could make it hard to secure approval for coal-fired plants.

The state-run Taiwan Power Co. buys around 28 million tonnes of coal per year for power generation, out of the 62.4 million tonnes Taiwan imported last year.

FOREIGN INTEREST

Around 10 companies have expressed interest in bidding for an independent power producer licences, which will commit them to sell their power directly to Taipower for the next 25 years, industry officials said.

Last year, IPPs provided around 19 percent of the island's installed power capacity, with state-run Taipower providing the remainder.

Kuo Kuang Power Co., in which state refiner CPC, Taiwan Corp. [CHIP.UL] holds 45 percent, with privately held Meiya Power Co Ltd holding 35 percent, are bidding to build a 480 megawatt gas-fired plant.

Also interested is the Ho-Ping Power Company, which is 70 percent-owned by Taiwan Cement Corp and 30 percent by One Energy -- a joint venture between Japan's Mitsubishi Corp and Hong Kong's CLP Holdings Ltd . That venture is looking to build a 700-800 megawatt coal-fired plant, according to officials.

BLACKOUTS?

Building new power plants is not the only way to plug the deficit. New and overhauled distribution systems are also required, but they also face similar public opposition due to fears about living near high-voltage power lines and sub-stations.

The main concern is the possibility of blackouts in power-hungry northern Taiwan, where the high density of the population means it is hard to get land to build power plants and transformer stations.

"Currently there are only four high-voltage transformer stations supplying greater Taipei, all of which where built 20-to-30 years ago and are now unable to satisfy the demand growth of recent years," said Taipower in a statement this week.

Taipower said new high-voltage transformers were desperately needed to meet future demand, saying that up 150,000 homes could be without power in areas of the capital Taipei and other outlying suburbs if just one power line was to shutdown.