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The Research on Reform Strategy of Electricity Tariffs and Demand Response Responding to Renewable Energy

The Research on Reform Strategy of Electricity Tariffs
and Demand Response Responding to Renewable Energy
As renewable energy continues to be incorporated into the power
system, the net load of Taiwan (after deducting the load from solar power
and wind power) will gradually form a Duck curve, leading to the
difficulty in dispatching the must run units and the sudden increase in the
evening load, or resulting in solar curtailment. In responding to the Duck
curve, foreign electric utilities have gradually adjusted the peak and
off-peak periods of time-of-use (or time-varying) rate to guide users for
the use of electricity; for example, California adjusted the peak period
from 12: 00 ~ 18: 00 to 16: 00 ~ 21: 00 in 2019. By devising in advance
the electricity rate plan and the electricity demand response plan, the
curtailment of wind power and solar power, or the substantial increase in
the demand for supporting services can be reduced. The related practices
can serve as references for Taiwan.
In addition, the Electricity Act was amended and promulgated on
January 26, 2017, which allowed power generation industry and power
selling industry of renewable energies to enter the retail market, enabling
renewable energy operators to directly sell electricity to end consumers.
In the future, it is expected that the cost of power generation equipment
for renewable energy will decrease year by year, which will compete with
Taipower ’s multistep electricity rate and time-of-use (or time-varying)
rate, impacting the revenue and the rate structure of electricity. Therefore,
it is indeed necessary to adjust Taiwan's multistep electricity rate and
time-of-use (or time-varying) electricity rate in accordance with the
future development trend of renewable energy.
The management of current demand can be divided into price-based
and incentive-based measures. In respond to the schedule of Taiwan's
renewable energy penetration, short-, medium- and long-term reform
strategies should be planned as early as possible, including when to start,
how to adjust, and how to transit the implemented schedule, allowing
Taiwan's electricity pricing system and demand response strategy to meet
the needs of power system transformation and open market in the future.
The world is now at an important stage of the energy transition. The
electric utilities in major developed countries around the world are facing
the challenge of death spiral. By combining the current information
communication technology (ICT), artificial intelligence (AI), analysis
of big data (data analytics) and the Internet of Things (IoT), the smart
grid can effectively connect to distributed generation, renewables, energy
storage, and disruptive technologies such as electrical vehicle charging
and discharging technology and business models and advanced metering
infrastructure (AMI) for power demand, as well as other "non-wire
alternatives" (NWA) such as energy efficiency, demand response, and
time-varying rate (TVR), promoting a more flexible and efficient power
supply and demand. In addition, the business model of traditional electric
utility can also be improved, which suggests that electric utilities no
longer have to focus solely on power generation, transmission &
distribution, and electricity sales as their core businesses. Instead, they
can strengthen customer participation and customer services, treating
them as important niche for business operation.
For this reason, this study will assist Taipower to review the reform
strategy of electricity rate and demand response based on foreign electric
utilities in respond to the increasing share of renewable energy and the
established power market. The results can then be adopted to formulate
Taipower ’s short-, medium-, and long-term reform strategies for
electricity rate and demand response of renewable energy penetration and
the above-mentioned disruptive technologies under reasonable scenarios,
including multistep electricity rate, time-of-use (time-varying) rate, and
demand response measures. In addition, the impact of electricity rate and
demand response review practices on stakeholders and the expected
benefits will be assessed to assist in the development of related policies
and the convening of public briefings for stakeholders.