Taipower, the vertically integrated monopoly electricity enterprise in Taiwan, is responsible for power supply. Therefore, it proactively develops power sources to meet electricity demand. In the early days, self-generated electricity was sufficient to meet sales demand. To support the government's water resource development initiatives, Taipower has gradually purchased electricity generated by public reservoir power plants since 1968. In 1988, in line with the government's policy to promote cogeneration systems, Taipower began purchasing surplus electricity from Cogeneration. By 1991, due to the difficulty in developing new power sources, Taipower's supply capacity could not meet the government's prescribed reasonable reserve margin, leading to power rationing. To address the demand and supply gap, the government opened the establishment of Independent Power Plants. In recent years, with the severe issue of global warming, the government has encouraged the establishment of renewable energy generation systems, and Taipower continues to purchase renewable energy electricity. The reasons Taipower purchases various types of electricity are explained as follows:

Reservoir Power Plant

To develop and utilize water resources, Taipower has been purchasing electricity generated by hydroelectric units attached to water resource facilities built by the government or Irrigation Associations since 1968. The initial purchase started from the Shihmen Hydroelectric Power Plant. Subsequently, power purchases were made in conjunction with the establishment of the Yihsing, Zengwen, and Feitsui Power Plants.

Cogeneration

Considering that cogeneration systems can significantly improve the thermal efficiency of heat and electricity in the production process and enhance energy utilization, the government enacted legislation in 1988 to specify various incentive measures to encourage operators to establish cogeneration systems. Taipower cooperates with the government in purchasing surplus electricity from cogeneration operators to reach the higher efficiency of energy utilization goal.

Independent Power Plant (IPP)

The difficulties of power development resulted in the reserve capacity ratio below 7% from 1991 to 1996 and even lead to power rationing. In order to meet the power demand, relieve power supply pressure and plan to liberalize the electricity market afterwards, Ministry of Economic Affairs (MOEA) has permitted private operators to establish power plants since 1995.

Renewable Energy

Due to the scarcity of resources and the aim of efficient utilization, Renewable Energy Development Act was enacted in 2009. The government stipulated feed-in-tariffs to encourage operators to establish renewable power generation system and Taipower coordinated its effort to purchase the renewable energy with favorable price.