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Legal Issues Regarding the Promotion of Smart Grid in Taiwan

In order to reach the goal of a nuclear-free homeland and establish a nuclear-free schedule, the government amended the Electricity Act early last year and incorporated in Article 95 the requirement of stopping the operation of nuclear-energy-based power plants by 2025. On the policy side, the government is also aggressively promoting numerous plans that emphasize energy transition and renewable energy development, such as the "New Energy Policy" proposed by the Minister for Economic Affairs on May 25, 2016, the "White Paper on Energy Industry Technology in 2016," the new "Energy Development Agenda," the Four-year Wind Power Promotion Plan, the Two-year Photovoltaics Promotion Project, the Forward-looking Infrastructure Development Program, the “White Paper on Energy Transformation” and the “Green Energy Rooftop Action Plan for All Citizens.” The target is to increase the amount of natural gas to 50%, cut coal consumption to 30%, and raise the proportion of renewable energy from the current 5% to 20% by 2025.


Regardless of whether the aforesaid goal of renewable energy development can be reached within 8 years, if this goal can finally be achieved, the key to a smooth energy transition and secure power system in Taiwan would definitely lie in the smart grid or Advanced Metering Infrastructure (AMI).


According to the introduction of Taiwan Smart Grid Industry Association, the reason why the smart grid has such importance is that the smart grid is an advanced grid system that integrates power generation, transmission, distribution and users. It has the advantages of automation and informatization and is capable of self-inspection, diagnosis and repair so as to provide clean power of high reliability, quality and efficiency. Such grid is not only in line with the development direction of energy policies worldwide but also in response to users’ requirements for enhanced power supply stability and quality. Further, a large amount of renewable energy can be imported into the grid for power generation and combined with smart meters to conduct demand side management, reduce carbon dioxide emission, suppress peak load and save energy.


To utilize the energy transition technology of such importance, the government has started the layout since many years ago. Taiwan Power Company launched a plan to deploy and install smart meters for high-voltage electricity consumers, and a total of 24,000 large-scale electricity-consuming enterprises and factories have been installed with such smart meters, covering 60% of Taiwan's electricity consumption. In recent years, however, it turned out to be difficult to promote  smart meters targeting low voltage small and medium-sized enterprises, small shops and households with large power consumption. Nevertheless, a ray of hope has finally dawned upon the controversies arising from public procurement, user willingness and rebates offered by manufacturers. Starting from the year of 2018, an estimated amount of 24 to 25 billion New Taiwan Dollars is expected to be invested to install smart meters for 200,000 households, which is estimated to increase to 3 million by 2024. The year of 2018 will herald the era of smart meters in Taiwan.


However, there are still worries whether this wave of development can be completed on schedule, especially from the perspective of legal practice.


First of all, with regard to the deployment and installment of smart meters, countries worldwide would generally require electricity enterprises to achieve a statutory target during a certain period of time. However, it seems that the Taiwan government has set out merely requirements for how the smart meters should be deployed and installed since the launch of the program. Without a statutory scheme, there are still doubts whether the program would again come to a standstill due to the same controversies.


Secondly, under the current situation of frozen electricity prices, is it possible for Taiwan Power Company to transfer the large amount of investment cost to users? In the absence of a legal mechanism that guarantees a charge on users, as implemented in many foreign countries, there are still doubts whether Taiwan Power Company is willing to overcome the obstacles when encountering the abovementioned controversies and challenges.


In addition, the key to whether smart meters can bring about the expected effect lies in providing energy-saving services and advice by analyzing information on users’ electricity consumption. However, such value-added services would incur an additional cost. A user’s willingness to pay is related to relevant incentives or controlling measures. As mentioned above, there is no incentive for users to purchase relevant analytical services due to the current frozen electricity price. Besides, regarding the policy side, the latest amendment to the Energy Management Act does not introduce any energy conservation obligation(ECO) like the European Energy Efficiency Directive. Therefore, such analytical services can hardly create a subsequent market as lacking an incentive mechanism. Consequently, the installed smart meters would be almost useless.


Moreover, provided that Taiwan Power Company is allowed to analyze such information and provide users with energy-saving suggestions for free, there would arise issues set forth in the Personal Information Protection Act. Since Taiwan Power Company itself is not an expert in energy-saving consultation, it has to rely on external energy service companies or energy-saving counseling related consulting agencies or firms. The information collected by Taiwan Power Company is originally used for the sole purpose of recording and collecting electricity bills. Can the company analyze the information on its own or provide the information to a third-party for analysis so as to offer users relevant energy-saving suggestions? Does the company need to obtain additional consent from users, or is there any legal basis for performing analysis and providing suggestions? Should enterprises involved comply with relevant regulations governing the security and protection of this information? Can users refuse an analysis on their own electricity consumption information when having doubts about the suggestions provided? All of the aforesaid situations would result in controversy. Another issue needing consideration is that, for some users, trade secrets, such as operational performance, may be inferred based on energy consumption information, and an analysis thereon may also involve sensitive information or business secrets, hence, there is a need to put such issues under regulation.


Given the foregoing, although the promotion of smart grid facilitates the application of big data, which allows Taiwan to provide high-quality power supply and policy formulation by taking advantage of automation and informatization, relevant legal issues are still waiting to be further clarified.