Transmission network price setting model for the promotion of liberalized market for the power industry in Taiwan

Currently, privatized state-owned Taiwan Power Company (Taipower) has a monopoly over energy production and vertically integrates the electricity market in Taiwan. Because of the geographical environments, economies of scales, social structures, and diverse political ideologies in Taiwan, the electricity market exhibits unique characteristics. To maximize the benefits of electricity liberalization, future market operations must not only involve conventional considerations for economic dispatch; overall social welfare should be included by incorporating the perspectives of fairness, responsibility, and the environment, and key electrical grid operations should be executed appropriately. We responded to the future market liberalization planning by including factors, such as, environmental effects and government policies, in addition to electrical line construction, and operation cost factors involved in the entire operational model planning. On the basis of responsibility sharing, this study used the simulated -responsibility three-phase pricing method. The proposed pricing method is expected to help attain the following policy goals: 1. Achieving reasonable power price allocations; 2. Simultaneously ensuring fair and efficient electric grid operation; 3. Changing the operation orientations of the power plants and electrical grid facilities; and 4. Increasing the rate of renewable energy use.