Taiwan's energy storage d-Reg market has recently experienced a surge in activity, with private sector involvement expanding rapidly. However, an oversupply situation has emerged, leading to a downward pressure on transaction prices and a general subdued atmosphere in the market. To address the excess supply in the energy storage sector, Taiwan Power Company (Taipower) has presented two proposed solutions to alleviate market congestion. Yet, industry stakeholders are urging for prompt implementation of specific details to tackle the market's malfunction.
Driven by the steady rise in installations of renewable energy sources, energy storage has emerged as a critical strategy for grid stabilization. Recognizing the lucrative prospects in this domain, numerous companies have rushed to capitalize on the opportunity. Nevertheless, the recent proliferation of d-Reg has surpassed Taipower's initial target of 500MW, prompting firms to engage in competitive bidding practices, resulting in price declines, and the minimum bid in some instances is $0.
It is understood that Taipower, along with industry representatives and public associations, continues to convene meetings to address the prevailing oversupply issue in the d-Reg market. Taipower's proposed solutions include offering a refund scheme for the "capacity retention fee" when energy storage players exit the market (pending detailed announcement by Taipower) and allowing firms to transition d-Reg to E-dReg while reducing the participation threshold for E-dReg to 1MW, aligning it with d-Reg.
Taipower's projections indicate a target of 500MW for d-Reg energy storage by 2025, with a corresponding target set for E-dReg. Currently, d-Reg has exceeded 100MW, while E-dReg capacity is estimated to range between 110 and 120MW. Taipower asserts that there remains a viable capacity available for E-dReg, leaving companies with the option to transition voluntarily.
In addition, Taipower has mooted the evaluation of regional virtual power plants as a potential solution to alleviate the energy storage surplus, focusing on meeting its internal needs. However, this plan remains under deliberation and planning stages.
Industry players express apprehensions regarding the oversupply situation in the d-Reg market, with many acknowledging the exit of numerous firms due to unsustainable operating costs. Moreover, the transition proposed by Taipower to E-dReg necessitates careful consideration of associated costs and benefits.
Furthermore, industry stakeholders highlight the lack of clarity in Taipower's plan for virtual power plants, emphasizing the need for detailed implementation guidelines and revenue considerations before evaluating the transition plan.
While transitioning from d-Reg to E-dReg may offer temporary relief and prevent market price collapses, concerns linger regarding the potential recurrence of market dysfunction in the future, given the 2025 target for E-dReg is also set at 500MW.
Taipower indicates that based on current projections, E-dReg is not expected to surpass 500MW by the end of 2024. Nevertheless, ongoing reviews of the d-Reg to E-dReg transition are deemed imperative. Overall, demand for E-dReg is anticipated to exceed 500MW by 2025.
Taiwan's energy storage market is still in its infancy compared to its global counterparts. However, against the backdrop of sustained momentum toward green energy sustainability, energy storage is deemed indispensable for governmental and private entities. Taipower and industry players continue to recalibrate strategies and engage in dialogue to promptly stabilize market operations.
