BMI's Executive Summary

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The new Taiwan Power Report from BMI forecasts that the country will account for 3.3% of Asia/Pacific regional power generation by 2011, with an increasing generation surplus that provides a theoretical export capability. BMI's Asia/Pacific power generation estimate for 2006 is 6,167 terawatt hours (twh), representing an increase of 7% over the previous year. We are forecasting an increase in regional generation to 9,041twh by 2011, representing a rise of 46.6%.

Asia/Pacific thermal power generation in 2006 is estimated by BMI at 4,644twh, accounting for 69.9% of the total electricity supplied in the region. Our forecast for 2011 is 6,455twh, implying 39% growth that raises the market share of thermal generation to 71% - in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Taiwan's thermal generation in 2006 is estimated at 187twh, or 3.5% of the regional total. By 2011, the country is expected to account for 3.1% of thermal generation.

For Taiwan, oil is the dominant fuel, accounting for an estimated 40% of 2006 PED, followed by coal at 38%, natural gas at 10% and nuclear power with a 9.0% share of PED. Regional energy demand is forecast to reach 5,258mn toe by 2011, representing 47% growth over the period. Taiwan's estimated 2006 market share of 2.9% is set to fall to 2.5% by 2011. Taiwan's estimated 44twh of nuclear demand last year is forecast to reach 60twh by 2011, with its share of the Asia/Pacific nuclear market rising from 7.7% to 8.2% over the period.

Taiwan's overall business environment can be considered fairly unattractive in a regional context, in spite of e low levels of long-term political and economic risk. The country's overall composite score is held back by the weakest position as regards electricity market deregulation, privatisation and the creation of a competitive framework. It also fares badly in the areas of energy import dependency and deregulation, with only moderate growth prospects for power generation and overall energy demand. In the BMI Business Environment Ranking matrix, Taiwan receives a composite score of 24, which ranks the country equal eighth out of 11 states included in the Asia/Pacific region, alongside Thailand.

BMI is forecasting Taiwanese real GDP growth averaging 4.2% per annum between 2006 and 2011, with this year's forecast at 4.0%. Population is expected to expand from 22.9mn to 23.3mn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly. The country's power consumption is expected to increase from an estimated 186twh last year to 261twh by the end of the forecast period, leaving surplus generation falling from 53twh in 2006 to 33twh in 2011, assuming 4.4% annual growth in generating capacity.