The Analysis of Adaptation Decision-making and Risk Management at Taiwan Power Company under Climate Change Risk and Uncertainty 

Abstract:

It is clear that global warming has already become an irreversible trend. Taiwan Government has already initiated a national adaptation policy making process and the implementation of adaptation action plans is one of the highest- priority tasks towards the prevention of the negative and harmful climate change impacts. As the dominant power producer in Taiwan, Taipower plays the most important role of energy supply in the energy sector. Deciding how to cope with the possible impacts of climate change and preparing appropriate adaptation plans is a necessary and urgent task for the company at the present. In order to coordinate with The National Climate Change Adaptation Action Plans of CEPD, Taipower initiated this project under the National Adaptation Action plans. The results emanating from this study will be served as the foundation for adaptation decision making and risk management. This study analyses climate change controlling mechanism of worldwide power companies and their potential climate risk types they may encounter. Furthermore, this research also conducted risk evaluation of climate change impact on Taipower. The results were sorted out by priorities ranking according to the criteria established and four major risk impact items were delineated. In descending order, impact of flood and mudslides on electricity transmission and distribution facilities due to extreme typhoon and storm surge, increased demand for air-conditioning due to heat wave and high temperature, impact of extreme climate and strong wind on electricity transmission, distribution and dispatch, and impact of heavy downpour or extreme typhoon on reservoirs and dams constitute the four major risk impact items. In addition, extreme climate also results in fluctuation and hikes in international fuel price, and storm surge combined with rising sea level floods on coastal electricity infrastructures which are the two relatively important risk impact items required attention. Accordingly, Climate Change risk matrix based on the results of risk assessment for Taipower was constructed. After clarifying the priority of the risk impact items, we propose appropriate adaptation options and carry out a stochastic cost and benefit analysis and a qualitative multi-criteria analysis for risk management. In the quantitative analysis, we assess the three cases of typhoon with extreme rainfall, strong winds and heat waves, respectively, use cost-benefit ratio method to identify effective adaptation options of each case. In the qualitative analysis, we apply multi-criteria analysis method and adopt four prioritization criteria, namely: importance, urgency, no regrets and related collateral effects, as well as another three criteria for feasibility study: technical, institutional and social feasibility. By conducting the analysis of expert judgment through a questionnaire survey, we evaluated the effectiveness and priorities of various adaptation options. Finally, for mainstreaming, integration of adaptation strategies into Taipower’s short, medium and long-term development strategy has been conducted. In short-term development strategy, we advise Taipower replace the original climate change risk controlling items under item No. 5 “Power supply shortage affects system steadies and safety” by the item No. 13 “Power facilities damage caused by natural disasters.” In medium-term, we also advise Taipower to integrate climate change adaptation into future development and management charts by adding “Acting as the pioneer of climate resilience and low-carbon electricity” as a visional icon. In the long-term, we advise Taipower examine the compatibility of company sustainable development policy and the adaptation policy iteratively and periodically and amend it annually and accordingly. It is expected that with the implementation of the results of this study Taipower will become a business model, and will play the leading role in combating against climate change among domestic industries in Taiwan.