Electric power is the foundation for economic development. After decades of construction, Taiwan has a very complete electricity transmission and distribution system, and power facilities are quite diverse. In general we have three main types: thermal, nu-clear, and renewables. Each has its positives and negatives.

As for thermal power, the cost of coal is not high, but carbon dioxide emissions are. Natural gas, on the other hand, though much cleaner (with about half the carbon emissions of coal) has to be transported by ship and stored at low temperature, and you can't always buy as much as you would like to in the market. Nuclear power is cheap and plants can, like coal-fired plants, serve as "base-load" power plants [ensuring 24-hour minimum expected power supply] but the public is very apprehensive about nuclear power, and safety is a major challenge.

As for renewable energy sources, although hydroelectric power, which we have had for a long time, is clean and can operate around the clock, total -power generation is small, and Taiwan is already at the saturation point for dams. Meanwhile, newer types like wind and solar power have high costs and are at the mercy of the vagaries of the weather, so they cannot supply base-load energy.

Because each type of energy has pros and cons, the watchwords now are "diversification" and the proper "composition" of the structure of our power supply. The challenge is to come up with the ideal composition that will ensure a safe and reliable supply, lower carbon emissions, and competitive prices.

Of course, the composition can be adjusted over time. In 40 or 50 years, when the technologies for storage of renewable energy and "smart" power grids are mature, the proportion of renewable energy will sharply increase. From what we can envision today, a practicable range will be around 20%.

Some commentators have said that the government's schedule for renewables, which will account for 8% of -power generation by 2025, is too conservative. Let's look at wind power. Although right now costs are relatively low, you have to have a reliable wind field where you can set up equipment, and we need to carefully reassess just how much expansion capacity there is for inland and coastal wind farms; you can't always increase the supply of wind power just because you would like to.

As for solar, right now a kilowatt-hour of solar power costs about NT$7-12, which is a lot less than before. Our main consideration is when to get into solar power in a big way, because-like semiconductors and flat panel displays-the price of solar power equipment is falling rapidly, and it is estimated that costs could fall by as much as 40-50% over the next six or seven years. At that time, large-scale purchasing of solar-generated power will not put any extra cost burden on the power grid.

Environmental groups suspect that Taiwan's reserve margin is excessively high. But as long as the economy continues to grow, so will use of electricity. Records over the past 20 years in Taiwan show this to be the case. And let's say you get people to drive less to save energy and reduce carbon emissions, growth in the industrial and commercial sector, mass rapid transit systems, and the high-speed rail will all consume a huge amount of power, and electric cars will also need electricity.

Of course we agree that economic growth should be "delinked" from electrical power. Yet Taiwan's levels of economic growth and growth in electricity consumption are still above those of the richest countries, so it would be very difficult to imagine that there could be no correlation at all between them. Over the next few years, power usage is expected to go on increasing, but we hope to moderate the rate of the increase.

In 2009, Taiwan's reserve margin was 28%, but that was because the global financial crisis caused the economy to shrink, so power consumption also declined. Last year the economy recovered, and the reserve margin returned to 23%. It should go down still farther this year.

In the past, for a long period Taiwan's reserve margin was below 15%, so there were periodic power outages. We have a completely independent power grid, with no back-up support. South Korea is in the same situation, and their reserve margin is also about 15-16%. The figure of 10% proposed by environmental groups doesn't take into account the fact that power plants have to undergo maintenance in rotation.

Until the industrial structure and prices for power are altered, one possible option is an energy tax, so that externalized costs are then internalized into people's electricity bills. However, though on the surface everybody agrees that this is a good idea, in reality, in the legislature, all kinds of influential interest groups get involved. For instance, we would prefer that the price of oil can be adjusted to reflect real import costs, but the Legislative Yuan insists that the domestic price cannot be raised, creating a huge gap between the ideal situation and how things really are. Yet the government must have some ideals, or it cannot provide leadership in society. We are seriously thinking about these issues, but there has to be more public education and awareness so that the public will accept policy changes.