Research and Analysis of Promotional Policies for Small Hydropower Generation in Taiwan

Abstract

To achieve the net zero emission target by 2050, Taiwan is committed to promoting solar photovoltaic and offshore wind power. However, in order to ensure the stable supply of renewable energy, it should actively develop low-cost and mature base load renewable energy sources, such as small hydropower. By the end of 2021, Taiwan’s hydropower (excluding pumped storage hydropower) had a total installed capacity of 2094 MW, accounting for 18.6% of the overall renewable energy ratio, with an average growth rate of 0.05% from 2016 to 2021. It is mainly limited by the need for low environmental and ecological impact, so it is relatively difficult to install large-scale hydropower; therefore, Taiwan has turned to the development of environmentally friendly small hydropower generation. In order to actively develop small hydropower generation and resolve development concerns, Taiwan has established a “Small Hydropower and Renewable Energy Development Strategy Platform”. The current effective cases are mostly in the fields of the Taiwan Power Company, Water Resources Agency, and Council of Agriculture. The private sector has not yet shown its investment in the field. The reasons for this can be summarized as cumbersome administrative procedures, regulatory restrictions, insufficient economic incentives, and lack of technical capacity. The higher-level supervision mechanisms (such as the Executive Yuan level) are also the main key to whether small hydropower can be quickly promoted. In view of this, this study analyzes the current situation and policies to promote small hydropower generation policy recommendations through a literature review and comparison of international promotion experience. Some recommendations have also been incorporated into the newly revised Renewable Energy Development Act in 2023, such as relaxing the definition of small hydropower generation and incorporating water conservancy construction facilities that can be combined with power generation to improve site diversification. Other suggestions mentioned in the text can also be used as a reference for subsequent policy promotion in the future.

1. Foreword and Problem Definition

As we face the crisis of climate change, developed or developing countries alike are all confronted with the urgency of developing clean and renewable energy (RE) and promoting environmental sustainability. Hydropower stands out as the largest source of all clean energies being developed around the world. Specifically, the subcategory of “small hydropower” (SHP) is a technology that is low in both environmental impact and installation cost and contributes to mitigating greenhouse gas emissions and boosting independence of energy supply. It is an important direction for RE development and offers a great solution for communities situated in remote or mountainous areas, forests, or fishing/agricultural villages.

In 2021, Taiwan imported up to 97.7% of its energy, with a domestic content of merely 2.3%, and fossil fuel accounted for 83.4% of the fuel used for power generation. Building a diversified portfolio of power generation systems that are low-cost, low-carbon, and provide stable and around-the-clock electricity poses a profound challenge. Furthermore, Taiwan’s electrical system, which is independent from other geographical areas, cannot be stored in large quantities and must be used as soon as it is generated. It is also difficult to import from other countries during an emergency, so the shortage or interruption of the country’s energy supply stands to threaten its national security. To maintain the economic impetus and enhance people’s quality of life, it is imperative to have an ample and stable supply of power, and so diversity in energy penetration is important for ensuring both cost-effectiveness and stability. However, it is relatively challenging to build large hydropower facilities in Taiwan today because of environmental factors like over-developed catchment basins and altered topography and riverways; and conservational requirements around reservoirs, rivers, land animals, and water quality; not to mention that most good candidate sites have already been developed. Hence, zero-carbon and eco-friendly SHP, deploying small- to medium-sized units, should be mainstreamed in the island’s efforts to align with international trends toward net-zero emissions.

2. Research Framework and Literature Review

2.1. Research Framework

Figure 1 below shows the research framework of this article, where the objective of this research is to study Taiwan’s SHP policies. Firstly, literature review and development assessment were conducted to understand the status and foundation of current SHP implementation. Secondly, seminar discussion and problem study were carried out to consolidate opinions, while focusing on the problem of implementation. Lastly, the authors of this article formulate response to challenges and propose improvement strategies.

2.2. Literature Review

Small hydropower, or SHP, has been viewed in recent years as an important energy source toward realizing the global targets for renewable energy (RE) [1], thanks to its virtues in terms of stability, long lifecycle, and relatively low operational costs. However, it requires a longer planning and agreement process prior to installation and higher technology threshold and capital investment, so many studies have examined the current state of SHP development [2,3,4] and assessed different types of SHP turbines. Hira et al. [5] discussed various SHP models and control technologies to arrive at an effective program for installation assessment. Sachin et al. [6] reviewed different types of SHP facilities with an eye to minimizing installation cost. Various studies have been published on installation options for different types of SHP aimed at reducing cost while maintaining operational effectiveness [7,8,9,10]. Thiago et al. [11] formulated steps to ensure effective management and policy revision. Other studies cover the use of GIS (Geographic Information System) software to enhance effectiveness in the siting of SHP stations [4,12,13].

SHP equipment may be divided into two main categories: civil (water intake equipment, channel, and decontamination equipment) and mechanical (turbine, generator, and controls). The distribution is illustrated in Figure 2.

The turbine is the core piece of equipment in SHP. However, different sites and development models require turbines with different designs to suit the head and flow of the selected site. Flux generates mechanical power on the shaft, which is then converted into electrical energy by the generator. In order to maximize SHP operational efficiency, many in-depth studies have been undertaken to probe the related hardware. K. Wirtayasa et al. [15] analyzed the design of axial-flux permanent-magnet generators; Nasir et al. [16] explored suitable types and sizes of turbines; others analyzed the performance and operation of low-head turbines [17,18]. Yoosef et al. [19] examined and interpreted the design of the Archimedes screw. Ludovic et al. [20] discussed the impact of seasonal change on the efficiency of a station. Barelli et al. [21] proposed an accurate feasibility study and suitable applications for torrential rivers.

SHP may be linked with various uses of water [22], including as an addition to a water supply system to utilize the extra energy [23]. When installed along an irrigation canal, it can generate electricity while supplying water. Renata et al. [24] investigated the technical and economic feasibility of home-based SHP. SHP can be further combined with other types of renewable energy. One study [25] investigates a run-of-the-river hydro-PV battery hybrid system and highlights the significant influence the flow averaging period has on the energy balance results. Another study [26] underlines the suitability of using extra SHP-generated electricity to produce hydrogen along the Northwest Columbia River between spring and summer. Evidently, comprehensive planning of various resources will contribute to diversification and sustainability in SHP development.

In addition to achieving energy efficiency, a balance must nevertheless be maintained between basic water abstraction, biodiversity, environmental protection, and land use, as well as acquiring acceptance at the local level. The impact of SHP installation on the surrounding animals discussed in some studies [27,28] underline the need to better understand the local ecology. Basso et al. [29] proposed a set of tools for maximizing benefits in multiple aspects, including economic, ecological, and environmental, in order to facilitate the design and management of power stations. Sigrid et al. [30] scrutinized a case where SHP development in Norway impacted land originally used as pastoral grounds by the indigenous people, triggering their opposition as a result. Thus, it is imperative to consider local perspectives and public acceptance in decision-making during the preliminary planning stage. Terese et al. [31] arrived at four key points, based on case studies from Germany, Portugal, and Sweden, in enhancing SHP effectiveness: (1) maintain area control; (2) adapt to climate change; (3) ensure public benefit; and (4) protect nature and ecology. The first point refers to the fact that run-of-the-river SHP should be managed as a decentralized system, unlike the case of a conventional large reservoir.

Many studies offer perspectives into the current state and future prospects for specific countries or regions. Hatata et al. [32] investigated SHP potential at different sites on the Nile Delta and established formulas to calculate the efficiency of various combinations of turbines, heads, and flow rates to serve as references for establishing SHP in Egypt. Lea [33] surveyed the cost-effectiveness of potential sites around the USA. There are also related studies for other locations, such as Ghana [34], Pakistan [35], Turkey [36], Japan [37], China [38,39], Switzerland [40], Poland [41], Europe [42], and the Baltic countries [43].

As SHP gradually evolves to become a critical part of the RE strategy as a means to mitigate climate change, a systematic analysis is then necessary to accommodate RE in existing energy codes and standards to ensure rigor and compliance. Thiago et al. [11] argue that ecological and watershed management should be considered in policy formulation. Sarah [44], through the analysis of the Chilean case, suggests that the development planning of small hydropower should involve collaborative research with local communities. Kishore, T.S. et al. [45] provide a basis for policymakers by analyzing the technical and economic benefits. Sarah et al. [46] propose that the existing policies and relevant financial practices for small hydropower still lack integration with environmental laws and regulations, lacking the necessary comprehensive planning for development.

Taiwan is relatively lacking in research into small- and medium-sized hydropower stations under development, and there is relatively scarce international research on regulatory aspects. Therefore, this study aims to conduct an assessment and analysis of SHP applications in Taiwan by compiling information on international development and propose recommendations and corresponding measures for future development.

3. Analysis of International Development and Taiwanese Application

3.1. International Trends

According to “Renewable Energy Statistics 2022” by IRENA (International Renewable Energy Agency) [47], the total installed capacity of renewable energy worldwide reached 3064 GW as of the end of 2021, and hydropower still accounts for the highest RE penetration at 44% or 1360 GW (excluding 130 GW in pumped storage). Due to environmental and conservational factors, however, it is relatively challenging to install hydropower systems in some countries, and most candidate sites for large hydropower facilities are already developed, so SHP is now being pursued as an eco-friendly alternative.

SHP boasts the benefits of low environmental impact, high reliability, and a relatively long facility lifecycle. It takes advantage of existing watercourses and pipework, its capacity is easy to calculate, and the technology is mature, with over 50 years of development, although seasonal flow impacts its loading and may sometimes cause damage. However, the definition of SHP varies around the world, in most cases described based on installed capacity (

Table 1. Definition of SHP by installed capacity [48].

Country/Organization	Definition (kW)
China, USA, Canada	<50,000
Brazil	<30,000
India	<25,000
Taiwan	<20,000
Japan, Korea, France, Australia	<10,000
Ireland	<5000
Germany	<1000

). For instance, it is defined as installed capacity under 50,000 kW by China, the USA, and Canada; and under 10,000 kW by the UN Climate Technology Centre & Network, Japan, and the Republic of Korea. In Taiwan, it is defined as “hydropower systems under 20,000 kW that utilize watercourses (canals for irrigation or other uses” under Article 3.7 of the Renewable Energy Development Act (hereinafter “REDA”).

According to the United Nations Industrial Development Organization (UNIDO)’ s World Small Hydropower Development Report 2022 [48], globally the total installed capacity of SHP under 10 MW has reached 79 GW, a growth of 11% compared with 2013 and 5.3% compared with 2016. Asia and Europe have seen the greatest growth, but there is still 140 GW of undeveloped potential.

Asia and Europe are the fastest-developing regions so far, with Asia boasting the highest total capacity for SHP under 10 MW. Europe is the most developed region, with western Europe, for instance, having reached 83% development already. In addition, over the past three years, the African region has experienced a significant growth rate of 23%. The Asian region, on the other hand, has shown a slight downward trend in small hydropower development. In the Americas, small hydropower development is concentrated in North and South America. As for the Oceania region, there has been a slight growth in small hydropower development.

Globally, China boasts the largest capacity, accounting for 53% of the global pool under 10 MW and 29% in overall potential SHP capacity, which is four times the sum of Italy, Japan, Norway, and the USA. The top five countries are China, the USA, Japan, Italy, and Norway, accounting for 71% of the total global capacity. Current status of SHP installation and development trends are compiled in

Table 2. Major development of SHP by country [48].

Region	Status
Europe	Relatively long history in SHP development with installed capacity reaching 20,434 MW and estimated potential capacity of 39,607 MW. The increase in installed capacity in comparison to 2019 is mainly due to the new capacities added in Norway, Italy, and Albania; 52% of the potential capacity developed as of 2022.
Americas	6937 MW in total capacity; potential for under 10 MW estimated to be 25,294 MW, accounting for 15% of the global potential. Within North America and South America, Brazil, Canada, and the USA dominate the market in capacity and development potential. In the Central Americas, Mexico is assessed as a country with vast SHP potential, but no studies have been undertaken.
Asia	50,406 MW in total capacity and estimated potential capacity of 139,946 MW for SHP under 10 MW, accounting for 37% of the global potential. China has the largest installed capacity in Asia.
Oceania	454 MW in total capacity, with a growth of 7% over 2019; estimated potential capacity of 1106 MW with only 36% developed. Broad variation in SHP potential; all countries enjoy abundant precipitation, with Australia and New Zealand presenting the highest potential; the other Pacific Island nations enjoy sufficient precipitation but few have the mountainous topography required, so topographical factors present the greatest challenge in this region.
Africa	Relatively low capacity but enormous potential; total capacity of 729 MW for SHP under 10 MW; estimated potential capacity 15,714 MW with only 5% developed and relatively slow in development. Broad variation in climatic and geographic conditions across the region, resulting in differences between the northern and southern parts; eastern Africa is the fastest developing region and also has the highest potential; northern Africa has climatic constraints and lower potential; southern Africa has the lowest capacity and most development is concentrated in South Africa.

below.

The feed-in tariff (FIT) has been the most dominant strategy for promoting SHP worldwide, with 50 countries deploying it as the main pillar for SHP development. In Europe and the Americas where FIT is most widely used, some countries have replaced it with other schemes such as green certificates or feed-in premium (FIP). However, FIT is still growing in Asia and Africa, with 16 countries applying it. Other strategies include FIP, prioritized grid connection, tax exemption, green transaction certificate, auction, investment assistance, other subsidies, and market premium mechanism. The primary strategies deployed in various regions are listed below:

• Europe: Europe has the highest number of countries (22 in total) using FIT to grow SHP. However, development in Europe has also been met with obstacles, which are primarily regulations around environmental impact, while some environmental groups also hold a negative view of SHP.
• Americas: Of the 30 countries here, those that have adopted FIT include Canada, (some states in) the USA, and Ecuador. Most countries in the Americas have policies facilitating SHP but are not free of their own bottlenecks. The primary obstacle is the considerable upfront cost for building SHP stations, along with insufficient legislation and the unpopularity of SHP due to its environmental impact.
• Asia: The main incentive for developing SHP in Asia is to lower dependence on fossil fuels and thus reduce environmental pollution. Other impetuses include reductions in energy imports and increases in electrified rural areas. However, there are also various obstacles, such as insufficient technology, personnel, and financing, as well as unattractive wholesale prices and water shortage.

A comprehensive look at the developmental trajectory of SHP worldwide suggests that the technology is highly mature and generalized, with the potential to help developed and developing countries to effectively raise clean energy penetration into their electricity supply profile. Many countries have or are starting to utilize SHP to help areas that are poor and unable to supply electricity. In addition, SHP may also help developing countries realize targets in renewable energy and greenhouse gas reduction.

In the “World Small Hydropower Development Report 2022” by the UNIDO [48], seven recommendations were made to overcome challenges and obstacles in developing SHP worldwide:

• Undertake detailed resource assessments: To lower their development costs and engage private investments, developing countries should conduct comprehensive analyses of their SHP potential. Specifically, their re-assessments need to factor in new technologies, ecological conditions, laws and regulations, and the potential in converting existing infrastructure and refurbishing old sites.
• Develop appropriate policies and regulations: Existing policies and financial incentives for other REs should be expanded to accommodate SHP, with a special emphasis on green technology, and clear targets should be set for SHP development. Such policies and incentives should be aptly formulated to account for local circumstances and leverage collaboration across bodies responsible for water resources, environment, and electricity. Government bodies should also set up a one-stop window to standardize and streamline the licensing process and the issuance of permits and contracts.
• Facilitate access to sustainable sources of financing: There should be a thorough strategy put together to mitigate the financial risks for investors. Easier and enhanced access can help overcome steep initial costs so that project developers can secure the necessary finances. One possible adaptive measure is to raise SHP awareness among local banking or microfinance institutions so as to improve their risk assessment and create a supportive financing environment.
• Facilitate access of the SHP industry to equipment and technology: The overall development of the SHP sector will benefit from building or upgrading industries that act as SHP components. Countries where there is insufficient local technology may gain improved access to foreign imports through concessionary duties and decreased import taxes.
• Provide reliable infrastructure: In order to attract private investment, it is vital to develop robust grids with adequate capacity and coverage so that new SHP stations can connect to grid. Countries with high distribution losses should pay special attention to matching investments in generation with distribution systems so as to boost the overall efficiency of SHP plants. Building SHP micro-grids with base-load power can also provide a short-to-medium-term—or even permanent—solution for supplying electricity to remote and hard-to-access communities.
• Improve local skills and expertise: Improving local capacities to undertake feasibility studies, construction, and operation and maintenance of SHP plants can contribute to making the entire SHP sector more self-sufficient and long-lasting in the country.
• Strengthen international and regional cooperation: Establishing international and regional networks to promote SHP is critical for mainstreaming SHP as a robust RE solution. In particular, more insights must be acquired into topics such as new SHP technologies, sustainable financing and ownership models for SHP development, the effectiveness of financial incentives for SHP projects, and impact on climate change. Strengthening South–South cooperation and triangular cooperation among developing/developed countries and international/regional agencies will help international organizations smoothen the successful scaling of pilot initiatives into full-scale programs.

3.2. Assessment of SHP Potential in Taiwan

Taiwan’s natural environment, featuring steep mountains, rapid river flow, and abundant precipitation, presents stellar opportunities for hydropower generation. Hydropower is precious as one of the few domestically available sources of clean energy in Taiwan, as it strives to diversify the national energy portfolio. Over the years, development has centered on large-scale hydropower stations due to construction cost and environmental factors but has reached a highly saturated level. Coupled with rising environmental awareness, it is becoming increasingly difficult to find sites for large-scale stations. As a result, the government has been aggressively pursuing SHP, and various agencies such as the TPC (Taiwan Power Company), WRA (Water Resources Agency), COA (Council of Agriculture), and various levels of governing bodies for water resources are implementing projects aligned with the government’s energy policies. They have been reviewing the flow and head of the watercourses in their existing facilities, including reservoirs/weirs, power houses, and irrigation canals for feasibility in SHP installation and prioritizing high-potential sites.

However, the calculations for SHP potential must also factor in mechanical engineering capability, grid design, and regional economic benefits in addition to the characteristics of the water body and its flow volume and flow rate. Meanwhile, hydrological variations caused by climate change also affect SHP potential. Factors involved in assessing the economic benefits of SHP include the local electrical demand, feeder costs, grid connection agreement and costs, investors and developers interest, etc. A comprehensive, systematic, scientific, and practical stock-taking of SHP potential across Taiwan has yet to be conducted. Agencies like the TPC, WRA, and COA have carried out their own preliminary analyses, but with different principles applied to the calculation of power generation potential the resulting numbers are hard to compare. According to data from the WRA, TPC, and the Irrigation Agency (under the COA), there are 124 potential SHP sites (

Table 3. Potential SHP sites in Taiwan [49,50].

Agency	Potential
	Site	Capacity (MW)
WRA	60	440.8
Irrigation Agency	59	50.256
Taiwan Water Co.	5	3.402
Total	124	494.458

) with an accumulative potential of 494 MW, encompassing reservoirs and retention basins, run-of-the-river, and irrigation canals.

In its drive to accelerate development, Taiwan has set a policy goal of achieving 29 GW in RE capacity by 2025. In addition to a core portfolio comprising solar power and offshore wind, the target capacity for hydropower is set to be 2122 MW. Currently, hydropower projects in Taiwan are mainly driven by TPC and supplemented by private SHP project developers. As of December 2022, the total capacity (

Table 4. Installed capacity (MV) of hydropower stations in Taiwan [51,52].

Current Installed Capacity	TPC	Private Power Stations	Self-Use Power Generation	Pumped Storage
Subtotal	2050.317	42.15	1.47	2602
Total	2093.937

) is 2094 MW from conventional hydropower, of which about 5 MW is small hydropower and 2602 MW from pumped storage.

In order to reach the target of 2122 MW by 2025, the Ministry of Economic Affairs (MOEA) has established the “Developmental Strategy Platform for Small Hydropower and Renewable Energy”. SHP stations being planned and built over the next three years have been reviewed and inventoried. There are 15 sites, totaling22.8 MW (

Table 5. Inventory of the “Developmental Strategy Platform for Small Hydropower and Renewable Energy” [51].

Agency	Name	Installed Capacity
WRA-TPC collaboration	Shijun Connection Canal	4.54
	Jiji South Bank new construction (settling basin)	3.18
	Jiji South Bank new construction (#9)	1.69
	Jiji South Bank new construction (#10)	1.69
	Jiji South Bank new construction (#11)	1.88
	Jiji South Bank No. 3	1.69
	Jiji South Bank No. 4	1.88
Taiwan Water Co.	Lijia Water Treatment Plant, Taitung	0.13
	Shalu Water Distribution Center, Taichung	0.72
	Nanhua Reservor, Tainan	1.44
	Raw water pipe at Liyutan Water Treatment Plant	1.12
	Raw water pipe at Houli First Water Treatment Plant
Local WRA agencies	North Bank Connecting Canal No. 1 (N10~13 hydraulic drop)	1.16
	North Bank Connecting Canal No. 2 (Phase 2, N20 hydraulic drop)	1.66
	Output hydraulic works at Agongdian Reservoir and Fuxing Canal	0.03
Total 1: Installed capacity of all listed facilities		22.81
Total 2: Excluding Taiwan Water Corporation		19.4

), including 7 co-developed by the WRA and TPC (16.55 MW); 3 by private players solicited by the WRA via a commercial or bidding process (2.85 MW); and 5 by the Taiwan Water Corporation (3.41 MW).

4. Challenges and Solutions in Developing SHP in Taiwan

To gain an insight into the current status of SHP power generation and industry opinions in Taiwan, the study team actively attended local SHP forums to engage in exchange and discussions about Taiwan’s SHP development and how to shape a more robust environment to nurture its growth, in addition to better understanding the current state of local development. Related issues and suggestions received are compiled below:

• Related Issues

  1.

  It is relatively complex and difficult to file an application to establish SHP in Japan because the process involves numerous laws and regulations. However, gradual deregulation has been undertaken in recent years, including delegating approval of 200–1000 kW plants to municipal governments, and requiring registration instead of approval for projects utilizing agricultural irrigation or water management facilities to generate power.

  2.

  Taiwan, in its susceptibility to sedimentation, is attributed to dams built along rivers. One approach worth considering is to incorporate sediment removal in the original design of the SHP plant, thus lengthening its lifecycle through simultaneous power generation and sediment removal. SHP installation should also be considered when water management facilities are being refurbished or planned from scratch.

  3.

  Common obstacles in developing SHP include high development risks, substantial initial investments, and difficulties in connecting to the grid. Development risks may be mitigated by verifying the potential of a candidate site via studies involving hydrological data or flow survey. Initial investments may be reduced by leveraging existing water management facilities and piping materials or turbines readily available in the market to reduce development costs. As for connecting onto the grid, the local distribution network may be used, or the power generated may be reserved for self-use.

• Suggestions

  1.

  SHP should be included in the executive items of Taiwan’s 2050 Net Zero strategy; efforts should be redoubled in development of the local SHP industry chain, continued focus in the research and development of SHP units, and enhancement of technical capacities in site assessment and design optimization.

  2.

  The definition of SHP in the REDA should be reviewed by referencing the established international definitions and standards in order to better align Taiwan’s SHP green certificates with the rest of the world.

  3.

  The scope of SHP power generation should be broadened to encompass sites with natural elevational (gravity) differential, such as water purification plants or the water discharge system of power stations.

  4.

  New SHP categories should be added to the list of wholesale prices to include rates for categories other than those differentiated by installed capacity (e.g., diversion or impoundment).

  5.

  Measures for reducing water pressure or velocity are often installed in irrigation channels to decelerate the flow, but they also engender a waste of valuable energy. Introducing hydropower generation would help convert the decelerating energy into hydropower instead, resulting in better use of the hydro energy.

  6.

  Many countries offer national-level subsidies and support aimed at bolstering local energy supply and creating local jobs. They encourage the community to establish a SHP power company to maintain and operate the plant, in the process bringing income and jobs to the community while attracting young people to return to their hometown.

  7.

  Industry–academia collaboration should be advanced to develop commercial SHP units; related faculty and curriculum should be integrated at various levels of schools to foster talents in the field.

  8.

  Information on existing SHP sites in Taiwan should be compiled and published for better promotion and understanding, and greater support and approval, from the general public.

In summary, the development of SHP still faces several challenges, such as cumbersome administrative protocols and legislation, wide variation in economy of scale, improvements to the current tariff matrix, and insufficient technical capacity. They are discussed below:

• Administration and legislation

According to Paragraph 1, Subparagraph 7, Article 3 of the REDA, as amended on 29 May 2023: “Small hydropower refers to hydropower generated in ditches or where the installed capacity of the system is less than 20,000 kilowatts”. The revised definition states: “Small hydropower refers to the conversion of non-pumped hydropower into electrical energy using the original water volume and drop of existing water facilities, such as waterways, ditches, or pipelines, which are not used for other hydraulic purposes. It can be directly installed or set up through an auxiliary waterway, and its installed capacity does not exceed 20,000 kilowatts”. The new law expands the definition to include other utilization methods that can simultaneously ensure the original functionality of the site, allowing for combined power generation. It also applies to small hydropower plants for grid connection and power purchase agreements. Furthermore, Articles 4.2 and 7 of the aforementioned Regulations require applying to the competent authority for licensing of the RE power generation equipment by completing and submitting the necessary dossier. A certificate of water right, agreement for use of a watercourse, or other similar proofs issued by a competent water authority must also be submitted, except where the application is filed by a competent water authority itself. The procedure is illustrated in Figure 3 and Figure 4 below:

Licensing related to land use may be obtained according to the site location based on the Urban Planning Law, Regional Plan Act, Regulations Controlling Non-urban Land use, Regulations on Review of Applications for Use of Agricultural Facilities on Agricultural Land, Soil and Water Conservation Act, and The Forestry Act. The “Standards for Determining Specific Items and Scope of Environmental Impact Assessments for Development Activities” applies where an EIA is required. Licensing for channeling water, on the other hand, must be obtained according to the “Regulations for Management of Farmland Irrigation and Drainage Facilities” and the Water Act. The relevant laws and scope are listed in

Table 6. Relevant laws of SHP development in Taiwan.

Law	Competent Authority	Scope
Electricity Act	Bureau of Energy (BOE)	Fundamental laws related to electrical resources. Amended so that SHP refers to power generation systems utilizing watercourses or other water conservancy facilities with under 20 MW in installed capacity to encourage SHP.
Renewable Energy Development Act
Basic Environment Act	Environmental Protection Administration	Assessment of environmental impact. Amendment to the “Standards for Determining Specific Items and Scope of Environmental Impact Assessments for Development Activities” so that an EIA is not required for a facility under 20 MW.
Standards for Determining Specific Items and Scope of Environmental Impact Assessments for Development Activities
Urban Planning Law	Ministry of the Interior	The SHP site must comply with the applicable land-use plan. Amendment to allow for SHP installation on land zoned for agricultural, forestry, and security uses as long as it is not zoned for “specific agricultural use”.
Regional Plan Act
Regulations Controlling Non-urban Land use
Regulations on Review of Applications for Use of Agricultural Facilities on Agricultural Land	COA	Relaxation on regulations related to combining SHP (excluding pumped storage) with agricultural use as a ground-based green energy facility. Relevant laws apply to ensure soil and water conservation on a site located in a mountain or forest. The “Regulations on Irrigation and Drainage” apply to the use of irrigation canals to prevent negatively impacting irrigation supply.
Soil and Water Conservation Act
The Forestry Act
Regulations for Management of Farmland Irrigation and Drainage Facilities
Act for Promotion of Private Participation in Infrastructure Projects	Ministry of Finance	Governance over private sector participation in SHP-related businesses.
Revenue Directions for National Public Real Estate
Water Act	WRA	Application for water right in accordance with Chapters 3 and 4 and Article 85. Application for works related to water conservancy in accordance with Chapter 5.

.

As seen above, the administrative protocols involved in SHP application and installation are cumbersome and involve multiple government agencies, as well as numerous legal procedures and the Indigenous Peoples Basic Law, with the main issues outlined and discussed below:

1.

The application process span involves multiple government agencies: The agencies involved include the WRA and the Irrigation Agency (water right, usage rights for rivers or watercourses), local governments (registration and filing for record, water right, land, building), TPC (grid connection), and BOE (registration and filing for record, construction permit).

2.

Local governments are unfamiliar with the licensing administrative process: The REDA was amended in 2019 to allow the local government to assess the application to file for SHP installation record, but municipal governments are unfamiliar with the administrative process.

3.

Indigenous Peoples Basic Law and constraints on equipment licensing: Developing land in indigenous territories involve the Indigenous Peoples Basic Law and is constrained by the right to informed consent; the definition of SHP means that facilities that are not watercourses or existing water conservancy facilities are not assessed.

• Economic cost

Key issues, including insufficient economic incentives, insufficient cost parameters for the existing tariff system, and poor water supply conditions impacting the quantity of electricity sold, are discussed as follows:

1.

Project developers comment that most private units are under 200 kW, construction costs have been rising in recent years, and the cost parameters for wholesale pricing have been underestimated.

2.

Extreme weather patterns have impacted water supply and the full load hours are not as good as anticipated.

• Technical support

Key issues, including a lack in technical capacity, commercial operational expertise, and successful experience, are discussed as follows:

1.

Overdependence on foreign import: There are already mature products available from Japan, Europe, and China, so usually complete units are imported rather than being developed and manufactured by local companies; an industry chain and cluster for unit manufacturing have not been formed, so domestically produced units are not yet competitive.

2.

Insufficient experience in mechanical–electrical integration: Taiwan has strong technical capacity in electrical and mechanical equipment and automated controls, but lacks experience in integrating turbines and generators; SHP units are site-specific, so the selection and pairing between site and unit type is critical.

5. Policy Recommendations

The implementation of hydropower is urgent as a way to adapt to climate change and ensure energy sustainability. Taiwan’s natural environment boasts robust potential for developing SHP, and the government has made significant efforts to facilitate it through legislative amendments and subsidies. Recommendations for further improvements are offered below:

• Administration and legislation

Coordination efforts should be made to overcome administrative barriers by consolidating into one single contact window across various government agencies and enhancing communication and information integration. Recommendations for specific measures are outlined below:

• Establish a one-stop shop that provides SHP-related services to assist with application processes and resolve any concerns project developers may have related to land permits, water right, usage rights for rivers or channels, and equipment licensing.
• Help local governments clarify the licensing and review processes for SHP equipment by organizing meeting platforms to facilitate communication at the local level, providing a standardized set of licensing and review criteria, staging training, and appointing on-site advisors.
• Assist with negotiations with indigenous communities and local briefings; examine potential relaxation of regulations on SHP equipment licensing to allow for utilization of the natural flow and head of watercourses, creeks, rivers, irrigation canals, and water distribution pipework.

• Financial incentives

Apt financial incentives should be offered to engage private project developers and link and create a local industry chain. Recommendations for specific measures are outlined below:

• Examine the practicality in forming a new tiered tariff matrix, which factors in realistic circumstances around capacity and the microenvironment for development by referencing international data; alternatively, ask project developers to submit an evidence-based report on cost and reasonable return on investment for review.
• Accelerate the renewable energy certificate system and expand on commercial models for SHP electricity trading.
• Subsidize waterway improvement while assisting with SHP installation that involves existing water conservancy facilities, with a view to preserve existing water use and ecological wellbeing while reducing the project developer’s development costs.
• Draft a set of guidelines on subsidizing SHP development to subsidize equipment installation, with a view to diversifying Taiwan’s energy portfolio.

• Technical support

Recommendations for specific measures related to the cultivation of local technicians and talents and domestic capacity in R&D and manufacturing are outlined below:

• Leverage the COVID pandemic to convert a crisis into an opportunity—referencing TPC’s Jingshan and Hushan Power Stations as case studies, leverage collaboration between senior local technicians and foreign companies to develop and train local talents through such exchange.
• Subsidize domestically produced equipment through government-funded R&D projects, e.g., encourage companies to develop innovative applications for SHP technology to produce equipment suitable to Taiwan’s geographical and hydrological conditions.
• Encourage local companies to develop and hold key core technology (the turbine and generator are the core components in SHP) to augment SHP development in Taiwan.
• Organize seminars and dedicated training to develop hydroelectricity talents and publish related popular-science books to cultivate strong educational roots.

6. Conclusions

Currently, Taiwan has a complete planning path for various types of renewable energy. Although solar photovoltaics and offshore wind power are the focus of promotion, if supplemented by base-load renewable energy such as small hydropower, geothermal and biomass energy, a stable and resilient renewable energy grid system can be completed. Therefore, this study suggests raising the administrative level of supervision of the small hydropower promotion platform to strengthen the promotion force, and clearly relax the definition of small hydropower generation, such as incorporating the planning of power generation in combination with water conservancy construction projects to improve the multi-use of sites; and adding new small hydropower purchase rate levels and types to increase economic incentives; promoting industry–university cooperation, integrating teachers and courses to cultivate professional talents, and promoting small hydropower through specialized books to strengthen national support and recognition. At present, Taiwan’s solar photovoltaic installed capacity has increased sevenfold from 2016 to 2023, offshore wind power has doubled, and the overall proportion of renewable energy has reached 8.6%. If the government can declare its active promotion of base-load renewable energy, it will help to enhance the industry’s confidence in renewable energy supply and achieve the net zero goal by 2050 earlier. This article hopes that through the aforementioned analysis and research and comprehensive recommendations, it can serve as a reference and basis for Taiwan’s subsequent promotion of small hydropower generation.