Sun Moon Lake, in Yuchi Township of Nantou County, is surrounded by Shuishe Mountain, Buji Mountain, Yiji Mountain, Tantou Mountain, Songlun Mountain and Maolan Mountain. It was originally a natural lake, formerly known as Shuili Lake, Shuishe Lake, Longtan or Dragon Lake.
During the Japanese Occupation, in order to use Sun Moon Lake to generate electricity, the Government-General in Taiwan built Shushe Dam and Toushe Dam to increase the reservoir capacity, and then built a 15-kilometer underground channel from the Zhuoshui River channel closest to Sun Moon Lake to block sand and intercept stream water. The overall reservoir construction project was completed in 1934.
Today, the Sun Moon Lake Reservoir has the most complex hydroelectric power generation system in Taiwan, which is used daily through Taipower's pumped-storage power generation.
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