When Taiwan was under Japanese rule in 1934, hydroelectric plants were constructed at Sun Moon Lake to generate power from the fall of the Zhuoshui River.

[2][3] After the war, Taiwan Power Company (Taipower) took over the project with aid from the United States Agency for International Development.

The dam controls runoff from an area of 219 square kilometres (85 sq mi), and is operated to reduce flood peaks on the Zhuoshui River by up to 2,520 cubic metres per second (89,000 cu ft/s).

The Wanda Power Station (萬大發電廠; Wàndà Fādiànchǎng) is located about 2 kilometres (1.2 mi) downstream and was the only part of the project to be completed before the construction halted due to World War II.

[7] In 1957, generating units G1 and G2 were put into service, using water from the Wushe reservoir at a gross head of 109.7 metres (360 ft).

All three units are powered by vertical-axis Francis turbines, and generate about 182 million kilowatt hours (KWh) per year.