Power shortages bigger threat than missiles: analysts

China's missiles may not be the biggest danger to Taiwan. An impending power shortage could cause blackouts within three years and weaken the nation's economy.

Power production is failing to keep pace with demand because of a ban on new nuclear plants and delays in completing projects already underway, said Jeffrey Bor (柏雲昌), a Chung-hua Institution for Economic Research (中經院) fellow.

"The chance of large-scale blackouts is quite high," he said. "Defense against missiles should be of lower importance because the chance of an attack is slim."

President Chen Shui-bian's (陳水扁) government has ignored long-term economic planning because of his drive to secure Taiwan's formal independence from China, said Yang Tai-shuenn (楊泰順), a professor of politics at the Chinese Culture University.

Power supply disruptions could accelerate the exodus of local manufacturers, who already fill more than 40 percent of their export orders through overseas factories.

Taiwan Power Co (Taipower, 台電) is counting on the Fourth Nuclear Power Plant to help prevent shortages.

First approved in 1981, the station is only 63 percent complete. The project, in Kungliao (貢寮) Township, Taipei County, probably won't open until 2011, Bor says.

Without Kungliao, which is designed to produce 6 percent of Taiwan's electricity, the nation may face outages in 2010, say Bor and Liang Chi-yuan (梁啟源), a government adviser and economist at Academia Sinica.

"Every walk of life will be affected," Liang said.

Taipower estimates that Taiwan's reserve margin, the spare capacity available during peak times, will shrink to 8.5 percent in 2010 without Kungliao.

That's less back-up than the state-run company needs to shut generators for maintenance, meaning one faulty unit could trigger blackouts, says Yang Feng-shuo (楊豐碩), director of energy studies at the Taiwan Institute of Economic Research (台經院).

Taipower generates about 75 percent of Taiwan's power.

"The trend of the reserve margin falling is quite worrisome," Yang said.

Clint Chou (周義岳), a spokesman for Taipower, says that at least one of Kungliao's two reactors will be operational by 2010, allowing the company to maintain a reserve margin of 12 percent.

"As long as it's above 10 percent, it'll be OK," Chou said.

The risk of blackouts may prompt manufacturers to leave Taiwan, says Niven Huang (黃正忠), secretary-general of the Taiwan Business Council for Sustainable Development (中華民國永續發展協會), whose 25 members include Taiwan Semiconductor Manufacturing Co (台積電), the world's biggest supplier of custom-made computer chips.

"Electricity outages disrupt operations and prompt companies to rethink investment locations," Huang said.

Still, Eric Tang (譚仲民), vice president of Powerchip Semiconductor Corp (力晶半導體), Taiwan's biggest memory-chip maker, says he isn't aware of the falling reserve margin.

"If there are power outages, we'll be worried," he said.

Taiwan must add 1,200 megawatts (MW) of generating capacity, equal to 4 percent of its production, each year to meet demand. A government panel this month recommended that a 1,600MW coal-fired power station be spiked because of pollution concerns.

Without new coal plants Taiwan may see its back-up capacity slip to almost zero by 2015, said Tu Yueh-yuan (杜悅元), Taipower's chief engineer.

"We'll be very nervous," she said. "A power system can't allow a situation like that."