Sat, Sep 14, 2024 page8

• Taiwan’s energy challenge ahead

  • By Harun Talha Ayanoglu
  • • 
    • 
    • 

  In his inaugural speech, President William Lai (賴清德) outlined a clear vision for Taiwan’s future, emphasizing the nation’s strategic role in the global supply chain amid shifting geopolitical tides. He underscored the centrality of the “five trusted industry sectors” — semiconductors, artificial intelligence (AI), the military, security and surveillance, and next-generation communications — in this vision. These sectors are not only vital to Taiwan’s economic development, but also characterized by their energy-intensive nature. As AI and semiconductor industries rapidly expand in Taiwan, concerns about the sufficiency of the nation’s power supply are becoming increasingly critical.

  Taiwan’s economy stands out among developed nations because high-tech manufacturing still accounts for more than one-third of its GDP. While other advanced economies have shifted toward services and outsourced manufacturing, Taiwan remains a global manufacturing powerhouse, particularly in the semiconductor industry. Taiwan is the undisputed leader, with a share of about 63 percent of the global market, with Taiwan Semiconductor Manufacturing Co alone controlling 56 percent of the global foundry market. Other manufacturers like United Microelectronics Corporation and ASE Technology also contribute significantly through foundry services, packaging and testing, making Taiwan indispensable to the global tech ecosystem.

  However, these accomplishments come with a heavy energy burden. Semiconductor manufacturing is one of the most energy-intensive industries in the world. Advanced fabrication technologies, particularly those below 7 nanometers, require large amounts of electricity to power clean rooms, cooling systems and precision equipment. As semiconductor demand continues to grow, so does the energy needed to power this crucial industry.

  Nvidia CEO Jensen Huang (黃仁勳) recently highlighted Taiwan’s energy concerns during his recent visit, stressing that power limitations could deter investments in critical sectors such as AI and supercomputing. His warning underscores a broader challenge Taiwan faces: How to balance its growing demand for energy with its need for energy security, all while navigating geopolitical risks and the global energy transition.

  Taiwan’s energy mix is imbalanced and heavily dependent on imports. As of last year, fossil fuels accounted for a staggering 81.8 percent of the nation’s electricity generation. Renewable energy sources, including wind, solar, hydro, and waste-generated power, contributed just 9.9 percent, despite years of government efforts to increase their share. Meanwhile, nuclear power, which has long been a reliable and relatively low-carbon energy source for Taiwan, provides 7 percent of the nation’s electricity and pumped storage accounts for 1.2 percent.

  Taiwan’s extreme reliance on imported energy sources poses significant risks. Nearly 98 percent of its fossil fuels are imported, primarily from the Middle East. This dependency on foreign energy, particularly in a region where China’s influence is expanding, raises concerns about Taiwan’s long-term energy security. Geopolitical tensions could disrupt supply chains, driving up costs and exacerbating energy shortages, potentially hampering Taiwan’s critical industries.

  Despite these challenges, Taiwan remains committed to achieving a “nuclear-free homeland” by next year, a policy introduced by former president Tsai Ing-wen (蔡英文). The government’s plan hinges on phasing out nuclear energy and ramping up renewable energy to 20 percent of the energy mix. However, the reality on the ground is far from ideal. Although Taiwan has made remarkable progress in expanding renewable energy, the share of renewables in the energy mix remains well below next year’s target, sitting at just 9.9 percent last year. Achieving the goal of a nuclear-free homeland might be within reach, but without sufficient renewable energy capacity, Taiwan risks an overreliance on fossil fuels, which could hinder its climate goals and leave it vulnerable to energy price shocks.

  The debate surrounding nuclear energy in Taiwan has often been framed in overly simplistic terms — pro-nuclear versus anti-nuclear, or environmentalists versus industry. This polarization misses a crucial point: Energy security is not just about the type of energy Taiwan uses; it is about ensuring a stable, affordable and reliable supply of energy for the long term. The International Energy Agency defines energy security as the uninterrupted availability of energy sources at an affordable price. For Taiwan, energy security means diversifying its energy sources and suppliers, reducing its reliance on any single type of energy, and ensuring that its energy infrastructure can support the needs of its industries.

  Phasing out nuclear energy is relatively straightforward compared with the challenge of rapidly scaling up renewable energy. Doubling renewable generation requires significant investments in infrastructure, technology and grid capacity, none of which can be achieved overnight. Taiwan’s unique position as a high-tech manufacturing hub means that continuous, affordable energy is not just a luxury — it is a necessity. Its semiconductor and AI industries, in particular, rely on uninterrupted power to maintain their global competitiveness. The idea that renewable energy can fully replace nuclear or thermal power in the near term is unrealistic, especially in an island nation where energy imports are a critical lifeline.

  Taiwan’s energy security is a complex and serious issue, one that cannot be sacrificed to populist or activist sentiment. The future of Taiwan’s energy mix must be determined through a rational, fact-based lens, with a clear focus on maintaining economic competitiveness and global leadership in high-tech industries. Phasing out nuclear energy without an adequate replacement would only strain Taiwan’s already fragile energy system and hamper the net zero emissions target. To ensure its energy future, Taiwan must prioritize a balanced and diversified energy mix. The nation’s economic future and its role in the global supply chain depend on it.

  Harun Talha Ayanoglu is a research associate at the Taiwan Center for Security Studies.
• Most Popular

  • 1

    First person arrested as Danjiang Bridge opens

  • 2

    TSMC shares stumble on report, but losses minor

  • 3

    Navy needs 12 subs for modern fleet: CSBC head

  • 4

    Police identify man who engaged in indecency at park

  • 5

    HIMARS to be deployed to islands