President William Lai’s (賴清德) vision for Taiwan’s development is built around the “Five Trusted Industry Sectors” — semiconductors, artificial intelligence (AI), military, security and next-generation communications — aiming to strengthen Taiwan’s position in the global economy and its leadership in the global high-tech supply chain.
Strengthening Taiwan’s role in the global supply chain would also enhance its ties with democratic allies, boost competitiveness, and improve national security and resilience, Premier Cho Jung-tai (卓榮泰) said. While this vision is ambitious and forward-looking, it faces several critical challenges in practice.
Foremost among these challenges is the energy-intensive nature of the Five Trusted Industry Sectors. The semiconductor industry, in particular, requires massive amounts of energy for manufacturing processes. Taiwan, as a global leader in semiconductor production, plans to further expand its operations, meaning energy security would be crucial in sustaining this growth. Similarly, the nation’s ambitions to boost AI development hinge on access to stable and abundant energy. However, Taiwan’s renewable energy sources, while growing, cannot meet the rising demand due to their intermittent nature. Daily and seasonal fluctuations in renewable energy production, combined with insufficient energy storage solutions, further exacerbate this problem. The reliance on fossil fuels, which is increasing due to the government’s anti-nuclear stance, conflicts with Taiwan’s net zero carbon targets.
The rapid rise of AI is contributing to a significant surge in global energy demand, particularly from data centers that must operate continuously to power AI systems. For example, a single query from ChatGPT consumes about 10 times more electricity than a standard Google search. As AI models become more complex, the energy needed to train them would constantly increase. For instance, training ChatGPT-3 required enough energy to power 130 homes for a year, while its successor, GPT-4, uses 50 times that amount. Data centers, which account for 1 percent to 2 percent of global electricity consumption, are expected to see this share rise to 3 percent to 4 percent by 2030.
In response to this surge in energy demand, nuclear energy is experiencing a global revival as a more stable and clean energy source. Major tech companies such as Microsoft, Amazon and Google are exploring nuclear power to meet their energy needs while keeping their carbon footprints low.
For example, Constellation Energy and Microsoft recently signed a deal to restart a unit of the Three Mile Island nuclear plant, marking a shift toward nuclear energy to power AI-driven data centers. Countries such as China are leading the nuclear push, with government support propelling them to the forefront of global nuclear energy development. By 2030, China is projected to have the world’s largest nuclear program. Even Japan, despite the legacy of the 2011 Fukushima Dai-ichi nuclear power plant disaster, is considering nuclear energy as a solution to its heavy reliance on fossil fuels.
One key development in the nuclear energy revival is the rise of Small Modular Reactors (SMRs). Unlike traditional nuclear reactors, SMRs are smaller, more affordable, and easier to construct and transport, making them an attractive option for reducing emissions. SMRs also feature enhanced safety measures, often relying on passive cooling systems that do not require human intervention, reducing the risk of accidents. Not only does their modular design allow for flexible deployment, but SMRs also prove to be an ideal solution for areas with limited grid access or energy-intensive facilities such as AI data centers and semiconductor foundries.
Global interest in SMRs is growing, with international organizations such as the International Atomic Energy Agency and the EU supporting its research and development. SMRs offer long-term, stable energy solutions and could complement renewable energy by providing steady power during periods of fluctuating renewable energy production. As Russia, China and the US compete for dominance in the global SMR market, Taiwan should consider how this technology can help address the growing energy demands of its key industries while staying on track toward carbon reduction goals. Clean and stable energy is vital for Taiwan, because — despite significant investments in offshore wind and other renewable sources — its renewable energy share still falls short of the 20 percent target set for next year under former president Tsai Ing-wen’s (蔡英文) administration. Moreover, reactivating phased-out nuclear reactors or building new conventional reactors is neither economically feasible nor sufficient to meet the nation’s energy needs.
Can SMRs be the answer to challenges stemming from AI-driven rising energy demands while staying on the net zero track? It depends. SMRs have cons, such as high initial costs, regulatory hurdles, public skepticism and nuclear waste disposal. On the other hand, their smaller size and flexible deployment options make them suitable for Taiwan’s geographical constraints, allowing for integration into areas where large nuclear plants would be impractical. Additionally, SMRs’ ability to provide stable and reliable power makes them an ideal complement to Taiwan’s renewable energy projects, helping to balance energy supply during periods of low wind or solar output.
This technology could help Taiwan maintain its leadership in the semiconductor and AI industries while advancing its environmental sustainability goals. Failing to explore SMR technology now could leave Taiwan lagging behind in energy security and technological innovation, while other nations secure their footholds in this rapidly growing market.
Taiwan should consider taking proactive steps to evaluate the potential of SMRs and integrate them into its energy strategy. Supporting SMR research and development, establishing regulatory frameworks and fostering partnerships with global SMR leaders would help Taiwan meet the energy demands of its energy-intensive industries without compromising its net zero targets.
Harun Talha Ayanoglu, PhD, is a Taiwan Center for Security Studies research associate.
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