Last week, Nvidia chief executive officer Jensen Huang (黃仁勳) unveiled the location of Nvidia’s new Taipei headquarters and announced plans to build the world’s first large-scale artificial intelligence (AI) supercomputer in Taiwan.
In Taipei, Huang’s announcement was welcomed as a milestone for Taiwan’s tech industry.
However, beneath the excitement lies a significant question: Can Taiwan’s electricity infrastructure, especially its renewable energy supply, keep up with growing demand from AI chipmaking?
Despite its leadership in digital hardware, Taiwan lags behind in renewable energy adoption. Moreover, the electricity grid is already experiencing supply shortages. As Taiwan’s role in AI manufacturing expands, it is critical that all new electricity demand is fulfilled by renewable energy sources, such as wind, solar and geothermal.
Taiwan’s electricity grid remains heavily dependent on fossil fuels. Last year, 83 percent of electricity in Taiwan was generated from coal, oil or gas, leading to high emissions and air pollution. In 2023, Taiwan’s per capita carbon emissions were 13.45 tonnes — approximately twice the global average — mainly due to a fossil fuel-based energy mix and energy-intensive industries.
As production of AI chips soars, so does demand for electricity. In 2023 and last year, electricity demand from AI chipmaking in Taiwan increased by more than 350 percent. When operational, Nvidia’s 100 megawatt supercomputer is projected to consume approximately 876 million kilowatt hours of electricity per year, equivalent to the annual consumption of roughly 240,000 households, according to Greenpeace East Asia calculations.
Although critics cite Taiwan’s population density and mountainous terrain as barriers to renewable energy development, wind and solar farms are just as well suited to Taiwan’s environs as are massive computing complexes. In fact, Taiwan has tremendous wind power potential, particularly from abundant offshore wind resources. Research indicates potential capacity of up to 29 gigawatts (GW).
However, as of the end of last year, the actual installed offshore wind capacity in Taiwan amounted to only 3GW.
The barriers to renewable energy development in Taiwan are primarily related to policy. Taking offshore wind as an example, frequent policy shifts and unclear implementation have made it difficult for investors to assess long-term risks, hindering financing and progress. As a result, some international developers, such as Danish wind turbine giant Vestas, have exited Taiwan’s market.
In response, a local blade manufacturer halted production and laid off 470 employees, highlighting the significant supply chain disruption caused by policy instability.
As the government fails to increase renewable energy capacity at the required pace, tech companies with an urgent need for renewables have begun to step in and fill the gaps. Last year, Google partnered with energy developers to invest directly in 1GW of solar power in Taiwan. In April, Google signed Taiwan’s first corporate power purchase agreement for geothermal energy. Such investments can enable tech companies to ensure a stable, clean energy supply for their own operations, while also providing surplus electricity to support their supply chains and accelerate decarbonization.
Regrettably, several prominent tech leaders, including Huang, have suggested that nuclear power could help to meet Taiwan’s growing electricity demand. Nuclear power has long faced opposition in Taiwan due to safety risks associated with the operation of the plants and the practice of burying nuclear waste on Orchid Island (Lanyu, 蘭嶼), home to the indigenous Tao people, without residents’ consent.
Taiwan’s last nuclear power unit was officially decommissioned last month, heralding a new era of a “nuclear-free homeland.” A return to nuclear power would represent a costly step backward. Extending the life of nuclear plants necessitates expensive upgrades, safety inspections, equipment replacement and the construction of new waste storage facilities.
According to the International Energy Agency, the cost of extending nuclear operations ranges from US$500 to US$1,100 per kilowatt and continues to rise. By contrast, the cost of renewables is steadily declining due to ongoing technological advancements.
The expansion of AI manufacturing in Taiwan is also being used to justify new gas capacity. Taiwan Semiconductor Manufacturing Co (TSMC), which manufactures the advanced chips used in Nvidia’s graphics processing units, is expanding production in Huang’s hometown of Tainan. To meet new electricity demand, plans for a gas plant were formed, but scrapped after locals raised concerns about the impact of air pollution and the risk of gas explosions. Yet, a new gas plant is still scheduled to be built, ensconced in a science park where it is exempt from the same local review process.
The electronics supply chain is notoriously opaque, obscuring the relationship between Nvidia, TSMC, and Taiwan’s climate and air pollution crisis. Unlike Apple, Nvidia has not committed to powering its supply chain with renewable energy by 2030. Nvidia’s lack of focus on supply chain decarbonization is especially concerning given that nearly 90 percent of its emissions come from its supply chain.
Going forward it is critical that Nvidia targets full decarbonization, including in Taiwan. As a first step, the chip designer should mandate that all of its suppliers achieve 100 percent renewable energy by 2030.
Nvidia should strive to create renewable energy investment opportunities for its suppliers, just as Apple has done.
Taiwan has welcomed Nvidia with open arms, and Nvidia must find a way to foster growth without compromising Taiwan’s energy transition.
Lena Chang is a climate and energy campaigner at Greenpeace East Asia in Taipei.
Taiwan aims to elevate its strategic position in supply chains by becoming an artificial intelligence (AI) hub for Nvidia Corp, providing everything from advanced chips and components to servers, in an attempt to edge out its closest rival in the region, South Korea. Taiwan’s importance in the AI ecosystem was clearly reflected in three major announcements Nvidia made during this year’s Computex trade show in Taipei. First, the US company’s number of partners in Taiwan would surge to 122 this year, from 34 last year, according to a slide shown during CEO Jensen Huang’s (黃仁勳) keynote speech on Monday last week.
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