A Ministry of Economic Affairs forecast that electricity demand growth would slow over the next decade might be overly optimistic, experts have said, given that Nvidia Corp’s artificial intelligence (AI) data centers and advanced chip manufacturing facilities are set to come online in the coming years. If projections prove unrealistic, they could undermine grid resilience and disrupt industrial growth.
Industrial users accounted for 55.2 percent of total power demand last year, the ministry’s annual report released on Friday showed. The report projects electricity consumption to grow at an annual rate of 1.7 percent from last year to 2034, down sharply from the 2.8 percent annual growth rate it estimated for 2023 to 2033.
Taiwan’s consumption outlook would be in line with Japan’s 0.6 percent and South Korea’s 1.8 percent, the ministry said, without citing its sources.
However, Japan recently revised up its electricity-use outlook and stepped up energy generation efforts to meet new demand from data centers and chip fabs, reversing its previous forecast of shrinking demand due to a declining population and stagnant economy, Reuters reported. The country’s electricity demand is projected to rise 2 to 25 percent by 2040 from 2019, and by 8 to 42 percent by 2050, based on scenarios provided by the Organization for Cross-regional Coordination of Transmission Operators.
The Ministry of Economic Affairs said it factored in potential jumps in electricity demand from AI and other emerging technologies over the next few years, but it did not provide a detailed forecast. The growth would be offset by declines in power demand from sluggish traditional sectors such as cement, steel and petrochemicals, and the government’s years-long efforts to curb power consumption growth through power conservation initiatives, it added.
The ministry has asked heavy industrial users to cut electricity consumption by 1 percent annually and subsidizes purchases of energy-efficient equipment to help them meet that goal.
Major changes in the nation’s industrial landscape — the decline of traditional sectors and the rise of semiconductors — would offset the increased demand by about 10 percent, state-run Taiwan Power Co (Taipower) said.
The ministry also cited US tariff policy as a factor behind its lower forecast, but declined to clarify whether Taiwanese tech firms’ decision to expand new capacity overseas to avoid tariff risks was a key driver of the slower electricity demand.
Power supply would be tight over the next five years, with the ministry projecting Taipower’s reserve margin during peak hours would fall to between 11.3 and 14.2 percent from this year to 2029 — below the regulatory requirement of 15 percent — due to a surge in demand from AI.
The forecast also assumes the timely deployment of new generation units, it said. The reserve margin is forecast to recover to 19.6 percent in 2030 and reach 23.8 percent by 2034, the report said, adding that the power supply would be stable, citing Taipower’s plan to add a net 12.22 gigawatts of gas-fired capacity by then, not including renewable energy growth.
The ministry’s rosy outlook does not seem to account for risks, such as malfunctions at several power generation units in Kaohsiung and New Taipei City’s Linkuo District (林口) that reduced the power reserve margin sharply to as low as 4 percent early last month, from an estimate of 14 percent.
The sudden shortfall showed that the ministry had underestimated the importance of the supply-demand balance, which left it vulnerable to unexpected outages.
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