Securing Taiwan's Energy Future
Updated: Feb 5
Executive Summary
Taiwan’s electricity consumption in 2023 was 276,500 GWh. The Energy Administration predicts an average annual growth of 2.5% over the next 5 years and 2.8% over the next 10 years. This projection calculates additional demand to be 36,300 GWh by 2028 and 87,900 GWh by 2033. In seeking to eliminate nuclear energy, the government plans to increase gas to 50%, lower coal to 30%, and increase renewables to 20% by 2025, with the goal of 20 GW of installed solar capacity and 5.7 GW of installed offshore wind. However, these goals are not on track with coal at 42.2%, gas at 39.5%, and renewables at 9.5%. Increased reliance on gas is inadvisable as 30% is still sourced from the volatile spot market, leaving the energy sector vulnerable to market disruptions, and Taiwan’s ability to only maintain an 11 day reserve of LNG means that it would be more strongly impacted in the case of a Chinese blockade. While lacking the vulnerabilities of gas, renewables have significantly lagged behind the government’s energy goals. The average annual increases of 1.4 GW for solar and 0.22 GW for offshore wind mean that it would take an additional 5.5 years and 18 years respectively to achieve the government’s capacity goals.
Despite public concern over the safety of nuclear energy, the best strategy for ensuring Taiwan’s energy security is to restart the two shuttered nuclear plants and complete construction on the mothballed nuclear plant. Restarting Jinshan and Kuosheng is achievable in less than a year and would provide 25,500 GWh of additional generation. Completing Longmen would require a larger investment of 2-5 years and $2.2 billion, but would provide an additional 21,300 GWh of generation. In total, 46,800 GWh of generation would be added within 5 years, outpacing the projected demand of 36,300 GWh in 2028.
Added generation from renewables would supplement the nuclear sector, but this would still fall short of reaching the demand of 2033. To achieve this goal, investment should be made into small modular reactors (SMRs). SMRs can have capacities of up to 300 MW and generate up to 2,400 GWh each, approximately the same average generation added by renewables each year. They are much less land intensive compared to renewables which is important for a spatially limited island nation. Their smaller size and greater safety measures also reduce the risk of damage from earthquakes, helping to reduce public concern. Increased nuclear capacity would also insulate Taiwan from the dangers of a Chinese blockade since reactors typically store 18 months’ worth of fuel onsite. If Taiwan wants to satisfy its growing energy demand while committing to limiting carbon emissions and safeguarding from foreign interference, mobilizing and expanding its nuclear capacity while supplementing with renewables will be its best option.
Full Report
Taiwan is at a critical juncture with the future of its energy security. As an island nation, Taiwan possesses little natural resources for energy production and relies heavily on imports, primarily in the form of fossil fuels, to supply the majority of its power. Taiwan’s energy usage is largely in support of its globally important export-oriented manufacturing sector. Its technology parks host over 1,100 companies and produce US$127 billion annually (Hilton, 2024). This manufacturing prowess is largely centered around semiconductors with Taiwanese companies holding a 68% market share of all global chip production and its largest company Taiwan Semiconductor Manufacturing Company (TSMC) producing at least 90% of the world’s most advanced computer chips (Hilton, 2024).
The industrial sector accounted for 55.3% of Taiwan’s overall electricity usage in 2023 (MOEAEA, 2023) with about 9% of its overall electricity being used by TSMC alone (Hilton, 2024). In addition to the steady rise in the electricity demand of the industrial sector, efforts to establish Taiwan as a leader in AI and data centers places an even greater burden on its electricity demand as just one small Vantage 16 MW data center can use as much energy as 13,000 households. This significant electricity demand places a heavy burden on Taiwan’s energy system and has resulted in blackouts with major incidents in August 2017, which affected nearly 7 million households, and March 2022, which affected 5 million households (Shan, 2024).
Further complicating Taiwan’s energy landscape are the government’s decision to shut down its nuclear reactors as well as the increasing threat of a potential invasion or blockade by Chinese forces. Nuclear power has been a contentious topic in Taiwan with safety concerns related to the potential for meltdowns resulting from earthquakes, especially following the 2011 nuclear accident in Fukushima, Japan which sits on the same fault line as Taiwan. In response to these concerns, the government decided to shut down two of its existing nuclear plants at Jinshan and Kuosheng and will be shutting down its last operating plant in Maanshan in 2025. The government also opted to mothball the new plant being built in Longmen, sacrificing $10 billion that has already been invested into its construction. In adjusting for the energy deficit this creates, the government hopes to make up the difference with natural gas and renewables. Taiwan also faces the threat of military action by China. While a full invasion is unlikely, the more probable scenario of a maritime blockade of the country could be devastating due to its reliance on imported fuel. Given the importance of Taiwan’s manufacturing exports, a power shortage caused by a blockade would have major impacts on the nation’s economy.
In 2016, then president Tsai Ing-Wen laid out an ambitious goal for Taiwan’s energy mix. This strategy sought to reduce coal generation to 30%, increase gas generation to 50%, increase renewable energy generation to 20%, and eliminate nuclear energy entirely by 2025. For renewables, the government hoped to achieve 20 GW of installed capacity for solar and 5.7 GW of installed capacity for offshore wind (MOEAEA, 2023). Based on reports by the Ministry of Economic Affairs Energy Administration (MOEAEA), as of 2023 these goals are far from on track with coal at 42.2%, gas at 39.5%, renewables at 9.5%, and nuclear at 6.3%. The government’s decision to eliminate nuclear and make up the difference with LNG and renewables threatens Taiwan’s energy security due to challenges associated with both energy sources. Increasing reliance on LNG also increases Taiwan’s vulnerability to the fluctuations of the natural gas market. Despite efforts to diversify its LNG procurement sources, Taiwan still acquires 30% of its LNG from the highly volatile spot market (Minami, 2024), meaning that disruptions to the market such as what happened with the Russia-Ukraine War and recent conflicts in the Middle East will have an outsize impact on the energy system in Taiwan. Additionally, increased reliance on LNG also heightens the risks of a potential Chinese blockade. Due to the very low temperatures required for LNG storage, Taiwan is only able to maintain an 11 day reserve of LNG (Minami, 2024), meaning that a maritime blockade by China would result in gas power plants shutting down in less than 2 weeks.
Renewable energy sources, while able to avoid the threat of blockade, face challenges in terms of rate of adoption and space availability. Using data from the MOEAEA we can calculate the average trends since the announcement of the new energy goal in 2016 until the most recent data in 2023 (MOEAEA, 2023). While these are rough estimates given the number of variables we cannot account for, they will give us a general idea of what we can expect going forward. For solar energy, since 2016 installed capacity increased by 11.2 GW which over the course of 8 years gives an average of 1.4 GW of additional capacity per year. At this rate, it would take an additional 5.5 years to reach the 20 GW capacity goal set by the government. For offshore wind, since 2016 installed capacity increased by 1.76 GW which equates to an average of 0.22 GW of additional capacity per year. At this rate, it would take an additional 18 years to reach the government’s 5.7 GW capacity goal. Additionally, both sources face spatial limitations. Solar farms require relatively flat land in order to best function, but given that Taiwan is 79% mountainous (Hilton, 2024) there is much less available room for expansion. For offshore wind, the Taiwan Strait on the west side of the island is a strong source of wind energy, but undersea power cables are easier to damage and the proximity to China makes it an easier target for interference.
The MOEAEA reported that in 2023 Taiwan’s electricity consumption was 276,500 GWh. Recent estimates by the Energy Administration predict that the average annual growth in demand will be 2.5% between 2024 and 2028, and 2.8% between 2024 and 2033 (Hsiao, 2024). Based on those estimates, Taiwan would need to produce an additional 36,300 GWh of electricity by 2028 and an additional 87,900 GWh of electricity by 2033. Assuming that we do not want to increase fossil fuel consumption in accordance with the goals of limiting carbon emissions and reducing the threat of Chinese blockade, we can use the same formulation to calculate the feasibility of satisfying this increased demand solely with renewables. For solar energy, since 2016 energy generation increased by 11,800 GWh for an average of 1,475 GWh of additional generation per year. For offshore wind, since 2016 energy generation increased by 4,500 GWh for an average of 560 GWh of additional generation per year. Combined that comes to just over 2,000 GWh of renewable energy added each year. Even if we disregard the spatial limitations, this only puts us at 10,000 GWh by 2028 and 20,000 GWh by 2033, well under the expected amount of future demand.
Given the downsides of fossil fuels and the lacking potential of renewables, we find that the most advisable course of action for the government is to rescind its goal of eliminating nuclear power and instead invest in restarting its existing nuclear infrastructure for the short term energy insurance it provides and securing long term security through the development of small modular reactors (SMRs). Despite being shut down, the Jinshan and Kuosheng plants were never fully decommissioned meaning that they have retained a good deal of functionality, with estimations that both plants could be brought back into service in less than a year (McGillis and Oung, 2022). With respective capacities of 1,272 MW and 1,970 MW (IAEA, 2024) and a typical capacity factor of 90% for nuclear plants (DOE, 2020), these plants would be able to provide 25,500 GWh of electricity, heading off several years of future demand. While a more involved effort, completing the mothballed plant in Longmen is also feasible with estimations that it could be finished within 2-5 years (McGillis and Oung, 2022) at a cost of US$1.9-2.3 billion (WNA, 2024). With a 2,700 MW capacity, Longmen would be able to provide an additional 21,300 GWh of electricity, bringing the total added generation to 46,800 GWh and exceeding the demand projections of 36,300 GWh for 2028.
However, even if we add in the 20,000 GWh of renewable energy that can be added by 2033 this only brings us to 66,800 GWh, still short of the 87,900 GWh prediction for 2033. To address these future energy concerns, investment should be put into the development of SMR technologies. An average SMR can have a capacity of up to 300 MW (IAEA, 2023), being able to provide up to 2,400 GWh per year, which is more than the predicted 2,000 GWh of generation renewables will add each year. SMRs are also much less space intensive than renewable energy plants, potentially needing areas as little as several hundred meters (NRC, 2024). Given the land constraints that Taiwan has, such compact energy plants provide a critical strategic benefit.
Since nuclear energy maintains a certain stigma with the public, it will be important to address and waylay the concerns of the citizens. Concerns mainly center around the potential for plants to be damaged by earthquakes. While this concern is not wholly unjustified, most plants are constructed with anti-seismic infrastructure, especially newer ABWR reactors like Longmen which have a 0.3G earthquake acceleration standard. SMRs are even safer when it comes to earthquakes as designs like molten salt reactors are designed with passive safety features that require no direct human intervention in the case of a meltdown (IAEA, 2023). Japan’s recent decision to reopen its Onagawa nuclear power plant (Reuters, 2024), which was damaged in the same earthquake that caused the Fukushima accident, will hopefully also help assuage public concerns. Nuclear plants are also more insulated against threats from China. Unlike the storage challenges present with LNG, reactors typically hold 18 months’ worth of fuel onsite (McGillis and Oung, 2022) which limits the impact of a blockade. Additionally, Taiwan’s close proximity to China means that China would not be able to attack nuclear plants without risking contamination spreading to its own territory in regions like Fujian.
Taiwan is at a crossroads with its energy security. The current strategy of increasing LNG use and expanding renewables is proving to be insufficient and is jeopardizing both the current and future energy security of the country. While there are deeply held concerns in regards to nuclear energy, restarting the entire nuclear infrastructure and investing in new nuclear technologies like SMRs is our best bet at ensuring the country’s energy security in the future.
