Taiwan Makes Most of the World’s Computer Chips. Now You’re Running Out of Power

It is not just a matter of building more capacity. Taiwan’s energy crisis is a combination of national security, climate, and political challenges. The island depends on imported fossil fuels for about 90 percent of its energy and lives under the increasing threat of blockade, quarantine, or invasion from China. In addition, for political reasons, the government has committed to shutting down its nuclear weapons sector by 2025.

Taiwan regularly attends UN climate meetings, although never as a participant. Despite China’s insistence on becoming a member of the United Nations, Taiwan asserts its presence on the fringes, calling side events and accepting the goals of the Paris Agreement to produce high emissions before 2030 and to achieve net zero by 2050. Its major companies, including TSMC, have already signed up. to RE100, the company’s renewable energy initiative, and pledged to achieve net-zero production. But right now, there is a wide gap between aspiration and performance.

Angelica Oung, a journalist and founder of the Clean Energy Transition Alliance, a non-profit organization that advocates for rapid energy transition, has studied Taiwan’s energy sector for years. When we met at a restaurant in Taipei, he happily ordered an incredible number of dishes that were spread out on a small table as we chatted. Oung described two major blackouts—one in 2021 that affected TSMC and 6.2 million homes for five hours, and one in 2022 that affected 5.5 million homes. He says it’s a sign of an energy system running dangerously close to the edge.

Nicholas Chen says the government is failing to keep up with the current demand. “In the last eight years there have been four major blackouts,” he said, and “blackouts are common.”

The operating margin on the grid—the buffer between supply and demand—should be 25 percent for a secure system. In Taiwan, Oung explained, there have been several times this year when the rate has dropped to five percent. “It shows that the system is fragile,” he said.

Taiwan’s current energy mix reflects the magnitude of the challenge: Last year, Taiwan’s electricity industry was 83 percent dependent on fossil fuels: Coal accounted for about 42 percent of production, natural gas 40 percent, and oil 1 percent. Nuclear provided 6 percent, and solar, wind, water and biomass together about 10 percent, according to the Department of Economic Affairs.

Taiwan’s fossil fuels are imported by sea, leaving the island at the mercy of international price fluctuations and a possible blockade by China. The government has tried to protect consumers from rising global prices, but that has led to mounting debt for Taiwan Electric Power Company (Taipower), the national supplier. In the event of a naval blockade by China, Taiwan could rely on six weeks’ supply of coal but no more than one week’s worth of liquefied natural gas (LNG). Given that LNG supplies more than a third of electricity generation, the impact will be significant.

The government has announced major energy targets. The 2050 roadmap released by Taiwan’s National Development Council in 2022 promised to shut down its nuclear sector by 2025. In the same year, the share of coal will have to decrease to 30 percent, gas will have to increase to 50 percent. percent, and renewables would have to exceed 20 percent. None of these targets are on track.