Companies and ordinary citizens in Taiwan have good reasons to ask the question: Do we have enough power?

In the middle of May, 2021, the Ministry of Economic Affairs (MOEA) had just published the latest edition of its report on energy consumption in Taiwan. The next day, on May 13th, a malfunction at a high voltage substation in Kaohsiung knocked four generators in the Hsinta Power Plant offline, resulting in rotating power outages for millions of households across the country. Four days later, the generators in Hsinta went offline again, plunging the island into another cycle of power outages. 

The MOEA estimates that energy demand will come closest to catching up with supply in 2023. After that, the reserve margin percentage should hover at a reassuring 15%, with a chance to rise as time goes by. 

What this fails to take into account is the rapid increase in energy demand across Taiwan. The report states: “In 2020, Taiwan’s annual power consumption rose by 2.1%, which is above-average when compared with the past decade. Until 2027, annual consumption is estimated to grow by an average of 2.5% every year.”

The real numbers are far more nerve-racking. 

Taiwan’s Bureau of Energy estimates that in the first ten months of 2021, power consumption rose by 4.3% year-over-year. That’s 1.7 times greater than the official estimate published just six months prior. Power consumption grew by 7.71% in the industrial sector—more than any other sector. The reason is simple: Returning Taiwanese companies need a lot of power, and this is especially noticeable in the semiconductor industry. 

CommonWealth Magazine took the latest numbers and calculated the actual reserve margin percentage for the next few years. The results are rather unsettling.

Power consumption is closely linked to the economic growth of Taiwan. The Directorate General of Budget, Accounting and Statistics estimates that Taiwan’s economy grew by 6.09% in 2021. It is predicted to grow by 4.15% in 2022, and is expected to maintain an annual growth rate of about 4% for the next few years.

If electric energy consumption grows in tandem with the economy, the growth rate may be as high as 2.93% in 2022; for the foreseeable future, the annual growth rate is unlikely to dip below 2.82%. 

If we take this new, more accurate forecast into account, the reserve margin percentage for the next few years will not surpass 15%. But there are other factors to consider, such as fuel limitations caused by delays in the construction of liquefied natural gas (LNG) receiving terminals, and an unavoidable reduction of 5% in capacity due to scheduled maintenance. 

All told, the reserve margin percentage in 2021 and 2022 is actually below 7%. It will drop down to 4.38% in 2023, and it’s downhill from there.   

The dwindling reserve margin is not the only issue. Another looming crisis is tied to the deactivation of large-scale baseload power plants. In accordance with the plan to transform Taiwan’s energy structure, nuclear power, which currently makes up 11% of the country’s power supply, will be reduced to zero by 2025, and the situation will be further exacerbated.

(Source: Chien-Tong Wang)

Natural gas is slated to provide 50% of Taiwan’s electric power in 2025, but it is difficult to ramp up capacity quickly. The environmental impact assessment (EIA) for CPC Corporation’s proposed LNG receiving terminal in Datan, Taoyuan, got the green light three years ago; however, to this day, the project is mired in controversy. And despite the recent referendum being passed in favor of the project remaining in Datan, it is already two and a half years behind schedule. 

What will this delay cost Taiwan? Chi-yuan Liang, Chair Professor at National Central University, says that if generators number eight and nine in Datan remain offline, it will affect 6% of Taiwan’s reserve margin percentage in 2024.

These pessimistic estimates beg the question: Is darkness looming over Taiwan’s future?

Chein-ming Lee, Vice President of the Taiwan Research Institute, says that power outages can be avoided with the right power distribution technologies. “A low reserve margin is alarming, but at the end of the day, optimal distribution is the key to a stable and reliable energy grid,” Lee emphasizes. 

An important component of Taiwan’s energy transition, the Energy Trading Platform, has been online since last year. It combines the dispersed and diversified sources of energy across the country into a single power grid. For example, when Hsinta Power Plant temporarily went offline last May, Taiwan Cement Corporation’s Green Energy Storage System in the Changhua Coastal Industrial Park was able to quickly close the gap. In the future, as more energy storage systems are constructed across Taiwan, the fear of power outages should become a thing of the past. 

In addition, in recent years, Taiwan has begun experimenting with newer and more diverse ways of distributing power. One example is “demand response”, a system that offers incentives for reducing consumption when demand is too high, in order to distribute power more evenly. 

In other words, although outages remain a risk, advanced technologies can plug the hole. However, before a sufficient number of storage systems are online, distribution specialists at Taipower will face tremendous pressure. Not only will they have to respond quickly to any emergency, they must pray that all the generators and all of the power grid operate smoothly, lest they come face-to-face with the nightmare of drastic power outages. 

(Source: Chien-Tong Wang)

Deputy Economics Minister Tseng Wen-sheng has responded to doubts about green energy and grid stability; below is an excerpt from his interview:

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Q: Solar and wind power installations are currently behind schedule. How does the government plan to catch up?

A: In 2021, the process of expanding solar power had run into two hurdles: an increase in the costs of raw materials, and supply chain issues. In response, we adjusted the FIT (feed-in tariff) rates in the second half of 2021. In 2022, we will further adjust for the changes in the costs of raw materials.

As for wind power, the three wind fields that were supposed to be incorporated into the grid last year will be incorporated in 2022. By the end of this year, more than 1.5 gigawatts of wind power will be injected into the grid. (Editor’s note: this is close to one-third of the offshore wind power that is scheduled to join the grid before 2025.) 

Q: What are some of the bottlenecks in the development of geothermal energy in Taiwan? What can the government do to help?

A: Geothermal power is one of our main points of focus. Because it can be used as part of the baseload, it can help us achieve net zero emissions. 

Surveying for geothermal energy carries with it a certain degree of risk, and the technology used to extract power from these sources is still evolving. Since it is affected by the geologic structure of an area, preliminary surveys are essential. We’ve directed the CPC to work closely with the Central Geological Survey of MOEA, and Taipower to conduct preliminary surveys. 

We start by going over any laws that are applicable. For example, regulations related to soil and water conservation on hillside slopes are within the purview of the Water Resources Agency and the Soil and Water Conservation Bureau under the Council of Agriculture. Since this is an issue that concerns two separate departments, we hope to replicate the model we used for solar energy and simplify the process by establishing a procedure for conducting joint reviews. However, preliminary surveys have shown us that regions with a higher potential for containing geothermal energy are often located near communities that belong to Taiwan’s indigenous peoples.

Q: Many people are worried that Taiwan does not have enough power. If we base our predictions on the assumption that economic growth will hold steady at 4%, the reserve margin percentage will drop to 4.38% in 2023—that’s dangerously low.

A: If we looked at the reports from different sectors, power consumption in the semiconductor industry grew the most rapidly.

One of the reasons why energy consumption grew so rapidly in 2021 was because the manufacturing sector, including the semiconductor industry, was operating at full capacity. It’s hard to say if this means we will not have enough power in the future. We have already taken the estimated rise in power consumption in the next couple of years into account.

In Taiwan, peak demand has shifted towards the period between six and eight o’clock in the evening. If we can make full use of pumped-storage hydroelectricity (PSH), energy storage systems, and other smart distribution technologies, we will be able to provide for the whole country during peak demand. In other words, the daily supply of electrical power in Taiwan will be relatively stable.  

Q: A great deal of renewable energy developed with government support has been snatched up by big corporations. We see that some businesses are actively investing in the development of more sources of renewable energy. What is the MOEA’s view on this matter?

A: The manufacturing sector should actively invest in the development of renewable energy; there is no reason to hesitate. We also hope that enterprises, especially in the manufacturing sector, can learn to view clean energy not as an increase in expenditure, but as an opportunity to commit more resources and brainpower. Renewable energy is a brand-new market opportunity, with boundless potential in the future. 

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Have you read?

♦ Taiwan needs more stable sources of green energy
♦ How UK and Taiwan can rise to the challenges and opportunities of climate action
♦ A carbon neutral future: Can Taiwan get there?

Translated by Jack Chou
Edited by TC Lin
Uploaded by Penny Chiang