Taiwan faces energy challenge – Taipei Times

In his inaugural address, President William Lai (賴清德) outlined a clear vision for Taiwan’s future, emphasizing the country’s strategic role in the global supply chain amid shifting geopolitical tides. He emphasized the centrality of the “five trusted industries”—semiconductors, artificial intelligence (AI), military, security and surveillance, and next-generation communications—in this vision. These sectors are not only crucial to Taiwan’s economic development, but also energy-intensive in nature. As the AI ​​and semiconductor industries rapidly expand in Taiwan, concerns about the country’s energy adequacy have become increasingly critical.

Taiwan’s economy stands out among developed nations, as high-tech manufacturing still accounts for more than a third of GDP. While other developed economies have shifted toward services and outsourced manufacturing, Taiwan remains a global manufacturing powerhouse, particularly in the semiconductor industry. Taiwan is the undisputed leader, with a share of about 63 percent of the global market, and Taiwan Semiconductor Manufacturing Co alone controls 56 percent of the global foundry market. Other manufacturers, such as United Microelectronics Corporation and ASE Technology, also contribute significantly through foundry, packaging, and testing services, making Taiwan an indispensable part of the global technology ecosystem.

But these advances come at a high energy cost. Semiconductor manufacturing is one of the most energy-intensive industries in the world. Advanced manufacturing technologies, especially those below 7 nanometers, require large amounts of electricity to power clean rooms, cooling systems, and precision equipment. As demand for semiconductors grows, so does the energy needed to power this critical industry.

Nvidia CEO Jensen Huang (黃仁勳) recently highlighted Taiwan’s energy concerns during his recent visit, emphasizing that capacity constraints could discourage investment in key sectors like AI and supercomputing. His warning underscores a broader challenge Taiwan faces: how to balance growing energy demand with the need for energy security while also navigating geopolitical risks and a global energy transition.

Taiwan’s energy mix is ​​unbalanced and heavily dependent on imports. Fossil fuels accounted for a staggering 81.8 percent of the country’s electricity production last year. Renewables, including wind, solar, hydro, and waste-to-energy, accounted for just 9.9 percent, despite years of government efforts to increase their share. Meanwhile, nuclear power, which has long been a reliable and relatively low-carbon source of energy for Taiwan, provides 7 percent of the country’s electricity, while peak storage accounts for 1.2 percent.

Taiwan’s extreme dependence on imported energy sources poses serious risks. Almost 98 percent of its fossil fuels are imported, mostly from the Middle East. This dependence on foreign energy, especially in a region where China’s influence is growing, raises concerns about Taiwan’s long-term energy security. Geopolitical tensions could disrupt supply chains, driving up costs and deepening energy shortages, potentially hampering the development of Taiwan’s key industries.

Despite these challenges, Taiwan remains committed to achieving a “nuclear-free homeland” by next year, a policy introduced by former President Tsai Ing-wen (蔡英文). The government’s plan is to phase out nuclear power and increase the share of renewable energy to 20 percent of the energy mix. But the reality on the ground is far from ideal. Although Taiwan has made significant progress in expanding renewable energy, its share of the energy mix remains far below next year’s target, at just 9.9 percent last year. The goal of a nuclear-free homeland may be within reach, but without sufficient renewable energy capacity, Taiwan risks becoming overly dependent on fossil fuels, which could make it harder to meet climate goals and vulnerable to energy price shocks.

The debate over nuclear power in Taiwan has often been framed in simplistic terms—nuclear proponents versus nuclear opponents, environmentalists versus industry. This polarization misses a key point: energy security is not just about the type of energy Taiwan uses; it is about ensuring a stable, affordable, and reliable supply of energy over the long term. The International Energy Agency defines energy security as the continued availability of affordable energy sources. For Taiwan, energy security means diversifying energy sources and suppliers, reducing dependence on any one type of energy, and ensuring that the energy infrastructure can support industrial needs.

Phasing out nuclear power is relatively straightforward compared to the challenge of rapidly scaling up renewables. Doubling renewable generation requires significant investment in infrastructure, technology, and grid capacity, none of which can be achieved overnight. Taiwan’s unique position as a high-tech manufacturing hub means that consistent, affordable energy isn’t just a luxury—it’s a necessity. Its semiconductor and AI industries, in particular, rely on uninterrupted power to maintain their global competitiveness. The idea that renewables could fully replace nuclear or thermal power in the near future is unrealistic, especially for an island nation where energy imports are a critical lifeline.

Taiwan’s energy security is a complex and serious issue that cannot be sacrificed to populist or activist sentiments. Taiwan’s future energy mix must be defined through a rational, fact-based lens, with a clear focus on maintaining economic competitiveness and global leadership in high-tech industries. Phasing out nuclear power without a suitable replacement would only strain Taiwan’s already fragile energy system and make it harder to achieve its net-zero emissions goal. To secure its energy future, Taiwan must prioritize a balanced and diversified energy mix. The country’s economic future and its role in the global supply chain depend on it.

Harun Talha Ayanoglu is an assistant professor at the Taiwan Center for Security Studies.