On May 19 at the Tainan City Council, dozens of people wearing yellow bandanas protested a plan to build the Jiu Wei Nanke Gas-fired Power Plant (九崴南科天然氣電廠) in the Tainan area.

Expected to directly supply power to the Southern Taiwan Science Park’s extra-high-voltage substation starting in 2026, the plant has been described as one of TSMC’s “escorts” to support its sizable increase in power consumption as it adds advanced chip production capacity in the park’s Tainan branch.

“We support the power plant, but it shouldn’t be so close to a residential community,” local resident Chu Jun-jung (朱俊榮) told CommonWealth. “This is pushing us beyond our limits.”

Chu and the others, most of whom are new to environmental activism, come from neighborhoods near the power plant’s planned site. These residential communities, about a 10-minute drive from the science park, are home to a lot of TSMC, Chimei and Innolux engineers.

TSMC: All we can do is believe the government

“On the one hand, the government says we don’t lack power but on the other hand it’s building thermal power plants all over the place. It doesn’t make sense,” said 38-year-old Chang Chun-hui, a mother of two. Her husband is a TSMC engineer.

The protest worked, as city councilors across party lines pledged the same day to oppose the project. Tainan Mayor Huang Wei-che (黃偉哲) even promised to reject any application for a building permit for the project.

The proposed gas-fired plant would have an installed capacity of 600 MW and account for about 1.5 percent of Taiwan’s peak-load power, a seemingly insignificant amount. 

It could prove critical in the next few years, however, when Taiwan’s electricity supply teeters on the brink of debilitating power shortages.

Nuclear power accounted for 9 percent of Taiwan’s electricity supply in 2022. There are now two functioning nuclear reactors left, at the Maanshan Nuclear Power Plant on Taiwan’s southern tip, but their operating licenses will expire on July 26, 2024 and May 17, 2025. 

Based on the nuclear-free homeland policy of President Tsai Ing-wen’s (蔡英文) government, when the last reactor is shut down, that will be curtains for nuclear power in Taiwan, and the business community is worried.

With the "Nuclear-free homeland" policy launched in 2016, Taiwan's electricity sources have tightened. (Source: Chien-Tong Wang)

The chairman of electronics contract manufacturer Pegatron Corp., T. H. Tung (童子賢), has recently urged on several occasions that the government rethink its energy mix to include nuclear power. 

Even TSMC Chairman Mark Liu (劉德音) said resignedly at the company’s annual shareholders meeting on June 6: “Taiwan’s government thinks there’s enough electricity [in 2025]. All we can do is believe them.”

To bridge the nuclear power gap and serious delays in rolling out renewable energy capacity, Tsai’s government has opted to go big on natural gas.

Over the next four years, state-owned utility Taiwan Power Co. (Taipower) expects to install seven new gas-fired units with total installed capacity of nearly 9,000 MW, giving Taiwan the second most gas-fired capacity currently under construction or in the planning stage of any country in the world, trailing only Vietnam.

At the same time, once the expansion plan of the Datan gas-fired power plant in Taoyuan is completed (scheduled for the summer of 2024), giving it a total of nine combined cycle generating units, it will have installed capacity of 7,500 MW, making it the second-biggest gas-fired plant in the world behind the Dubai Jebel Ali Power and Desalination Plant.

In two years, for every two kilowatt-hours of power used in Taiwan, one will be from natural gas, at least that’s the plan. That is consistent with the Tsai government’s target energy mix by 2025 of 50 percent natural gas, 30 percent coal and 20 percent renewables.

But delays in the rollout of some of this new gas-fired capacity and the liquefied natural gas (LNG) terminals that will feed it, and lags in wind and solar power development that have made the 20 percent goal unattainable by 2025 have prompted  calls for the government to delay its decommissioning of functioning nuclear reactors.

2025: Warning lights every day

Liang Chi-yuan (梁啟源), a chair professor of economics at National Central University, has crunched the numbers, and the results were not pretty.

Under a worst-case scenario, he estimated that on summer evenings in 2025, the operating reserve margin will be a piddling 0.4 percent, signaling a “black light” that indicates power rationing is imminent. 

The operating reserve margin refers to the amount of generating capacity available for Taipower to call in a pinch to handle a surge in demand or a power plant breakdown. A 0.4 percent operating reserve margin literally means absolutely no margin for error.

In the third week of June, however, the Ministry of Economic Affairs (MOEA), which oversees Taiwan’s energy policy and Taipower, said in its latest electricity summary on June 21 that the operating reserve margin in 2025 after the last nuclear power reactor is shut down will still be 11.6 percent.

Liang contended that the MOEA forecast had two major problems – it overestimated progress on building new power capacity and underestimated growth in demand.

MOEA estimate question marks

A closer look at Taipower’s electricity plan quickly revealed a gap of 1.91 million KW at peak generation in 2025 when Taiwan enters the nuclear-free era on May 17, 2025.

Taipower is planning to open a 1,300 MW gas-fired unit at the Taichung Thermal Power Plant in April 2025 to pick up the slack, but it may not have any fuel to burn. An LNG terminal project for the plant remains stuck at the environmental impact assessment stage.

The privately owned Chung Chia Power Co. is planning a 610 MW gas-fired plant in Taichung scheduled to operate in June 2025, but the company recently reported that its project will not be finished until the end of 2025 at the earliest. 

The building of wind and solar power capacity is also behind schedule. Only 24 percent of the wind power capacity expected to be installed in 2022 was actually completed because of disruptions from the COVID-19 pandemic, inflation, and manpower shortages, and even stronger headwinds may be on the horizon because of geopolitical shifts steering offshore wind interest toward Europe and potentially away from Taiwan.

Solar power development has been somewhat better, with 57 percent of the planned installed capacity in 2022 actually being built. But that number could slide because of the growing difficulty of finding suitable land for solar power projects in a country where the prime locations have already been exploited.

The sea surface photovoltaic field along the coast of Changhua. (Source: Chien-Ying Chiu)

SEMI Taiwan, a trade association for the global electronics industry, issued a series of policy recommendations for the photovoltaic industry in 2022. In them, there was an analysis of different countries’ targets for solar power generation in 2030 and the amount of land that capacity required, and it found that a much higher percentage of Taiwan’s land would have to be devoted to solar than in Japan, South Korea or the United States.

The National Development Council has planned for Taiwan to have 30,000 MW of installed solar capacity by 2030, requiring about 0.8 percent of the country’s land area. That would be more than twice the density planned for South Korea and Japan for the same year. 

Beyond those many barriers undercutting the MOEA’s estimate of available capacity in 2025, Liang also felt it missed the mark on demand. He estimated peak evening power demand in 2025 at 41.29 million KW, 2.36 million KW higher than the MOEA, based on a peak power load in July 2022 of 40.75 million KW and a 1.3 percent increase in demand over the following three years.  

On the supply side, the MOEA estimated maximum power generation in 2025 at 45.40 million KW, but 1.91 million KW of that will likely not be ready by then, leaving 43.50 million KW of supply. On paper, that gives a reserve margin of 5.4 percent. 

Not too bad at first glance. But Taipower’s reserve margin considers all capacity, including power plants that cannot be ramped up quickly to meet contingencies and solar power arrays that offer nothing after dark.  

Take that away from the calculations, and the actual operating reserve margin on summer nights falls to 0.4 percent, triggering the “black light” warning.

Tseng Wen-sheng (曾文生), a vice minister of the MOEA and acting chairman of Taipower, felt Liang’s estimate was too pessimistic.

MOEA: Weak economy = no worries

“Power usage last summer was unusually high,” Tseng said, pointing to the latest electricity report. 

Peak demand in July 2022 was nearly 1 million KW higher than expected, he said, partly because industrial production was booming. Another factor was soaring coal prices resulting from Russia’s invasion of Ukraine, which led owners of coal-fired cogeneration power plants to buy electricity from Taipower rather than run their own units, pushing up demand by 400,000 KW more than anticipated.

Tseng said demand for power had fallen this year, down 2 percent in the first half of 2023 compared to the same period a year earlier, due in part to a downturn in the economy (Taiwan’s exports were down 16.9 percent year-over-year in the first five months of 2023) and time-of-use pricing policies that encouraged more consumption away from peak periods. 

In other words, Tseng did not agree with Liang’s forecast, and he believed the weaker economy would curb power consumption, and there was no reason to worry.

In late June, the MOEA issued its annual report on electricity supply and demand, and it reflected Tseng’s optimism. The report adjusted its forecast for growth in peak electricity demand for the next two years to 1 percent and 2 percent, respectively, down from the 2.3 percent and 3.5 percent it projected in 2022.

The message was basically to pray that Taiwan’s economy remains sluggish or that TSMC sells fewer of its advanced chips that are big power guzzlers to mitigate the risk of electricity shortages.

Even then, what about the potential shortfall of 1.91 million KW of generating power in 2025?

Tseng said it was “within an acceptable range,” because Taipower instituted a demand-response system to secure power from private power plants in recent years that had lowered electricity demand by about 3 percent.

Its best demand response tool in recent years, however, may have been the telephone. Starting a few years ago, when electricity supply has gotten tight during peak hours, Taipower has mobilized top officials to call big power users such as steel and petrochemical plants and have them either temporarily halt production or cut their electricity use.

Opposition to LNG

Rotating power outages have generally been thought of as issues that could only happen in developing countries such as Myanmar, but the possibility they could emerge in Taiwan is ultimately down to the mounting opposition to gas-fired plants and infrastructure.

For natural gas to play the dominant role in Taiwan’s energy mix, it will need the Jiu Wei power plant to be built in Tainan and an LNG terminal to be built in Keelung. But those two projects are in limbo because of local opposition.

The Tainan power plant in particular has stood out because of the rush Jiu Wei Power Co. power plant seemed to be in to get it started. 

Taipower tenders to buy gas-fired electricity from private concerns were launched in the summer of 2021, and held at least 18 times without a taker because the price being offered for the electricity was on the low side. Finally, Chung Chia Power won a 15-year contract for a 610 MW project in Taichung and Jiu Wei Power a 26-year contract for a 610 MW project in Tainan. 

Jiu Wei did not sign a contract for the project with Taipower until October 2022, but it pledged to begin selling electricity by the middle of 2026.

Shinfox Energy Co. Vice President Wu Ming-hong (吳明竑) said that it generally took Taipower at least five to eight years to plan and build a thermal power plant, well beyond the Jiu Wei time frame. He retired from Taipower three years ago.

So why the rush?

“Plans haven’t kept pace with change,” said a senior executive in the energy business. 

With wind and solar power development behind schedule, delays in the expansions of the Datan and Hsinta power plants, and a sharp increase in electricity demand, it became clear much more electricity would be needed, prompting Taipower to suddenly issue the tenders in 2021.

Now, it fears the Jiu Wei plant may never get off the ground. 

“If this plant isn’t built, it’s just one fewer project for us, but it will mean a big power gap for Taiwan in 2026,” Wu said.

Protestors in Tainan. (Source: Pei-Yin Hsieh)

In response to the Tainan protesters’ skepticism over the government’s seemingly contradictory position of continuing to build power plants while saying that Taiwan does not lack electricity, the MOEA’s Tseng forced a smile.

“The precondition for not lacking electricity is that the new power projects that have been planned are completed on schedule,” Tseng said. “If our power generation plans run into walls everywhere, then our electricity supply will be under pressure in the future.” 

It was a stunning admission, given that the constant public assurances provided by the president and Economic Affairs Minister Wang Mei-hua (王美花) that Taiwan does not lack electricity have rarely if ever added that caveat.

Security issue?

Given the government’s push for gas-fired electricity, Taiwan’s natural gas consumption is expected to rise dramatically in the coming years. Three years ago, it used 18 million metric tons of LNG, making it the world’s fifth largest importer of the fuel. By 2030, demand is expected to increase to 30 million metric tons.

In August 2022, China held military exercises in waters surrounding Taiwan to protest the visit to Taiwan by then U.S. House Speaker Nancy Pelosi, in what some described as a quasi-three-day blockade of the island. It raised concerns of how a real blockade would disrupt the movements of LNG tankers.

MOEA chief Wang said at a legislative hearing that Taiwan has enough LNG storage capacity to last 11 days, but that actually falls to seven days during the summer months when power consumption peaks.   

The Wall Street Journal pointed to the vulnerability of Taiwan’s energy supply in August 2022, noting that of the world’s major LNG importers, Taiwan’s storage capacity was the lowest. By comparison, South Korea has a 53-day reserve and Japan a 36-day reserve, according to International Energy Agency statistics. 

Constant controversy 

The many controversies that have arisen over energy reflect the lack of faith among local governments in the central government’s energy transition policy and have become political footballs.  

Electricity is a fundamental issue for any country, but the more we hope for fast action on multiple fronts, the more battlefields that are created, with flare-ups occurring everywhere.

What cannot be argued is that businesses need green energy and there remains considerable opposition to nuclear power. But with the development of new energy sources far behind schedule and a potential gap looming in the coming years, it may be time to consider extending the lives of some of Taiwan’s nuclear reactors.

---

Have you read?

• Phasing out Nuclear Power? 
• Air Pollution or Nuclear Power?
• Taiwan’s water woes: Can anything be done?

Translated by Luke Sabatier
Uploaded by Ian Huang