Sustainability & CSR

Energy policies of Taiwan's presidential candidates

08 December, 2023

The 2024 presidential candidates differ on nuclear power, but all seem to support the future development of renewable energy in Taiwan


By Bart Linssen

The current administration has done significant work in the past eight years to promote the development of renewable energy in Taiwan. In particular, offshore wind and solar have fared well by recent government policies. This article explores what the impact of the election of any of the three presidential candidates may have on future renewable energy policy.


Terry Kuo, although he has since dropped out of the race, had an energy policy programme that deviated the most from current policies and echoes an opinion frequently heard among many “pan-blue leaning” businesses. Kuo said that he intended to increase the nuclear energy portion of the energy mix to 25% by restarting the existing nuclear power plants and researching and adding modular nuclear power.


Nuclear as an alternative for renewable energy is a view often heard as a line of thought when objecting against the development of renewable energy. This is unfortunate because nuclear, aside from existing nuclear facilities, is not a realistic option for carbon reduction in the short or medium term and the opportunities for the long term are unknown. Large new nuclear plants are expensive and take many years to build. Modular nuclear looks promising as a possible future energy source, but costs per kWh are still very high and the problem of how to store nuclear waste material remains. The energy plans of both the Kuomintang (KMT) candidate, Hou You-yi, and the Taiwan People’s Party (TPP) candidate, Ke Wen-je, also lean on the use of nuclear power.


In this context it is relevant to state that under the RE100, or Renewable Energy 100% ( guidelines, nuclear energy is not considered a renewable energy source. Businesses committing to RE100 is a trend that is now thoroughly affecting Taiwan’s export businesses. Many international enterprises, such as Google, Apple, Ikea and Microsoft, have specific RE100 goals and have started to demand that players in their supply chain commit to 100% renewable energy as well. In this context, TSMC has joined RE100 and targets 100% renewable energy by 2040.


The transition for TSMC to 100% renewable is impactful; TSMC’s yearly electricity consumption in 2022 was 21.8TWh. This is 7.5% of Taiwan’s entire yearly electricity production and will increase over the coming years with new chip manufacturing technology coming on line. If TSMC wants to switch to 100% renewable energy it will need an equivalent of 10GW of solar PV or 5GW of offshore wind capacity just to produce the energy that the company currently needs. As of September 2023, Taiwan’s installed capacity for PV was 11.5GW and offshore wind was 1.7GW. Therefore, just in order to satisfy TSMC’s renewable energy needs and ensure its continued competitiveness in the global supply chain while remaining in Taiwan, the amount of renewable energy must grow significantly.


So, renewable energy is in short supply in Taiwan, and there are a couple additional limitations: Solar PV is highly subsidized to support local players and receives Feed In Tariffs (FIT) of NT$5.8 per kWh for small scale projects of less than 20kW and NT$4.3601/kWh for bigger installations. The high FIT with a 20-year guarantee makes it less interesting for business to source their renewable energy needs from solar PV as they would need to pay a premium for the added risk of a Corporate Power Purchase Agreement (CPPA) as opposed to a 20-year PPA. The latest offshore wind projects, due to low or zero FIT, have a bigger incentive to look for private energy buyers, but the size and cost of the projects requires off-takers with a large power need and a high credit rating, something which only companies like TPC or TSMC are able to meet. This leaves an interesting game of suspense to determine what either TPC or TSMC are going to be willing to pay per kWh once the offshore wind projects come online in the next few years, with offshore wind developers needing to secure long-term revenue for their projects and TPC and TSMC looking for the best price per kWh.

With that huge need for additional renewable energy, the three remaining presidential candidates, not surprisingly, do not differ much in their renewable energy objectives: increasing renewable energy content and reducing the amount of power from coal. All three candidates have indicated to aim for 30% renewable energy by 2030 and to end the use of electricity generation by coal. The difference is in what they plan to replace the current coal production with. Hou You-yi and Ke Wen-je intend to replace it with nuclear where possible while Lai is sticking to the existing DPP party line and plans to replace coal with gas generation.


On the topic of local content policy, which plays such a critical role in the development of offshore wind, the candidates have not made any clear statements. It is to be expected that the current policies of localisation will remain firmly in place with possibly only an impact on who benefits among the local players.


Finally, on the policy side, you see candidates reacting to implementation of CBAM, the Carbon Border Adjustment Mechanism of the EU, which will have Taiwan exporters to Europe pay a carbon tax on products according to the CO2 released in the production of these products, unless such a tax has already been levied in the country of production. CBAM has provided an additional incentive for countries like Taiwan to implement their own carbon pricing mechanism, allocating a cost to carbon emissions. Ko Wen-je and William Lai have both proposed a carbon pricing mechanism, Ko Wen-je in the form of a carbon tax and William Lai by carbon trading. This will be an interesting topic to watch because, if fully implemented, and TPC has to pay for its carbon emission rights, it is bound to increase Taiwan’s electricity prices, a very sensitive political topic in Taiwan indeed and that is probably why Hou You-yi has been vague on this particular but very relevant topic.


In conclusion, the energy policy programmes of the three presidential candidates do not differ that much when it comes to renewable energy policy and carbon reduction. Carbon reduction and RE100 are global trends that none of the candidates can ignore if Taiwan is to remain a global manufacturing hub. The difference will be whether electricity generation by coal is to be replaced partly by nuclear as advocated by Ke Wen-je and Hou-You-yi or entirely by gas generation as advocated by William Lai. Aside from continuous support for offshore and PV solar, with a Hou You-yi win, we can expect investments in R&D in modular nuclear power generation, while a DPP win will see increased attention to the production and import of green hydrogen and the related technologies and development of geothermal energy. Bioenergy, wave energy and onshore wind have not been mentioned by any of the candidates and will most likely continue to stay underdeveloped. We can expect a carbon tax with Ke Wen-je and a carbon cap and trade mechanism with William Lai. Hou You-yi has been vague on this topic.


Bart Linssen is Director of Renewable Energy at RCI Engineering

Go Top