Taiwan Power Co (Taipower), the nation’s sole electricity utility, is grappling with financial difficulties that could jeopardize its clean energy goals and the semiconductor industry’s attractiveness. The state-owned company is anticipating substantial losses for the past and current years, facing challenges in passing higher energy production costs to consumers due to political pressure to maintain low prices.
Taipower’s financial struggles are of particular concern as Taiwan aims to increase the share of green power in its energy mix to 20 per cent by 2025, up from approximately 8 per cent in 2022. The government’s target to phase out nuclear power generation adds complexity to achieving this goal. The semiconductor industry, a crucial sector for Taiwan, is also closely watching Taipower’s ability to progress in clean energy, especially as leading chipmaker Taiwan Semiconductor Manufacturing Co (TSMC) has set a target of 100 per cent renewables use by 2040.
Taiwan’s heavy dependence on imported fossil fuels, constituting about 80 per cent of its electricity generation in 2022, raises national security concerns in the event of geopolitical conflicts, such as an attack or naval blockade by China. The government’s clean energy goals are integral to addressing these concerns, and Taipower plays a crucial role in the nation’s energy landscape.
Taipower is forecasting a substantial loss of NT$198.5 billion (US$6.34 billion) for the past year, with another projected loss of NT$188.7 billion for the current year. The utility, facing challenges in raising electricity prices due to political pressures, raised prices by 11 per cent on average last year and 8.4 per cent in 2022, primarily impacting industrial consumers.
Despite exploring new sources of income and cost reduction measures, Taipower’s financial constraints remain a cause for concern. The utility’s role as a major player in the energy sector and its influence on critical industries like semiconductors heighten the importance of addressing its financial challenges to ensure the nation’s energy security and clean energy transition.
The Taiwanese government is still optimistic about increasing renewables, particularly from offshore wind projects. However, the offshore wind sector faces rising costs and delays, impacting the overall progress toward clean energy targets. The financial difficulties of state-owned utilities, including Taipower, echo similar situations faced by counterparts in the region, emphasizing the need for sustainable financial models to support clean energy transitions.