Taiwan’s ambitions to become a regional powerhouse in artificial intelligence (AI) and the energy needs of its massive semiconductor industry could impede the country’s decarbonisation goals. But it is also demand for AI that will provide impetus for an accelerated expansion of the renewables sector, said the organiser of the island’s largest green energy and net-zero trade show.
Home to some of the world’s biggest chipmakers, Taiwan’s economy has been riding on the global demand for AI-related technologies. In July, its statistics bureau reported that gross domestic product (GDP) grew by 5.09 per cent in the second quarter, beating previous estimates – a result largely attributed to its growing AI sector.
Yet the island’s AI spending boom will also add to pressures on its already-burdened power sector, complicating efforts to secure supplies as it transitions to clean energy. Speaking at a press conference ahead of the Energy Taiwan and Net-Zero Taiwan 2024 trade show, representatives from the external trade council and the economics affairs ministry clearly signalled that Taiwan will have to meet the surge in electricity demand from data centres for AI.
Describing AI as a “monster whose thirst for energy cannot be easily quenched”, Simon Wang, president and chief executive officer of the Taiwan External Trade Development Council (TAITRA), said that even though its AI ambitions and goals to expand renewables use in its energy mix are at odds, both pursuits are equally crucial for Taiwan.
“AI has a mammoth energy consumption footprint, so as we chase the boundless opportunities in the sector, particularly with the adoption of generative AI surging ahead this year, we will have to push for deeper decarbonisation and the expansion of clean energy…We will have to do everything we can to limit warming to 1.5 degrees Celsius, which is the global benchmark for climate action,” he said.
Monday’s press conference was supposed to raise the curtain for the trade show but as Taiwan shuts down and braces for a storm, the three-day conference has been pushed back. Image: Ng Wai Mun / Eco-Business
TAITRA and the Green Energy and Sustainability Alliance (SEMI GESA), a platform spearheaded by semiconductor industry players, are the co-organisers of this year’s trade show. The three-day Taipei conference, originally planned to open on Wednesday, would have seen a record number of nearly 500 exhibitors and greater regional participation, but has been disrupted as the city braces for Typhoon Krathon, a tropical cyclone that has pounded Taiwan’s southern and eastern regions with torrential rains.
Every county in Taiwan had declared Wednesday as a “typhoon day”, and all schools and offices in Taipei City continue to be closed today. On Wednesday evening, organisers said the trade show would kick off on Friday instead, two days later than planned, with some regional side events and seminars cancelled.
Legislators scrunitise revised energy projections
In the months after new President Lai Ching-te took office in May, ushering in a historic third term for his pro-independence ruling party albeit with weaker support in the legislature, Taiwan’s administration has been actively trying to clarify its energy policies, with the economic affairs ministry touting a “second wave of energy transformation”.
The strategy is anchored on developing “smart energy and green manufacturing” solutions that will ensure Taiwan keeps its competitive advantage in strategic industry sectors where it has a dominant position.
But it had been reported earlier that the island – which is still dependent on coal and gas – is falling behind on meeting its 2025 goal to generate 20 per cent of its energy from renewable sources, up from 5 per cent in 2020.
Industry experts point to inflexible procurement rules and limits on project sizes for the wind and solar sectors as key barriers, although the government has since announced last month that it will ease clean energy purchase rules for businesses. Before the rule change, users were required to purchase the entire energy output of a renewables facility, but they can now procure the energy based on their needs.
At the press conference, Lee Chun-li, deputy director-general of the economic affairs ministry’s energy bureau, reiterated the administration’s commitment to the national 2050 net-zero roadmap, which will see renewable energy sources accounting for 60 to 70 per cent of its total electricity generation by mid-century.
Hydrogen will make up 9 to 12 per cent of the total share by 2050. Taiwan will still have coal, gas and other fossil fuels taking up at least 20 per cent of its energy mix, said Lee, although it will “make use of carbon capture technologies to achieve its net zero goals”.
“We will still be partially reliant on fossil fuels, but renewables will be at the core,” he added.
Roughly 80 per cent of the self-governing island’s power supply relies on fossil fuels now.
On Wednesday, at a session where legislators questioned the ruling administration’s AI development plans and how industrial electricity usage needs will be met, Taiwan’s premier Cho Jung-tai gave the assurance that it will have sufficient supply to support the rapid development of the technology sector by 2030, given assessments done by the economic affairs ministry and state-owned Taiwan Power Company.
Economics affairs minister Kuo Jyh-huei said that current power plans should meet future demands, but there is still catching up to do to ensure that Taiwan’s green energy goals are met.
A July forecast showed that Taiwan’s energy use will grow by an average of 2.5 per cent a year over the next five years, with much of the demand coming from the AI sector, which is expected to consume eight times more electricity by the end of the last decade, compared to last year’s numbers.
The projected increase in power demand comes as Taiwan debates whether to carry on with the ruling party’s plan to phase out nuclear energy due to safety concerns. It has shut down its second-to-last operating nuclear reactor and a remaining unit is scheduled to close in May 2025.
Trade show spotlights battery storage
Monday’s press conference also included a showcase of prominent local renewables players and their latest solutions, with a visible focus on demonstrating the Taiwan clean energy sector’s shift to focus on developing battery modules to meet storage demand.
Among the companies present was Formosa Smart Energy, which broke ground on a lithium iron phosphate (LFP) battery cell plant in Changhua county, located on the west coast of Taiwan, in April last year. The company is building up a domestic battery storage supply chain with government support.
In a press release, trade show organisers said energy storage has become essential for renewable energy development to stablise power supplies, ensure grid resilience and meet the growing demand for AI computing.
Across Asia, China, Japan and South Korea are all expanding their lithium battery industries and all three countries together hold most of the world’s battery capacity. By expanding energy storage capacity, challenges such as the intermittency of renewables can be avoided.
Terry Tsao, who heads the Taiwan chapter of the global semiconductor industry alliance SEMI, told Eco-Business on the sidelines of the press conference that Taiwan’s economy and its manufacturing prowess is highly dependent on steady, reliable sources of energy. “Other than solar and wind, we have to look into enhancing our energy storage capabilities as well as diversifying even our renewables sources to look at hydrogen and geothermal energy.”
Tsao also welcomed the updated procurement rules, which will help Taiwan’s export-oriented economy stay competitive. Taiwanese firms in the global supply chain need to adapt to international Scope 3 or value chain emissions reduction rules that see companies still reliant on fossil fuels lose their competitive edge, he said. “This means that the government must do more to support corporate procurement of green energy in the domestic market.”
Wednesday also saw the launch of Taiwan’s domestic carbon credit exchange platform, Taiwan Carbon Solution Exchange (TCX). Current regulations now require large-scale factories and high-rise construction projects to offset their emissions by purchasing carbon credits from voluntary projects or to implement other offset measures.
Eco-Business’ access to the trade show and press conference, as well as the sponsored trip to Taipei was facilitated by TAITRA.
