TSMC and AmCham's Concerns Over Energy Policy
The Storm Media Editorial, June 9, 2023
Energy policy has once again become a focal point as both Taiwan Semiconductor Manufacturing Company (TSMC) and the American Chamber of Commerce in Taiwan (AmCham Taiwan) express concerns and question the energy policies implemented by the administration of President Tsai Ing-wen and future power supply.
During a recent shareholders' meeting, Chairman Mark Liu of TSMC was asked about the power shortage issue. His response, "The Taiwan government believes our electricity supply is sufficient, and we can only trust them," immediately sparked controversy. The interpretation from the public was seen as a form of "helpless trust"—a belief that is not wholehearted but also acknowledges the lack of alternatives, resulting in the sentiment of "having no choice but to trust." Meanwhile, AmCham Taiwan released its latest "2023 Taiwan White Paper," expressing concerns about Taiwan's energy policies and highlighting that the country is "far behind" in making significant adjustments to its energy structure.
While TSMC and AmCham Taiwan express different worries and focus on different aspects of energy policy and future power supply, both raise concerns about two key points: insufficiency in both power supply and green energy.
Semiconductor industry pioneer Morris Chang once addressed then-President Ma Ying-jeou, stating that TSMC cannot afford to experience even a minute of power shortage. Therefore, Mr. Liu's statement, with its undertone of helplessness and even mockery, underscores the crucial concern over power shortage, particularly as advanced semiconductor processes consume more electricity. TSMC's newly built 5-nanometer and 3-nanometer fabs in southern Taiwan are power-intensive facilities, often referred to as "power-hungry monsters." However, concurrently, the Tsai administration’s “Nuclear-Free Homeland” energy policy plans to decommission the third nuclear power plant in Hengchun, southern Taiwan, with two units scheduled for shutdown in the coming years, creating a power supply gap.
Although the Taiwan Power Company (Taipower) has been constructing natural gas power units, it remains uncertain whether the power gap will be adequately filled. The issue of power shortage exists both in northern and central Taiwan. Will TSMC, planning to establish 2-nanometer fabs in Hsinchu Science Park and Central Taiwan Science Park, have sufficient and stable power supply? The government claims there is no problem, and TSMC can only "trust them." But can they truly be trusted?
Another crucial point is green energy, which is often overlooked by the public. However, TSMC does invest in green energy. In response to global carbon reduction trends and requirements from stakeholders (such as the RE100 green energy initiative), TSMC needs to purchase a large amount of green energy. There is an "urban legend" that TSMC has bought up all the green energy in Taiwan. Chairman Mark Liu clarified that 90 percent of Taiwan's green energy is purchased by Taipower, with only around 10 percent available for free trade. TSMC accounts for approximately 4 percent of that 10 percent. Nevertheless, the key issue is that TSMC has a demand for green energy, and it is challenging to meet this demand domestically. "Taiwan's green energy development is indeed slower compared to other regions," emphasized Liu.
As for AmCham Taiwan, they directly address Taiwan's significant adjustment of its energy structure but highlight that progress is still "far behind." Therefore, they urge the government to accelerate. This approach sidesteps the issue of whether or not to continue the use of nuclear power and focuses on the fact that Taiwan’s future energy supply will heavily rely on the development of green energy and increased reliance on natural gas after phasing out nuclear power. However, concerns about power shortage are implied. For instance, a survey revealed that 74 percent of US businesses are concerned about the stability of power supply, considering it the most worrying energy issue in Taiwan. Additionally, 67 percent of respondents worry about whether the supply of green energy is sufficient. The white paper directly states that "ensuring stable power supply is an issue that must be addressed immediately."
The mistakes and problems in the Tsai administration’s energy policy are becoming increasingly evident and serious, extending beyond the issue of power supply. The foundation of this energy policy is the “Nuclear-Free Homeland” policy, which has led the Tsai administration to decommission Nuclear Power Plants 1, 2, and 3 on schedule and prevent the restart of Nuclear Power Plant 4 while most other countries (except Germany) are extending the lifespan of existing nuclear power plants and constructing new units. This decision has reduced Taiwan's nuclear power capacity by approximately 20 percent, and the shortfall in nuclear power needs to be replaced by the costly development of green energy initiatives by the Tsai administration.
This is undoubtedly a foolish and ignorant decision. While it is necessary and a global trend to increase green energy, other countries replace fossil fuel power generation (coal, gas, oil, etc.) with green energy. Only Taiwan replaces non-polluting and non-emitting nuclear power with green energy. Unfortunately, Taiwan faces limitations and issues in expanding green energy (such as a low capacity factor in solar photovoltaic power), resulting in slow construction progress and limited prospects. It is impossible to achieve the target of a 20 percent share of renewable energy by 2025; with an estimate of only around 10%. However, the pace of nuclear phase-out continues, so by 2025, thermal power is expected to account for approximately 90 percent of Taiwan's power generation. Doesn't the Tsai administration realize that for businesses with a demand for green energy, nuclear power can also be considered green energy?
With such a power generation structure, air pollution and emissions will undoubtedly worsen. In recent years, Taiwan's carbon reduction performance has ranked poorly in international assessments. Netizens mock President Tsai Ing-wen's policy as a call for the public to "generate electricity with their lungs," highlighting this issue. This energy policy doesn't necessarily mean there won't be enough power supply. As long as the government has enough audacity and determination, it can increase thermal power generation to the maximum capacity, ensuring sufficient power supply. The incumbent Tsai administration is doing exactly that; one can see the number of planned and constructed thermal power units since President Tsai took office. However, this approach cannot be sustained indefinitely. Whether it's the social backlash and resistance from within or the external pressure on Taiwan's ineffective carbon reduction efforts, there will ultimately be a limit to thermal power expansion, and it's uncertain if power shortages can be avoided.
Regarding doubts about the nuclear phase-out energy policy from the outside world, Premier Chen Chien-jen stated that aiming for a "nuclear-free homeland" is an important consensus in Taiwan and a global trend. This is utter nonsense and a lie. Domestic polls have already flipped a few years ago, with more than half of the respondents supporting nuclear power, far surpassing staunch advocates for nuclear phase-out. This is the reason why the "Nuclear Power for a Green Future" referendum was passed. Premier Chen should also look at the international context. Carbon reduction has long replaced the non-nuclear issue as the most critical environmental concern globally, and many advanced countries are expanding nuclear power and extending the lifespan of existing nuclear power plants.
Premier Chen’s remarks make it difficult even to say, "We can only trust him."