Prof. ST Hsieh
Director, US-China Energy Industry Forum
626-376-7460
February 3, 2024
The headline from the Telegraph sounds very alarming that Taiwan may face imminent war because of China. But Taiwan’s vulnerabilities mostly come from her natural endowments as well as domestic politics.
First of all, almost no one with the right mind in Taiwan is interested in any war. They do follow the progress of the proxy war in Ukraine closely. While the US and allies had pledged to support Zelenskyy to provoke Russia “as long as it takes.” Now western aids are drying up because the allies now say that we will support Zelenskyy “as long as we can.” Further, Zelenskyy’s allies, the US and NATO, will not commit any boots on the Ukraine ground. Taiwan will not count on any solid action from the US and the newly elected leaders will not provoke Beijing.
Without any war threat, Taiwan as an island isolated from any direct link with external energy supplies (via Natural Gas pipelines, crude oil pipes, and/or power grid connections.) Taiwan does not have any energy security to speak of. A major issue is that the governments have not been able to develop and implement any sustainable energy policy consistent with the commitment to curb greenhouse gas emissions. Taiwan’s internal politics are bitterly divided on zero-emission vs nuclear power plants.
Without nuclear energy, Taiwan will not be able to provide cost-effective baseload power supply which threatens the survival chip making industry and the military defense capability.
Further, Taipower as a national monopoly is subjected to domestic politics. Many of the solar and offshore wind power projects have been accused of collusions and are not cost-effective. Taipower, with its huge financial losses, what is the purpose of purchasing drone defenses? Taiwan has a well-established Ministry of Defense (MoD), should MoD be solely responsible for the defense of power generation stations and all other infrastructures?
Taiwan’s defense procurements are dominated by the US, how did Britian land the deal? China is very sensitive to military equipment sales to Taiwan, would Britan’s drone defense equipment sale upset the China-Britan bilateral relation?
Taiwan to deploy drone defences around power plants amid fears of Chinese attack
Nicola Smith, The Telegraph
Sat, February 3, 2024 at 6:13 AM PST
Taiwan is planning to buy drone jamming guns to protect its power plants, which it fears could be among the first targets of a Chinese invasion.
The guns and a passive radar detection and response system would form a two-tier defence structure to deter sabotage and attacks on critical infrastructure, the ministry of economic affairs said last week.
Taiwan’s close observation of Russia’s war with Ukraine and the extensive use of drones in the conflict was behind the move to boost the defences of its electricity grid and nuclear power facilities, officials said.
China, which claims Taiwan as its own territory, has in recent years increased its military intimidation of the island democracy, flying fighter jets on a near daily basis close to its airspace. Outlying Taiwanese islands, which have sensitive military bases, have also seen a surge of commercial drone intrusions.
Taipower, a state-owned electric power company, has approved an initial £250,000 budget for a first batch of 60 drone jamming guns.
Even if it is able to safeguard its power plants in the event of a conflict, energy security remains an Achilles heel for Taiwan.
Energy-insecure economy
The densely populated island of 23.5 million, which dominates the global supply of semiconductors, is one of the world’s most energy-insecure economies, relying on maritime imports for about 97 per cent of its energy.
The over-dependence on imports has raised fears that Beijing could choke off Taiwan’s energy supplies – crippling its economy and infrastructure – through a naval blockade without resorting to a full invasion. According to some predictions, gas stockpiles would last for only 11 days.
Securing Taiwan’s energy reserves will be one of the major challenges facing Lai Ching-te, the new president, after his inauguration in May.
Mr Lai must quickly decide whether to plough ahead with the planned decommission of all nuclear plants by 2025 – a decision that could boost his popularity ratings but further strain the power grid.
Taiwan has already committed to net zero – reducing reliance on fossil fuels – by 2050, and to increase renewables from the current eight per cent of the energy mix to about 30 per cent by 2030.
The UK is at the forefront of helping to reinforce the island’s renewables industry.
Taiwan is the UK’s largest offshore wind market in the Asia Pacific region, and one the UK export credit agency has been keen to back with more than £1.2 billion in financial guarantees, including for the Hai Long wind farm, the island’s largest project to date.
Enhanced trade deal with Britain
British investment in Taiwan’s renewables sector is set to rise after London and Taipei signed an enhanced trade partnership in November, and British companies, with extensive North Sea experience, are uniquely placed to partner with Taiwanese companies to build up off-shore wind facilities.
“We can bring that British engineering knowledge and trusted brand to support them on what are huge investments,” said James Taylor, regional manager for Northeast Asia for Mott MacDonald, an engineering consultancy providing technical advice on Taiwan’s solar and offshore wind projects.
But experts warn that Taiwan still faces a mammoth task ahead to meet its energy security challenges even if offshore wind offers a partial solution.
“As it stands right now, Taiwan would most likely only be able to last a few weeks if there was a total blockade of all energy imports, said Joseph Webster, a senior fellow at the Atlantic Council’s Global Energy Centre.
“In terms of how Taiwan can resolve this issue or mitigate the risk, it’s an extremely challenging problem,” he said. “There is no silver bullet solution.”
Taiwan’s Sole Power Utility Racks Up Second Year of Losses
By Sing Yee Ong
January 30, 2024 at 11:44 PM PST
Taiwan’s sole power utility reported major losses for a second consecutive year on rising fuel costs triggered by Russia’s invasion of Ukraine and high inflation.
Taiwan Power Co. reported a pre-tax loss of NT$198.5 billion ($6.3 billion) in 2023, following an even greater shortfall in 2022, according to the financial statements on its website. The losses in 2023 came despite a capital injection of NT$150 billion plus a subsidy of NT$50 billion from the government that year. Taipower forecasts another loss of NT$188.7 billion this year.
Read more: Taiwan’s Troubled Utility Poses Risk to Chipmakers’ Green Goals
The state-owned utility, which is under pressure to keep tariffs low amid growing expenses, has been absorbing costs to avoid passing them on to the consumers.
Japan Firms Exit Taiwan Offshore Wind Projects, Deepening Industry Crisis
By Sing Yee Ong
November 16, 2023 at 3:00 PM PST
Japanese companies are dropping out of offshore wind projects in Taiwan, one of fastest growing markets for the technology, as rising costs and worsening delays plunge the industry into deeper trouble worldwide.
Oil refiner Eneos Holdings Inc. said last week it may exit the Yunlin Offshore Wind Project in the Taiwan Strait, after regional utility Shikoku Electric Power Co. decided to pull out of the same project due to delays threatening its profitability. Electricity generator Jera Co. announced it completed the sale of its stake in Formosa 3, another Taiwanese offshore wind project, in June.
Taiwan’s wind farms are part of a plan to increase the proportion of its electricity coming from renewables to 20% by 2025, from 8% last year. It aims to have 5.7 gigawatts of offshore wind capacity by then, compared with 2.1 gigawatts now. The island is also looking to increase its use of natural gas, cut coal and eliminate nuclear power, but is falling behind schedule on its targets.
The troubles in Taiwan’s wind industry compound a crisis that has already hit other parts of the world, as the after-effects of the Covid-19 pandemic push up the cost of labor and borrowing. While many businesses are able to offset cost changes by raising prices, many wind developments find themselves locked into contracts to sell power at rates set years ago.
In Taiwan, rigid requirements mandating developers procure 60% of their equipment from local manufacturers make projects even more expensive, sometimes doubling costs. The rules can lead to a sharp rise in offshore tariffs, saddling ratepayers with higher prices and bringing delays in installations, BloombergNEF Analyst Leo Wang said in a report this month.