This year is the year that Taiwan rises,” President Lai Ching-te declared in his National Day address, noting that Taiwan’s economic growth rate “ranks first among the Four Asian Tigers and surpasses China’s.” He attributed the impressive economic achievements to Taiwan’s semiconductor, information and communications technology, and electronic components industries. On October 17, the Chung-Hua Institution for Economic Research (CIER) released its latest Taiwan economic growth forecast, significantly revising it upward from 3.05% to 5.45%, citing a global surge in semiconductor demand driven by the AI boom.
While AI and semiconductors drive economic growth, they also put pressure on the island. In April this year, the International Energy Agency (IEA) released its flagship report on Energy and AI, which made a special mention of Taiwan. The report noted that most chips used in AI data centers are manufactured in foundries located in Taiwan and South Korea, with TSMC being a major player. “The semiconductor industry is estimated to consume about 1% of global industrial electricity demand, but the impact is more pronounced in certain regions – for example, in 2023, TSMC consumed almost 10% of the total electricity consumption in Taiwan.”
Amid growing energy concerns, the Taiwanese government has shown confidence. Nvidia’s new Taiwan headquarters is expected to require substantial electricity. When opposition lawmakers questioned whether there will be “enough power for data centers,” Taiwan Power Company (Taipower) responded that industrial needs “will be met.” It says future power plans already factor in rising demand from semiconductors and emerging AI technologies, assuring the public that there will be no power shortages.
This year also marks Taiwan’s first nuclear-free summer in four decades. With the decommissioning of the third reactor at the Maanshan Nuclear Power Plant, Taiwan has officially become nuclear-free. However, what should have been a milestone in Taiwan’s energy transition instead left the island at crossroads:
- The timeline for achieving renewable energy targets continues to slip. This year, Taiwan’s solar power installations may fall short of the 1GW goal for the first time in eight years, dropping back to 2018 levels;
- Natural gas, intended as a transitional option for renewable energy development (targeted to make up 50% of the energy mix by 2030), was identified in a US war-gaming report as the most vulnerable link of Taiwan if China were to impose a maritime blockade;
- Meanwhile, opposition lawmakers in the Legislative Yuan have called for all coal-fired power plants to be shut down by 2028 – six years earlier than originally planned – citing air pollution concerns;
- And in August, despite a voter turnout of less than 30%, over 4.3 million people voted in favor of restarting the Maanshan Nuclear Power Plant, far outnumbering those who opposed it.
As Taiwan pushes forward with its ambitions to develop AI-related industries, the questions loom larger than ever: How much electricity will we need, and what kind of power will fuel Taiwan’s future?
How much electricity does AI consume?
The government’s current estimates for AI-related power consumption come from two main sources. The first being the National Electricity Supply and Demand Report released in July last year, which projected that electricity use for AI will increase eight fold from 2023 and 2028; The second came a month later, when Taipower presented additional forecasts at the National Climate Change Countermeasures Committee, incorporating projected electricity demand from the semiconductor industry. Combined, these estimates suggest that by 2030, AI and semiconductor-related power use will require an additional 4.32 million kW – roughly equivalent to building another 0.9 Taichung Power Plant.
However, Chia-Wei Chao, Research Director, Taiwan Climate Action Network (TCAN), believes such projections are highly unrealistic. “That kind of estimate would mean data center electricity consumption in Taiwan growing by 50% every year,” he said. “In other words, Taiwan would need to build two data centers the size of Google’s facility in Changhua every quarter.”
Based on the three scenarios modeled by IEA, Chao estimated that Taiwan’s official projection – an eightfold increase in AI-related electricity demand – is extraordinarily high.
“According to Taipower, their estimates are based on construction plans submitted by data center developers, with much of the projected demand expected to come between 2028 and 2030. But if that many data centers were really being built, it’s unlikely that by late 2025 we are still nowhere near completing those processes. So I’m skeptical of that level of projected demand,” Chao explained. “Internationally, when people talk about AI-related electricity consumption, there’s a trend of first mapping out where data centers might be built. That can lead to an inflated picture of future energy demand.”
Are electricity forecasts overestimated or underestimated? Experts say there’s not enough data to tell
“Our biggest challenge right now, is that the latest National Electricity Supply and Demand Report doesn’t show any detailed data on AI. We have no idea how the government arrived at its estimates, and the numbers differ significantly from those released two years ago,” Chao said.
Each year, the Ministry of Economic Affairs publishes a National Electricity Supply and Demand Report summarizing Taiwan’s actual electricity generation and consumption for the year, while also projecting future demand to guide decisions on new power units and retirements. The 2023 report was the first to include AI-related electricity projections, forecasting an eightfold increase in demand. But in the 2024 edition, released at the end of September, those AI projections disappeared entirely.
The report maintains ambitious projections for AI development in its future electricity demand forecasts. “Considering the impacts of AI technological advancements, semiconductor industry expansion, US reciprocal tariffs, and deep energy conservation initiatives…,” Chao said. Yet future electricity growth estimates have been significantly reduced. “Projected annual average growth in electricity demand is approximately 1.7%.” Compared to last year’s projections of 2.5% to 2.8%, Chao noted, “Taking the gap for 2030 as an example, this equates to eliminating the output of one Taichung Power Plant.”
Looking at the overall electricity forecast – an average annual growth rate of 1.7% that supposedly includes AI-related industries – Hsin-Wei Hsu, Assistant Professor, Department of Industrial Engineering and Management, National Taipei University of Technology, believes the figure seems rather low. In the past, when projections were made based on sectoral data, such as residential, commercial, and industrial use, even without including AI-related industries, the growth rate already exceeded 2%, Hsu explained. “But I can’t say whether the current estimate is right or wrong, because we don’t have access to the underlying data.”
“Frankly speaking, it’s extremely difficult to forecast electricity demand for AI-related industries,” he added. “Traditional power forecasts rely on historical trends, but AI is such a new field that there simply isn’t enough historical data to go on.”
Chih-Wei Wu, Deputy Director General, Energy Administration, Ministry of Economic Affairs, explained the downward revision in this year’s forecast. “Since the implementation of our deep energy-saving policies in the second half of last year, we’ve already seen some results. So when making this year’s projections, we factored in the long-term effects of energy conservation.”
Regarding AI-related electricity forecasts, Wu noted that the estimates take into account the future demand of the AI industry as well as relevant international research. “We mainly consider the development of servers, AI hardware, and GPUs, including their power consumption, system technology advancements, and future applications. Since Taiwan largely plays an application-layer role, we also factor in edge computing (meaning computations performed on personal computers rather than in the cloud). For example, some current PCs can handle certain AI functions, and those are included in our calculations as well.”
“Based on data collected in 2025, we estimate that electricity demand from the AI industry will reach around 21.8 billion kWh by 2030,” Wu said. “Although this is lower than last year’s projection, the demand, especially from AI-related sectors, is still quite strong, and has been fully taken into account.”
Hsu believes it’s currently difficult to judge how representative the 21.8 billion kWh estimate is. If the Energy Administration doesn’t publish the current electricity consumption of AI, there’s no way to gauge the actual increase, he said. It’s the same with this year’s sharp downward revision due to the deep energy-saving measures. “We simply don’t know how they are quantified or how they will affect future electricity demand,” he said.
“Compared with the past, the government’s data disclosure on energy has certainly improved over time, but this year it seems to have suddenly become more conservative,” Hsu noted. He added that, besides the absence of AI-related projections in this year’s report, the current forecasts only present a single scenario. “What concerns me is how are these targets being achieved? Under what circumstances might they not be met? How much of the demand comes from AI? None of this information has been disclosed.”
“Capping this year’s electricity growth rate at 1.8% is, of course, a good thing, since it aligns with the country’s overall carbon reduction goals. But if you say that 1.8% already factors in AI electricity demand, then what actually happened over the past year? Did your assessment reveal that some of the expected demand didn’t materialize, or were the standards for measuring electricity demand raised in order to reach this level?” Chao also questioned.
“Based on a two-year estimate, reducing electricity consumption by the equivalent of one Taichung Power Plant would, of course, be very welcome, if it can actually be achieved. But it’s hard for us to verify how strong the policies would need to be to reach that level,” Chao said.
Hsu also cautioned that the historical role of the report has been to guide power plant planning, meaning estimates are usually set higher than the government’s carbon reduction targets. “That makes sense, because power plant planning needs to be conservative, ensuring there’s enough capacity for unexpected demand. But this year’s report aligns exactly with the government’s carbon targets and has removed a lot of information, that’s the unusual part.”
Guaranteeing electricity for AI “won’t be a problem” would make it hard to discuss details
“Compared with other countries, Taiwan is still in a mindset of ‘the demand will be met’ when it comes to AI electricity. That makes it difficult to see the proactive management measures and strategies that other countries have already started implementing,” Chao pointed out. He said, for example, plans proposed by former US President Biden before leaving office recommended that data centers should be located in areas with geothermal potential or abundant renewable energy.
“Of course, there has been some progress,” Chao added. “Taiwan now requires that data center electricity usage be included in early-stage energy assessments.” Chao said In the past, this kind of requirement applied almost exclusively to power plants, which had to demonstrate that their generating units were as efficient as possible. “But now I only see it included as a regulation, there are no detailed requirements specifying how much electricity efficiency must actually improve.”
This mindset also appears in the individual project review process.
Where will AI-related electricity actually be consumed?
To understand where electricity for AI is actually being consumed, READr reviewed EIAs and environmental impact analyses from the past five years to identify development projects linked to AI-related industries. These projects are expected to add at least 1.667 million kW of electricity demand, roughly 2.5% of Taiwan’s current total installed capacity.
Currently, EIA reviews for these developments fall into two main categories: individual projects and industrial parks. Individual projects are submitted by single companies, while park-type developments are typically proposed by local governments or science park authorities.
Yu-Yu Teng, Director of Media and Communications, Citizen of the Earth, Taiwan, cited TSMC’s EIA process as an example. “During the discussions, we felt there were still many details that needed clarification, but the overall atmosphere was to just get things done and approved quickly. I’m sure that puts some pressure on the EIA committee members as well.”
Teng mentioned that TSMC’s EIA for its new plant on the Kaohsiung refinery site was approved in just 1.5 months, raising concerns about the segmentation of the assessment. Since this piece of land carries special significance, there had been hopes that TSMC could become a model for industrial transformation, including commitments to purchase more socially responsible green electricity, such as rooftop solar panels. In the end, those expectations were not fulfilled.
Kaohsiung’s industries have historically been dominated by heavy industry. The site chosen for TSMC’s new plant was formerly the Kaohsiung refinery, where residents lived alongside pollution and industrial safety risks until the facility finally closed in 2015. After the refinery’s closure, the local community had hoped the area could be redeveloped into an ecological park. Then-Mayor Chen Chu personally promised to return a clean piece of land to the Houjing neighborhood, and CPC Corporation had planned a 10-year land restoration program, plans that were later upended by the announcement of TSMC’s move into the site.
At the time, TSMC’s original plan to expand in Hsinchu ran into obstacles, so the company turned to Kaohsiung. The Kaohsiung City Economic Development Bureau and TSMC then submitted environmental impact assessments for review. “There were quite a few changes during the process, including adjustments to TSMC’s production lines, making the processes more advanced, but it also increased environmental impacts and significantly boosted electricity demand,” Teng said. “On top of that, they now want to combine these projects into what would become the third park of the Southern Taiwan Science Park.” There’s no precedent for this, Teng said. No other park was first developed under a different designation and then later turned into a science park, essentially segmenting the EIA and sidestepping a more rigorous review process.
As of this article’s deadline, the EIA for the Southern Taiwan Science Park Nanzih District Development Plan, which consolidates four original EIA projects, has been formally submitted, with reviews scheduled to begin on November 5. Teng explained that the logic of the EIA system is to use scientific methods to assess environmental impacts before and after development, then determine whether the project should proceed or how to minimize its environmental costs. In this case, however, the projects have already been developed, making it impossible to assess the pre-development conditions. As a result, the current EIA leaves no room to conclude that the project shouldn’t proceed, nor can it effectively require the developer to adjust the project under existing conditions.
“Combined, TSMC’s five plants in Kaohsiung consume about 9.2 billion kWh, which equals roughly 30% of Kaohsiung City’s total electricity use in 2023 and 1.6 times the city’s residential consumption,” said. He added that although TSMC’s processes produce relatively lower carbon emissions compared with other local industries like steel and petrochemicals, this massive electricity demand still makes it the city’s second-largest carbon emitter. Kaohsiung’s future carbon reduction efforts will face significant pressure as a result.
“Based on current calculations, there’s enough electricity, so shortages aren’t expected,” Teng added. “But historically, much of Taiwan’s power flows from the south to the north or, or from central Taiwan to northern Taiwan. In the future, if the south has to rely on its own electricity, it will be difficult to meet demand from the north. That’s why Taipower has been planning new power developments in the north, to address this issue.”
Local government mobilizes to accommodate TSMC’s expansion
“It’s not just the EIA, various types of infrastructure are being coordinated to support this park,” Teng explained. For example, when TSMC needed water, the development of recycled water facilities was accelerated; when TSMC needed land, CPC Corporation quickly completed land restoration. Across Kaohsiung’s Nanzih District, transportation projects, from new roads to metro planning, are clearly being designed around the needs of this single industry.
Kaohsiung sees TSMC’s expansion as a key milestone in its transition from a heavy-industry hub to a smart city. In early October, its Mayor Chen Chi-mai received a commemorative wafer marking the trial production of TSMC’s new plant, attributing the achievement to the city as a whole. He said that the city government had proactively prepared critical resources – land, water, and electricity. This included the land at the former CPC Kaohsiung Refinery, which would have required 17 years for remediation but was reduced to just 2 years through inter-agency collaboration, clearing both the land and groundwater for TSMC’s use.
Once construction began, the city and the company adopted a “round-the-clock coordination” approach to ensure the investment proceeded smoothly, including nearby public facilities. “The city government has also actively coordinated administrative procedures, permit approvals, EIA reviews, and zoning changes to ensure that all reviews are seamlessly connected,” Chen said.
Isn’t the city’s full support for TSMC’s development a good thing? “Of course this depends on perspective. Many Kaohsiung residents view TSMC’s arrival positively, they feel the city is transforming, upgrading, and becoming more advanced. But when it comes to the city government’s overall industrial planning, we’ve long felt there isn’t a fully developed vision for transformation. Yes, new industries are coming in, but does that erase the pollution and electricity burdens we’ve carried in the past? Are other industries now expected to cut back to accommodate TSMC? Right now, it feels like TSMC just gets to move in first, and that’s that,” Teng said.
“When discussing semiconductor electricity demand with the government, they’re almost in a position that cannot be questioned. They see the expansion of the semiconductor industry as a given, leaving little room for discussion… It’s very difficult to challenge whether the growth trajectory is excessively ambitious,” Chao said earlier in an interview with Initium’s special report The World’s TSMC.
Chao added that his observation is mainly based on the government’s frequent inability to provide detailed assessments on this issue. “For example, during discussions on Taiwan’s 2035 emission reduction targets, the Ministry of Economic Affairs was willing to talk about scaling back the steel and petrochemical industries and curbing their electricity usage. But when it came to evaluating the electronics sector, they couldn’t present alternative plans.”
Teng pointed out that TSMC’s high electricity consumption, combined with its commitment to using renewable energy, increases pressure on renewable energy development and steers the overall green power push in the industry’s direction. “Both the government and NGOs support renewable energy, but there’s a fundamental difference: the government is driven by industry to actively develop green power, whereas our focus is on reducing the environmental cost of energy. Sometimes these goals are conflicted.”
This tension represents the biggest challenge facing Taiwan’s renewable energy development today.
Zoe Lee/Man Ru Wu/Hsiuwen Liu
05 November 2025