TAIPEI, Taiwan — Wang Bo-whei was 50 years old when he started working at Taiwan’s fourth nuclear plant, rising through the ranks to oversee its construction and — he thought — its eventual operation.

But 15 years into the job, following delays that frequently plague nuclear power projects, Wang was tasked with sealing off the facility at the island’s northeastern tip without a single megawatt ever being produced. Public opinion had turned sharply in the wake of the 2011 Fukushima disaster in Japan, prompting the government to halt construction on all projects.

“I spent my entire career working in nuclear power plants, and I understand how crucial they are,” Wang said, citing the energy needs of Taiwan’s world-leading semiconductor plants. “They provide affordable, stable electricity.”

Taiwan — an island at the heart of U.S.-China tensions and where energy demand for the chip industry is soaring — is not currently on track to benefit.

Instead, despite louder hints that the government may be prepared to shift away from blanket opposition, it is preparing to shutter its final reactor in the spring, a move that would phase out nuclear power entirely. The trajectory bucks a global trend of embracing nuclear as a way to meet climate change goals and lure investments in the power-hungry artificial intelligence sector.

It’s also a position that has drawn fire from opposition groups, defense analysts and key business leaders. All warn that Taiwan risks an energy and security crisis due to its reliance on the outside world for coal and gas supplies — imports that China’s navy could blockade as part of a confrontation.

And it comes with the island’s power supplies already stretched, threatening economic growth. Taiwan has raised electricity prices twice this year, with the latest being a 12.5% increase for industrial users that began earlier this month.

“We need more power in Taiwan,” Nvidia Corp.’s billionaire CEO Jensen Huang told reporters in June. Nvidia leans heavily on Taiwan Semiconductor Manufacturing Co. for production of its most important chips.

Granted, there are early signs of change. Premier Cho Jung-tai said in an interview with Bloomberg News that Taiwan was ‘very open” to using new nuclear technology to meet future power demand, the strongest hint yet that the government may be rethinking its position and could engineer a reversal.

Cho also said he’d ask the state-backed power provider to make sure that personnel from the archipelago’s decommissioned reactors stay in their jobs.

But signals remain vague, and have yet to be matched with action.

A lonely position

Today, nuclear accounts for less than 3% of Taiwan’s daily energy production, with liquefied natural gas and coal — all imported by ship — providing more than half. That’s down from about 5% earlier this year, before Reactor No. 1 at the Maanshan Nuclear Power Plant in southern Taiwan was shuttered in July.

Elsewhere, by contrast, countries and companies are already looking to bolster nuclear power by restarting old plants, extending the life of existing facilities or building new ones.

Microsoft Corp. recently struck a deal with Constellation Energy Corp. to restart a reactor at the shuttered Three Mile Island nuclear plant in Pennsylvania, using the energy to power its AI expansion. Technology companies are turning to the low-carbon energy source to power the AI expansion and stay aligned to green goals.

In addition, the Philippines and South Korea agreed to assess the rehabilitation of the Southeast Asian nation’s mothballed nuclear plant, while China approved 11 new reactors in August, a 220 billion yuan ($31 billion) investment. Even in Japan, site of the last major nuclear accident, the country’s biggest business lobby is also calling on the government to consider expanding nuclear capacity.

That puts Taiwan in a lonely spot.

Atomic energy was once seen by officials in Taipei as a source of cheap and stable baseload power, with nuclear plants producing almost half of the island’s electricity in 1984, and about 20% in 2002, according to the Chung-Hwa Nuclear Society.

But Fukushima undercut that standing almost overnight. With public support, the government suspended construction on nuclear projects in 2014. When the ruling Democratic Progressive Party took over in 2016, they sought to follow through on earlier efforts to make Taiwan a “nuclear-free homeland” by 2025 and the Lungmen plant Wang was working at was mothballed.

That no longer looks like a decision that will work in Taiwan’s favor.

The security threat from depending on energy imports was underscored last week, when China’s People’s Liberation Army undertook drills around Taiwan in what Beijing said was a warning against President Lai Ching-te. The PLA appeared to be practicing ways to encircle Taiwan in exercises seen as wearing down the self-governed island’s smaller military.

A blockade is widely viewed as the preferred way for China to get the island — which Beijing considers its territory — to capitulate, as opposed to a full-on military invasion that could quickly draw in the U.S. and its allies.

While energy shipments continued to arrive to the island during the latest Chinese drills, supplies in a real crisis could quickly run short. Taiwan currently has about ten days’ worth of natural gas reserves, according to Lee Chun-li, deputy minister of the energy administration, though he said total energy reserves would last months if conservation measures are enacted.

Taiwan is also pursuing other alternatives. The government is preparing to drill some 4 kilometers (2.5 miles) underground to tap geothermal energy. Unlike solar and wind, geothermal energy is not intermittent, meaning it could provide a stable baseload power source, though it currently only provides a small fraction of energy for the island’s needs.

As nuclear is phased out, energy generation from gas and renewable sources is set to increase, with power from renewables expected to double and gas to increase by more than 20% through 2030, according to Rystad Energy’s power mix forecast.

“Phasing out nuclear power amid geopolitical risks is a bold move that demands a comprehensive and accelerated plan to boost renewable energy while securing reliable LNG sources,” said Somnath Kansabanik, principal analyst at Rystad Energy.

Yet the island is behind schedule in achieving its initial targets to bring sufficient renewable power online, with delays plaguing the rollout of infrastructure and offshore wind facilities. That’s already forced an increase in imports of expensive fossil fuels, and risks even higher electricity bills for households and businesses in the future.

Meanwhile, electricity consumption is set to increase by as much as 13% by 2030, according to the energy administration, with much of that demand driven by the AI sector.

“We don’t have enough time to build up our renewable capacity and LNG capacity to supply power in Taiwan, so we need nuclear power in the near-term,” said Min Lee, a nuclear engineering professor at National Tsing Hua University.

Nuclear debate

Premier Cho said in his interview with Bloomberg that Taiwan would have no issue with power supply for industries before 2030. He also told lawmakers in July that they can discuss whether to amend regulations of the island’s remaining operational nuclear plant, according to local media.

“As long as there is a consensus within Taiwan on nuclear safety and a good direction and guarantees for handling nuclear waste, with this strong consensus, we can have a public discussion,” Cho told Bloomberg.

But if tensions with Beijing were to escalate substantially, so would pressure on the government.

The possibility of an energy shortage has already prompted Taiwan’s opposition parties to advocate extending the life of nuclear plants. In July, lawmakers spent hours debating over whether to reverse course on the island’s plans to phase out atomic power, though no conclusion was reached.

That debate could signal the start of a broader softening in the official stance toward atomic power.

President Lai Ching-te said in August that he wouldn’t rule out any energy that could contribute to the net-zero goal, including new and advanced nuclear technologies.

While the president seems more open to nuclear power compared to his predecessor, he will likely face strong pushback from within his party, Nobel Prize laureate and climate change committee member Lee Yuan-tseh said.

Still, for both security and industrial purposes, Taiwan has limited time to find reliable, secure power. Wang, the nuclear engineer, drew a direct link between nuclear power and the island’s chip industry.

“These nuclear power plants are like sacred mountains protecting Taiwan, much like the semiconductor industry itself,” he said.

But for now, the island’s final reactor is on track to be shuttered next year. And that has the industry’s proponents worried.

“I don’t think we’re ready” for a post-nuclear Taiwan, said National Tsing Hua University’s Lee. “Without nuclear power, we’ll likely face a power shortage over the next five years. We cannot survive, it’s as simple as that.”

With assistance from Shoko Oda.

©2024 Bloomberg L.P.

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