Taiwanese President Tsai Ing-wen publicly apologized for power outages that hit more than 6 million households and disrupted some semiconductor manufacturing while defending her policies to phase out nuclear power in favor of natural gas and renewables.
A combination of unusually hot weather, damage to infrastructure from recent typhoons and a push by Tsai’s administration to abandon nuclear power left Taiwan barely able to supply sufficient electricity to residential and business users. That balance gave way just before 5 p. Tuesday when the Tatan power plant in northern Taiwan, its second-largest producer, stopped after workers accidentally shut off its natural gas supply.
Electricity was restored by 10 p., but not before Lee Chih-kung, Tsai’s economy minister, offered his resignation. An article filling the front page of Wednesday’s China Times newspaper questioned the competence of Tsai’s administration for allowing the situation to deteriorate and her insistence on phasing out nuclear. A man was killed and his elderly mother hurt when candles caused a fire in their home, according to the Apple Daily newspaper. No other deaths or injuries were reported.
For Gadfly’s take on why the power woes should worry investors, click here.
There had been multiple warnings about electricity supply before the blackouts. A week earlier, state-run utility Taiwan Power Co. issued a red alert as the operating reserve margin, the difference between power produced and consumed, fell to the second-lowest on record. Business associations including the Chinese National Federation of Industries had called for slowing the pace of closing nuclear plants.
While Tuesday’s outage was caused by a loss of gas supply, the blackouts heightened scrutiny of Tsai’s policies, including a pledge to rid Taiwan of nuclear power and cut its use of coal. The island, which plays a critical role in the world’s electronics supply chain, will rely instead under her plan on natural gas, renewables and so-called distributed generation, which entails multiple, smaller sources of power that can be combined through the grid to ensure stable supply.
Tsai’s apology posted on Facebook late Tuesday included a reiteration of her determination to push forward phasing out nuclear in favor of renewable energy.
“The government is promoting distributed green energy to avoid the situation where an incident at a single power station can affect the power supply for the whole country,” Tsai wrote. “We will not change course. Today’s incident only makes us more determined.”
Capacity Delays
New capacity not being delivered on schedule is compounding Taiwan’s energy woes, according to Kerry Anne Shanks, a Singapore-based analyst at Wood Mackenzie Ltd.
“Commissioning of the new gas-fired units has been delayed again and again,” Shanks said by email Wednesday. “There are now appeals for a review of the nuclear phase-out policy. The government remains committed to a nuclear-free Taiwan by 2025, but this stance will depend on whether the power system can survive the summer.”
Taiwan has mothballed one of its four nuclear power stations, and three of the remaining six remaining reactors are shut down. Wu Tsai-yi, president at Taiwan Research Institute, said the restart of two of the shut reactors has been stalled by lawmakers. Nuclear made up 12 percent of Taiwan’s power mix last year, down from 17 percent in 2013, according to its Bureau of Energy.
2025 Goals
Legislation passed in January set a goal of getting rid of nuclear power by 2025, as well as lowering the share of coal to 30 percent and raising natural gas to 50 percent, with the remainder coming from renewables, according to Bloomberg New Energy Finance.
Taiwan’s three shut reactors -- both units at Jinshan and the No. 2 unit at Kuosheng -- have combined capacity of almost 2.26 gigawatts, according to the Atomic Energy Council. The Tatan plant accidentally shut on Tuesday can produce 4.38 gigawatts, according to Taiwan Power Co., known as Taipower.
The impact so far on Taiwan’s technology industry has been limited. Advanced Semiconductor Engineering Inc. said production lines are operating again at two plants hit by the blackout and the company is evaluating any losses. ChipMOS Technologies Inc. said production has been restored, while Taiwan Semiconductor Manufacturing Co. said there was no impact on output, with all lines operating as normal.
Advanced Semiconductor and TSMC are both suppliers to Apple Inc. The main assembler of iPhones, Hon Hai Precision Industry Co., locates most of the production for the U. company in mainland China.
The power cut Tuesday hit Taiwan’s Hsinchu Science Park, the “heart” of its semiconductor industry, said Annabelle Hsu, a senior research manager in Taiwan at International Data Corp.
"Factories there are running 24 hours a day, so sudden power cut without warning could cause a big damage," Hsu said.
— With assistance by Samson Ellis, Stephen Stapczynski, Yuan Gao, Yu-Huay Sun, and Dan Murtaugh.
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