Taiwan's renewable energy sector has been hit hard by strict government regulations, causing significant delays in system installations. Market forecasts suggest that recovery may not come until mid-2025. Yet, demand is swelling, fueled by the expansion of semiconductor manufacturing and the influx of AI data centers, creating a paradoxical situation where green energy supply is constrained despite booming demand.
Semiconductor and renewable energy firms are now exploring closer collaboration, aiming to integrate green energy into semiconductor production and renegotiate terms with the government to unlock frozen capacity.
But semiconductor companies' deeper involvement in the sector could pose new challenges, particularly around price negotiations. Offshore wind energy developers are facing pressure, while solar power producers are more amenable to the terms.
Large semiconductor manufacturers, driven by international clients like Apple, Google, Amazon, and Meta—all members of the RE100 initiative—are scrambling to meet rising green energy requirements. These companies, already racing to expand their advanced chip production for AI, are nearing a critical shortfall in green energy supply.
The energy demands of semiconductor giants have two main characteristics. First, they prefer to make bulk purchases of green energy. After evaluating smaller solar projects, they found that the varying prices and long-term contract terms were inefficient. As a result, they are gravitating toward large solar and wind farms that can meet their hefty energy needs while keeping management costs low.
Industry insiders note that foreign companies are expected to set up AI data centers in Taiwan in the first half of 2024, sparking a flood of offers from domestic solar firms. However, most of these projects are small, such as rooftop solar installations on farms or homes, which foreign investors are reluctant to manage. This same dynamic has already impacted Taiwan's largest semiconductor firms, exacerbating the hunger for green energy.
Second, cross-industry green energy development remains difficult. Some semiconductor companies have considered buying land to build solar farms, but speculation and skyrocketing land prices have made it nearly impossible. This has stalled their progress in self-sustaining energy production.
Despite soaring demand from semiconductor firms, AI data centers, and RE100 members, negotiations between renewable energy companies and the government remain challenging. A series of scandals has frozen many projects, threatening to shrink green energy supply instead of increasing it.
While Taiwan aims to drive economic growth through its semiconductor industry, it is struggling to solve the green energy shortage that threatens to choke its progress. Semiconductor companies note that foreign governments, eager to attract Taiwanese firms, are offering abundant green energy as part of their incentives.
Taiwan's solar installations fell by 30% year-on-year in the first half of 2024, according to the Energy Administration. Industry insiders say the market remains pessimistic about any recovery before mid-2025, despite the formation of a new cabinet. Partnering with semiconductor companies may offer the best chance of breaking the current stalemate.
