[Energy Doppelganger Taiwan Visit] (Part 2) Delayed Solar and Offshore Wind... Precarious Renewable Energy Experiment

Taiwan Achieves Rapid Offshore Wind Growth in Short Time
Aims for Nuclear Phase-Out Starting This Year
Renewables Struggle to Replace Nuclear Due to Power Instability
Difficulties in Substituting Baseload Power Like Nuclear
Caught Between Fostering Domestic Industry and Expanding Renewables
Lessons to Learn from Taiwan's Early Trial and Error

The view of Changhua 1&2b, Taiwan's first large-scale offshore wind farm complex. Photo by Ørsted

Editor's NoteTaiwan resembles South Korea in that it is an 'energy island' unable to receive energy supplies from outside. Both countries' economies are supported by advanced manufacturing industries such as semiconductors. They also share the similarity of being constantly exposed to threats of attacks from neighboring countries. The governments of South Korea and Taiwan often refer to each other's energy policies. Taiwan will become a fully nuclear-free country by stopping the operation of its last remaining nuclear power plant on May 17. The Taiwanese government plans to fill the gap left by nuclear power with renewable energy sources such as solar and offshore wind power. With the advent of the artificial intelligence (AI) era, electricity consumption is growing exponentially, prompting a more aggressive expansion of renewable energy. Some domestic voices still advocate for nuclear phase-out and suggest benchmarking Taiwan's offshore wind policy. But will Taiwan's energy transition policy proceed smoothly? Considering the increasing electricity consumption, Taiwan's nuclear phase-out experiment could serve as a reference when we secure future energy sources. This article features two installments based on direct interviews conducted in Taiwan with senior government energy officials, senior executives of Taiwan Power Company, private experts, and executives of offshore wind developers.

Taiwan is one of the countries frequently mentioned when discussing South Korea's offshore wind industry. It is recognized for successfully deploying offshore wind power in a very short period. For South Korea, which has struggled to accelerate progress for years, Taiwan is an excellent benchmarking target. Taiwan's geographical situation is also similar to South Korea's. Solar power faces limitations due to the small land area and mountainous terrain, but Taiwan has vast seas suitable for wind power installations.

Surrounded by sea on three sides, South Korea has set ambitious offshore wind expansion goals to increase renewable energy. According to the 11th Basic Plan for Electricity Supply and Demand, the target is to have 77.2GW of solar power and 40.7GW of wind power capacity by 2038. The government plans to expand wind power mainly through offshore wind to achieve this goal.

However, the expected renewable energy capacity by the end of this year is 32GW for solar and 3GW for wind. For wind power, the capacity must increase more than 12 times to meet the target. According to the Korea Wind Energy Industry Association, the domestic wind power installation capacity last year was only 2.27GW.

Replacing Nuclear Power with Renewable Energy?

What is the current status of Taiwan's renewable energy expansion? Taiwan has set a goal to become a 'nuclear-free country' through complete nuclear phase-out by May. As part of this, it planned to increase the share of renewable energy to 20%. Offshore wind power has played a crucial role in Taiwan's energy transition plan. Since 2012, Taiwan has aggressively expanded offshore wind by implementing a bidding system for offshore wind power projects.

Taiwan's first offshore wind farm, the 128MW Formosa 1, began operation in 2019 after four years of wind measurement. The 376MW Formosa 2 started commercial operation in May 2023. The Changhua 1&2a offshore wind farm, with a capacity of 900MW?the largest in the Asia-Pacific region excluding China?officially began operation in April last year.

However, Taiwan's renewable energy expansion target set for the end of this year seems difficult to achieve. By the end of last year, the share of renewable energy including solar and wind was only 11.6%. In an interview with Asia Economy last month, Chai Zimeng, Vice President of Taiwan Power Company, said, "The share of renewable energy is expected to reach 14-15% by the end of this year," adding, "The original target of 20% is expected to be achieved around October next year." Although the timeline is slightly delayed, there is no obstacle to achieving the goal.

In terms of installed capacity, Taiwan planned to increase solar power to 20GW and offshore wind power to 5.6GW by the end of this year. However, as of March, solar power stands at 14.4GW and offshore wind at 3GW. To meet the target, an additional 8.2GW of capacity combining solar and offshore wind must be installed. The initially proposed target is expected to be reached only next year.

Wu Zuwei, a department head at Taiwan's Ministry of Economic Affairs Energy Bureau, said, "Solar power capacity can reach 16-17GW by the end of this year," adding, "The necessary land for capacity expansion has been secured, so there is no problem with installation." He expects offshore wind power capacity to expand to 4.7GW this year.

Even if these targets are met, renewable energy such as solar and wind cannot replace the baseload power role previously held by nuclear power due to their instability. This is why Taiwan is expanding liquefied natural gas (LNG) for stable power supply. Taiwan plans to increase the share of LNG power generation to 54% by 2032. Additional LNG power plants are already being constructed in Taoyuan, Taichung, and Kaohsiung regions.

As a result, Taiwan's share of zero-carbon power sources has actually decreased. Despite aggressively expanding renewable energy, the outcome has been the opposite. According to the '2025 Taiwan Energy Transition Outlook' report published by the European Chamber of Commerce Taiwan (ECCT) in January this year, Taiwan's zero-carbon power share dropped from 16.81% in 2016 to 15.48% in 2024. This was evaluated as a setback in climate change response.

Regarding concerns about the increasing share of fossil fuels, Wu Zuwei said, "The long-term goal is to expand renewable energy to 60-70% by 2050," adding, "For LNG power generation, we plan to reduce carbon emissions using carbon capture, utilization, and storage (CCUS) technology."

Controversy over Domestic Equipment in Taiwan

There are various reasons for the stagnation in Taiwan's renewable energy deployment. Solar power faces a combination of corruption scandals, lack of developable space, opposition from environmental groups and residents, and lack of business viability. The ECCT explained in its report, "Negative public perception has increased due to scandals in solar power projects in recent years, and there has been a lack of comprehensive spatial planning for solar power."

The Feed-In Tariff (FIT) system for renewable energy also faces investor dissatisfaction due to low compensation levels. FIT is a system where the government or public institutions guarantee a fixed price for a certain period. While effective for renewable energy deployment, excessive FIT can burden government finances.

In offshore wind, the Local Content Requirements (LCR) system has become controversial. LCR mandates that a certain percentage of domestically produced equipment be used in wind power development. LCR is a representative example of conflict between domestic industry promotion and renewable energy deployment policies.

Taiwan has conducted three rounds of offshore wind bidding. The first round had no restrictions to promote deployment, but the second round applied LCR to strengthen the fragile domestic wind supply chain. According to this regulation, at least 60% of the components required for offshore wind farm development had to be sourced locally.

However, after the European Union (EU) protested last year, claiming it violated World Trade Organization (WTO) agreements, Taiwan plans to gradually abolish the LCR system starting from the third round. Major European wind equipment companies such as Vestas and Siemens Gamesa have established assembly plants locally to meet localization rates. Nevertheless, Taiwan's offshore wind supply chain has not expanded significantly, causing project delays.

Foreign investors point to LCR as a major bottleneck in offshore wind expansion. The ECCT noted, "The localization rules remain in Corporate Power Purchase Agreements (CPPA), causing serious problems." Wu Zuwei explained, "The LCR system was operated to nurture related industries but is now being flexibly adjusted." In fact, Taiwan's own supply chain has also grown. Taiwan shipbuilding company CSBC reportedly owns its own offshore wind installation vessels.

South Korea also introduced the LCR system in offshore wind but abolished it in the 2023 bidding. However, concerns about foreign equipment dominating the domestic market have persisted, leading to strengthened bidding criteria last year.