Getting out of nuclear power in Taiwan


With the recent closure of Kuosheng 1, Jeremy Wilcox examines the broader effect of Taiwan’s planned nuclear phase-out on that country’s energy landscape.

Above: In July, Taipower submitted an application to shut down the two-unit Maanshan nuclear power plant (Photo credit: Uwe Aranas /

THE EARLY SHUTDOWN OF TAIWAN’S Kuosheng 1 REACTOR, which supplied 3% of the country’s total power supply, has already resulted in two power cuts amid increased summer demand for air cooling which has been exacerbated by a coronavirus lockdown and capacity constraints, and while the government is adamant the shutdown will not impact electricity supply margins, removing nuclear capacity from a generation mix that is otherwise dependent of imports is likely to have an impact on margins in the short to medium term, in particular if the growth of industrial demand, which increased by an annual average of 0.34% between 2015 and 2020, continues.

In January 2017, the government passed a law to phase out nuclear power by 2025 and increase the share of renewables to 20% as part of a climate policy to halve carbon emissions from by 2050. The problem with this policy is that effectively replacing baseload nuclear capacity with intermittent renewables will have little impact on emissions in the medium term because coal (36.4% of installed capacity in 2020) and LNG (32.4%) provide more than two-thirds of Taiwan’s supply.

Exiting nuclear power may be politically popular in the post-Fukushima era, but it potentially increases exposure to market risks caused by heavy reliance on fossil fuel imports. Coal and LNG prices surged this summer, pushed by above-normal temperatures in Beijing, Shanghai, Tokyo and Seoul, which increased demand for air cooling, while oil, which provided 3.6 % of installed capacity in 2020, also jumped after COVID-19. require growth optimism.

Like many economies, Taiwan is seeking to shift from an energy policy based on affordability and security of supply to one focused primarily on sustainability. At the heart of this approach is the incremental investment in renewable capacity and the partial replacement of coal-fired capacity with gas to achieve a 20-30-50 generation mix by 2025, with gas supplying 50% and 30 % charcoal. Between 2021 and 2025, Taiwan plans to add 5.7 GW of offshore wind already allocated to the grid with an additional 10 GW of offshore wind to be added between 2026 and 2035. Additionally, Taiwan plans to add 14.2 GW of solar energy by 2025.

Assuming this renewable capacity is added in full and on time, and there are no grid constraints, increasing renewable capacity will reduce generation emissions by 2025, but if the government Taiwanese is sincere in its long-term decarbonization plans, it must phase out coal altogether. .

It would be easier if he had maintained, or developed, his nuclear capability.

Not only does continued reliance on imported coal limit decarbonization progress, but it also has a potential impact on affordability and increases market risk. Asia is expected to account for 75% of global coal demand by 2025 and, unlike the EU and US, coal demand is expected to increase over the medium term, with prices possibly following. And with LNG demand growth of 3% expected in 2022 and continued annual growth expected over this decade, LNG prices will also rise, increasing market risk.

To reduce the market risk of its import-dependent LNG market and increase the sustainability of its mostly intermittent renewable generation, Taiwan needs to be more flexible on LNG pricing and invest in battery storage technology. Moving away from long-term oil-indexed LNG contracts and balancing with spot and short-term LNG cargoes could reduce LNG market risks, and in particular the risk of lost opportunities, while that battery storage would limit the need for rapid gas response capability to balance renewable loads.

By phasing out nuclear before coal, Taiwan’s decarbonization path potentially presents heightened market risks that could reduce medium-term sustainability benefits.

Author: Jeremy Wilcox is Founder and Managing Director of Commodity Management Services

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