Taiwan’s energy security has long worried analysts. Home to the power-hungry advanced semiconductor industry, Taiwan has to generate a lot of energy with tight land constraints. More than 90% of the country’s energy supply is imported, raising fears that China could attempt an energy blockade, starving it of electricity until it submits to annexation.
But alongside import dependence is another vulnerability in the energy system: the power grid.
There are occasional power outages due to weather incidents or ageing infrastructure. But the best illustration of how precarious the grid is was an incident in March 2022, when a switch malfunctioned due to negligence at Hsinta Power Plant in southern Taiwan.
As the plant went offline, it led to a circuit malfunction at a nearby high voltage substation, triggering a cascade as other power plants to shut down in its wake. Ultimately, an incident at one power plant in the very south was enough to cause rolling blackouts nationwide, with 5.49 million households losing power.
In the past, Taiwan’s grid was developed as a centralised system to maximise efficiency. Taiwan’s western plains are densely populated, while much of the centre and east of the country is forested mountains. With scarce available land and rapid growth in electricity demand, the grid was designed around a small number of large power plants connected by a few key nodes.
The result is a system with just three main transmission lines – and three key high voltage substations – supplying power across the country.
That makes it highly vulnerable to disruption, as the 2022 blackout showed. At the time, Vincent Tseng, the chairman of state electricity company Taipower, blamed the system’s overcentralisation for the fact that a single incident turned into a massive power outage.
Future blackouts could be caused by damage from typhoons and earthquakes – or deliberate sabotage.
“Any kind of potential physical attacks or cyber attacks on these critical nodes is very likely to trigger a cross-regional power outage,” Dr Lu Tsaiying, director of the Energy Security and Climate Resilience programme at Taiwan’s DSET research institute, told Resilience Media.
“I will say the biggest concern, especially if we consider Ukraine’s case, it’s more about the substations for potential deliberate attack, because [those] will be the easiest targets during wartime.”
Balancing consumption and production
One important aspect of Taiwan’s centralisation is the mismatch between energy demand and supply across regions. The north of Taiwan – home to the capital, Taipei, and advanced semiconductor manufacturing, in Hsinchu – has high levels of electricity demand. According to figures from the Ministry of Economic Affairs published in 2024, in 2023 the region supplied 30.5% of the country’s electricity – but used 40%.
(For context, The key net electricity exporter is the central region, accounting for 36% of national supply, but using 26.6%. The south is roughly neutral in these annual figures with supply 33%, using 32%. The south is an important supplier of baseload – a lot of the central region electricity is from wind – so the north is still dependent on it.)
In the March 2022 incident, it was after losing power imports from the southern part of the grid that the north entered rolling blackouts.
Joseph Webster, a senior fellow at the Atlantic Council’s Global Energy Centre, said in a talk in September that northern Taiwan has “insufficient electricity generation locally” and lower solar potential than the country’s sunnier south.
Referring to the north’s dependence on transmission from the south, he said: “that’s a problem [even] in peacetime, there’s occasional outages in this transmission.”
Addressing an energy security event in Taipei last month, retired Rear Admiral Mark Montgomery said: “Taiwan has one of the most vulnerable grids among developed countries because such a high percentage is used every day.”
In recent years, Taiwan’s world-leading semiconductor manufacturing sector has benefited from surging demand for its chips from AI companies. As its profits have grown, so too have its energy needs. The industry’s electricity consumption in September was up 9.53% on the previous year.
Montgomery put it this way: “The good news is Taiwan’s got this vibrant growing industrial base, the bad news is that [it] puts more pressure on the grid.”
The problem is particularly acute in the north because of the limited number of substations there, which leads to bottlenecks.
In the case of a substation going offline, Lu describes how that would force power to be diverted to another substation: “that will cause extra pressure to that one, and that also exposes further risk of malfunction” wherever more power is directed through, she said.
Montgomery added that: “there’s just less room for error”. That means, he said, greater vulnerability when there’s maintenance, a typhoon, or cyberattack.
Grid seems to have been spared from hacking (for now)
This year, Taiwan has received an average of 2.8 million cyber attacks per day, and it is known to have wargamed attacks on critical infrastructure. Taipower’s IT systems have faced hacking attempts. But because the company maintains a strict separation between those systems – including its website – and grid infrastructure, the grid system has so far been mostly unaffected.
The most critical point is likely the substations rather than the power plants.
“If this attack is directly against the substation or the grid distribution facilities, that will cause malfunction of the whole regional grid system,” You Bo-xiang, a non-resident fellow at DSET, said.
The substations are mostly manually operated by Taipower, meaning their vulnerability to cyberattacks remains low.
And what about renewable energy?
But other vulnerabilities remain. In recent years, Taiwan has increased its renewable power generation in an effort to cut dependence on imported fossil fuels. But as the number of suppliers increases, careful oversight of cybersecurity and close coordination between renewable providers and the state grid system is needed. You said that “as more and more renewable energies or intermittent energy join this grid system, I would say that also creates a certain level of risk for cyber attack.”
The Taiwanese government is nevertheless putting significant investment into reducing the vulnerability of the grid. In September 2022, Taipower announced plans to invest $564.5 billion NT (roughly $18 billion US) in boosting grid resilience over ten years.
The bulk of this money is earmarked for distributing and decentralising the grid. For example, instead of generating electricity in the south and sending it north along a small number of vulnerable routes, boosting local generation and storage would make different parts of the grid less dependent on long-distance transmission. Taipower plans to build 28 new substations and compartmentalise 24 existing ones.
New plans also aim to minimise the reliance of science parks on cross-regional power supply. Instead, the plan is to supply energy directly from power plants to science and industrial parks, where the high-tech semiconductors are made.
Since tech companies increasingly demand renewable energy, there are also proposals to connect science parks directly to offshore wind farms. That will be coupled with energy storage, with plans to build 1000 MW of grid-side energy storage in 2025.
This is all part of a broader strategy of splitting the grid into different usage zones, such as industrial and residential, You noted. This localises any issues, as well as reducing dependence on key bottlenecks.
The ultimate goal would be to have more micro-grids, with local areas largely self-sufficient using batteries and renewables.
At the same time, a more flexible national grid is under construction. Adoption of grid-forming inverters across the system would allow solar and other energy to be sent into the grid. “This will further prevent relying on those baseload power plants to stabilise grids,” said You.
Some clear progress has been made already. According to Taipower, upgrades to substations and distribution equipment led to a 70% reduction in the number of accidental power outages in transmission from 2012 to 2023.
A flicker of concern
Despite the many best-laid plans, many hurdles remain for Taiwan and its efforts to improve its energy resilience.
Although the northern region is working to expand electricity generation capacity from liquefied natural gas (LNG), local opposition to a new LNG terminal in nearby Keelung may mean LNG has to be brought in from other parts of Taiwan.
Finances are another important issue. Taipower is struggling financially, having absorbed the cost of increased gas prices in 2022-3, after resistance from the opposition-controlled legislature to increase Taipower’s budget to fully offset that.
Whether this will slow down the implementation of Taipower’s ten-year grid resilience plan is unclear, and the state-owned company did not respond to a request for comment.
Taiwan’s central role in producing high-tech hardware for the AI boom, as well as its growing interest in building power-hungry data centres, also presents some difficult decisions for policymakers on how to keep the country competitive without straining grid infrastructure.
Unlike semiconductor fabs, which have fairly constant energy demand, data centre energy demand fluctuates far more, requiring a much more flexible grid system to respond to sudden changes in power needs. Regulations already prohibit new data centres of over 5MW in the north. For context, 5MW is a small fraction of the energy consumption of a typical AI data centre today, based on these square-foot consumption estimates from Goldman Sachs.
Ultimately, Taiwanese policymakers have to manage the costs of their highly successful tech-based economy, as Montgomery noted. “What’s made Taiwan a special country in the world in the last 30 years also makes it vulnerable.”
