Energy Production and Consumption

Utilizing thermal power as its main source of energy production, Taiwan is facing a desperate shortage of energy to sustain its consumption. In 2024, approximately 90 percent of Taiwan’s energy production depends solely on imported fossil fuels, making it vulnerable to disruptions or coercions in the hands of foreign entities, particularly China. In fact, Taiwan’s increase in capacity has been and continues to be hindered by its climate, political challenges, and national insecurity. On May 17, 2025, Taiwan closed its last operating nuclear reactor, marking the official closure of the nuclear sector. Nevertheless, Taiwan has never ceased to attend any possible climate conferences of the United Nations, despite its ineligibility to participate as an active member. In essence, Taiwan’s exploitation of robust technological advancements to harness alternative or large-scale energy sources in light of environmental and geopolitical factors.

The Taiwanese government currently depends on the success of its technology sector, looking forward to rising as the global leader in Artificial Intelligence. Data centers that empower AI expansion, however, are estimated to each require energy equivalen​t to the consumption of 13,000 households. Nicholas Chen, a lawyer who examines local climate and energy blueprints, cautions that “A.I. data centers cannot exist without sufficient green energy. Taiwan is the only government talking about A.I. data center rollout without regard to the lack of green energy.” In other words, Taiwan’s commitment towards the 2050 Net-Zero Transition clashes with the volatile energy demand of the development of AI, underscoring the need to find the balancing point between economic ambition and environmental sustainability. 

Thermal power​​ plant in Taichung, Taiwan. Source: Taiwan Power Company 

Source: Taiwan Power Company

Development of Green Energy

In order to decrease its reliance on fossil fuels, Taiwan has been investing more in green energy in recent years. The government has encouraged the increase of renewable energy sources, such as solar energy, wind energy, and hydroelectricity, including a few geothermal energy sources. The charts show that Taiwan’s development of green energy has grown steadily over the last couple of decades. Even though fossil fuels remain the country’s main electricity producer, the role of renewable energy in Taiwan's energy generation has increased significantly. From the line chart, the green portion of the graph in 2024 (renewable energy) is much more visible compared to previous decades, such as 1970, 1990, and 2010. In addition, as demonstrated from the pie charts, the percentage of renewable energy in 2024 takes up 11.9% of Taiwan's power generation, which is a significant increase from 2000 when renewable energy only took up 2.9% of the total power generation (Taiwan Power Company). The rise comes mainly from the expansion of solar power and offshore wind projects, supported by government policies and increasing public awareness of environmental issues, such as setting a target to reach carbon neutrality by the year 2050 (Ministry of Foreign Affairs). While natural gas and coal still make up most of the energy supply, the gradual increase in the green section of the chart displays that Taiwan is moving toward a cleaner, sustainable energy system and increased energy security.   

Challenges and Future Outlooks of Energy Storage Systems

Despite being a crucial renewable energy source to mitigate climate change, energy storage systems face numerous major challenges. To begin with, energy storage systems have a high implementation cost for not only constructing batteries or storage systems, but also for the importation of raw materials, such as lithium, nickel, and cobalt. The high costs create a barrier for many governments and companies, especially in developing and underdeveloped nations, to invest in energy storage projects. Additionally, the raw materials necessary for the development of energy storage systems are geographically concentrated in a few regions globally, as shown below in the three images, which makes the supply of raw materials vulnerable to geopolitical risks, such as but not limited to wars and sanctions. Energy storage systems also face technological and environmental concerns. The current batteries have limited lifespans, forcing companies to replace batteries often. Moreover, the disposal of used batteries can pose environmental concerns, since improper management can leach toxic elements into soil or sources of water. As animals consume water from the polluted sources, and crops can grow from the polluted soil, the toxic substances may reach humans after we consume those animals or plants.

The future outlook of energy storage systems on a global basis is determined by brisk alterations of trade relations and tariffs. The sharp elevation of prices in the spring of 2025 has more than blown trading outposts, posing serious threats to the electrical and electronics sector. Trump's sanctions have slapped tariffs on complete electronic products but not raw materials. However, the supply chain is creating ripple effects in the market. The supply chain has affected all types of technology, including energy storage mechanisms. Although the U.S. has imposed strategic sanctions on the energy market, they have increased the value of U.S. energy, causing prices to rise. The inflation made the U.S.'s energy security extremely vulnerable, resulting in a decline in manufacturing. U.S. tariffs have led to reduced production and energy scarcity, underscoring the critical role of energy storage resilience during economic disruptions. Countries like South Korea and China are heavily reliant on energy storage and batteries in times of crises. China has been increasingly leading in energy storage, partnering with allies to acquire rare earth minerals (REMs). In the foreseeable future, the U.S., along with its allies, should drastically advance in the energy storage and battery domains, boosting its flexibility to adapt to various energy crises.

World Map of Nickel Production Distribution

Source: French Institute of Petroleum

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Statistically, it is projected that, by 2029, the compound market size of energy storage systems is going to grow by 8.0%, attributed to an increasing awareness of sustainability as well as a circular economy that reinforces resource efficiency and waste reduction. The escalation is expected to intensify as the United States continues to delay the supply of renewable energy sources, and the negative effect on the global economy contributed by trade tensions and reciprocal tariffs. In terms of the major trends in the forecast period, renewable energy integration, developments of battery technologies, and grid modernization are anticipated approaches that have begun and will further accelerate in the near future.