On March 22, Taiwan’s Ministry of Economic Affairs (MOEA) announced the decision to raise electricity prices by an average of 11%, starting in April.
Power guzzlers, defined as those that consume more than 500 million kWh or Internet data centers that consume more than 50 million kWh monthly while the power consumption has been on the increase over the past 2 years, will be subject to a 15-25% hike in their electricity bills by their business operations and electricity consumption volumes. Semiconductor manufacturing companies are likely to fall into that category.
Data centers are where Artificial Intelligence (AI), especially Generative AI (GenAI), gets its computing powers. Not only so, the hardware producers for AI, especially the semiconductor supply chain companies producing advanced chips will all face an imminent increase in operating costs due to the double-digit electricity bill increase.
The MOEA explained that the Ukraine-Russia War had pushed up energy prices worldwide and Taipower had been selling electricity at a loss over the past two years, accumulating a massive loss of NT$382.6 billion, pushing it to the brink of a financial crisis. Hence the decision to raise electricity prices to offset some of the losses.
Taipower explained that green energy accounted for 6% and 9% of the total procurement costs, respectively, in 2022 and 2023. However, if the electricity generating costs were calculated with the same energy structure in 2015, where nuclear energy still contributed to 16% of the energy portfolio, Taipower still needs to spend nearly NT$4 to generate 1 kWh of power. It is very close to their cost now.
MOEA stressed that the government will subsidize NT$100 billion to keep the price hike around 11%. So starting from April 1, the average price for 1 kWh will be NT$3.4518.
Most families will only see electricity bills increase by 3-5%. But for the industries whose electricity consumption grew year-on-year in the second half of 2023, they will have to pay 14% more. Those whose electricity consumption was flat or increased by less than 10%, their electricity bills will increase by 12%. Industries that suffered more than a 10% decline in electricity usage will only have to endure a 7% increase in electricity bills.
