Taiwan's green energy shift: Navigating supply chain challenges

Annie Huang, Taipei; Vyra Wu, DIGITIMES Asia 0

Credit: AFP

In the urgent quest for decarbonization across global supply chains, Taiwanese enterprises find themselves at a pivotal juncture where procuring green energy is not just a choice but a necessity. As more businesses in Taiwan embrace the RE100 initiative, experts emphasize the imperative for supply chains to integrate green energy commitments into their operations. However, amid this transition, Taiwan's green energy market grapples with the twin challenges of high costs and insufficient supply.

According to insights from KPMG, discussions at COP28, the crucial climate conference, underscore the pressing need to phase out petrochemical fuels. This shift signals the dawn of an era where Taiwan's supply chain gravitates towards competitively priced low-carbon electricity. In this landscape, businesses have no option but to adopt green energy solutions, emphasizing agility and broad integration.

Driven by internal mandates for achieving net-zero emissions and by the demands of international brand partners subscribing to RE100, Taiwanese companies are increasingly aligning their strategies with renewable energy targets.

The Center for Energy and Environmental Research (CEER) of Chung-Hua Institution for Economic Research highlights RE100's role in rallying global corporations towards environmentally friendly practices, with member companies committing publicly to achieving 100% green energy utilization by 2050. Strategies encompass self-generation, green energy certificate purchases, and contractual agreements to curb greenhouse gas emissions and inch closer to net-zero targets.

The RE100 initiative boasts a membership exceeding a hundred operational entities in Taiwan, with major players like TSMC, Delta Electronics, and others leading the charge. However, CEER cautions that by 2026, for two-thirds of RE100 member markets, competitive green energy procurement must be the norm. Despite this ambition, Taiwan's green energy market remains buyer-centric, focusing on quality procurement practices. Feedback from RE100 members underscores persistent challenges of costliness and inadequate supply.

While Taiwan has witnessed a surge in renewable energy production, with solar energy accounting for over half of the 2023 generation, offshore wind power promises substantial growth in the near future. Yet, data from the Energy Administration reveals a disparity in direct supply to users versus sales to intermediaries, highlighting the limitations in the market's capacity to meet demand.

The surplus energy dilemma, a common theme in green energy management, necessitates innovative solutions beyond conventional group purchasing models. Integration and management mechanisms are lacking, prompting the need for green energy sales platforms or aggregators to bridge the gap between generation and consumption.

In navigating these challenges, Taiwan stands at the precipice of a transformative energy transition, where the convergence of policy, market dynamics, and corporate commitments will shape the future trajectory of its green energy landscape.