(Sept 30): Taiwan, home to some of the world’s biggest chipmakers, will raise its electricity rates again from mid-October in a move that will impact the island’s industrial users.

Industries will face an average 12.5% hike in power prices, according to Taiwan’s Economics Ministry on Monday. The decision will push up prices for bigger users, including the likes of Taiwan Semiconductor Manufacturing Co (TSMC).

The increase comes as the island expects power consumption to grow by an average 2.8% a year through 2033, thank mainly to demand from the artificial intelligence (AI) sector. Taiwan last raised its power rates in April, when industrial users saw their power bills go up 15% to 25%. TSMC saw the highest increase, which was expected to weigh on the company’s bottom line. 

State utility Taiwan Power Co (Taipower) faced hefty losses over the past two years as it tried to keep prices low even as fuel grew more expensive. The utility announced a second consecutive annual loss of NT$198.5 billion (RM25.82 billion) in 2023, following an even greater shortfall in 2022.

Taipower blames its losses on the sharp rise in international fuel costs following Russia’s invasion of Ukraine. Even though those prices have fallen, they are still higher than before the war, the utility said in a statement last week. Compared with the rest of the world, Taiwan’s tariff adjustments are slower, it added. 

The island is largely reliant on imported coal and gas to power its tech-dominated economy. Efforts to build out new energy like offshore wind, which the island is betting on to diversify its energy mix, are facing increasing delays and challenges. The island will also shut its final nuclear reactor next May.

Uploaded by Felyx Teoh