Recent Han Kuang exercises have exposed the brutal fact that energy resilience and stable supply in Taiwan are becoming an increasingly pressing issue. In addition to the energy stress caused by Taiwan’s booming high-tech industry, other issues include aging grids and lower generation output. Despite energy generation costs having decreased significantly, it is often the demand side of the energy market that causes conflict between state, industry, and end-users.

In 2025, Taiwan Semiconductor Manufacturing Company’s (TSMC) global electricity consumption accounted for 10.2% of Taiwan's total electricity consumption,[1] while its first-quarter 2025 revenue was equivalent to 3.5% of Taiwan's total annual GDP in 2024.[2] The scale of this consumption raises questions about the social and environmental responsibility of resource-intensive companies for the infrastructure and public goods on which they depend. The “Energy Administration Act” and “Renewable Energy Development Act (REDA)” may provide mechanisms to shift part of the strain on the public grid and also require high-energy-consumption enterprises to share the burden of energy generation and storage.[3] At the same time, the possibility of industrial exit or future divestment may place pressure on central governments to maintain favorable economic conditions for profitable high-technology industries.

The research puzzle here dives into the internal structure of public-private partnerships in the provision of public goods for high-tech industries, particularly energy infrastructure. Finally, the research question is: Should responsibility for electricity resilience be allocated equally among legally defined major consumers, or proportionately according to consumption, capacity to pay, contribution to system stress, and benefits received from infrastructure?

Taiwan, being an island country, has long debated the issue surrounding its energy sources. Recent analysis has shown that electricity storage during contingencies can sustain up to 14 days of electricity provision, with possible extension to 21 days if reserved for central governmental functions and critical infrastructure. This nevertheless casts doubt on Taiwan’s disaster readiness, as well as on securing different ways for energy resilience.

While the “Amendment for Energy Administration Act” calls for cost burden sharing amongst industries, it also presents the issues of balancing state-industry interaction among critical infrastructures. Taiwan's pursuit of semiconductor-led industrial growth creates a reciprocal dependency between the state and strategic industry where firms depend on state-provided electricity infrastructure, and the state depends on those firms for economic and strategic objectives. As electricity demand and security risks increase, electricity policy becomes a mechanism for renegotiating who bears the costs of sustaining that interdependence.

Regardless of which generation technology Taiwan adopts, expansion and decarbonization of electricity supply impose costs. The politically important question is how the state allocates those costs between government, the state-owned utility, strategic industries, and consumers.

As of July 2026, the price per kWh in Taiwan averaged 2.97 NTD for indigenous energy and 4.10 NTD for externally acquired energy.[4] This shows that civil domestic production does not necessarily meet competitive market value. Hence, Taipower is most likely to absorb the pricing difference of such energy acquisition. Yet if this cost could be distributed to corporates, then perhaps the financial pressure for Taipower would be less. In addition, Taiwan imports 95.3% of its energy supplies. This inevitably creates a vulnerability for national security, especially when discussed in the context of an island blockade. However, the introduction of corporate-funded energy diversification and generation could also be used as a supply-side mechanism. This not only augments the energy capacity of Taiwan but also invests in additional energy supply in case of contingency, by also taking pressure off the public grid for high-tech production.

2026 July, Taiwan’s Ministry of Economic Affairs announced a draft legal amendment to the “Energy Administration Act”, which stipulated that major energy consumers have a legal obligation to install energy storage and generation facilities.[5] The criticism surrounding this amendment is the obscurity of so-called “major energy consumers” and the carbon emission standards for the self-supplied energy generation facilities. The first issue is the debate on formal equality in public goods provision. If the government does carry out the regulation in accordance with REDA, then many small and medium enterprises (SME) also fall within the target audience of corporate responsibility sharing, whereas many of these businesses do not have the capacity to install, let alone run, said facilities. Hence, the key here is to seek policy regulations that could levitate burden on the public grid but also rightly distribute the cost for businesses that benefit the most from energy self-generation and storage.

Recent literature on Taiwanese energy resilience also depicts a similar situation in which Taiwan lacks a common consensus on how to construct an energy resilience society. In a paper by Bui et al. (2024), the research recognizes the importance of establishing a framework for assessing energy resilience and adapting the response ability and the sufficiency of the current energy system to improve energy resilience performance. Upon this, five different criteria have been recognized as the most effective in achieving such objectives: Energy infrastructure recovery, national energy planning, energy price, energy system reliability, and energy policy.[6] This shows that effective early planning is necessary in enhancing energy resilience while also expanding generation capacity for contingencies.

Source: Created by Author.

Data retrieved from the Energy Administration, Ministry of Economic Affairs, R.O.C.

The demand for energy resources has been known to have increased in recent years mainly due to the rise of high-tech industries and a surge in AI and data computation needs. One report published by Lu et al. (2025) also pointed to the need to build on-site energy storage systems for high-tech sectors to internalize associated expenses in terms of energy efficiency as well as minimizing grid stress. It also argues that since high-tech industries benefit the most from energy generation, they should have greater economic incentives to invest in energy storage technology R&D in exchange for corporate tax credits.[7] Building on top of this, Taiwan also has a structural defect regarding energy provision and government subsidies.

Taipower is the state-owned electric utility that is responsible for the generation, transmission, distribution, and retail sale of electricity across Taiwan. It is also the major absorber of energy prices and infrastructure costs, as it has been keeping energy prices low and stable amidst the Middle East conflict. However, this strategy is also starving the grid as energy demand is surging with the high-tech industry expanding yearly. With this, power purchase agreements (PPAs), contracts for difference (CfDs), and conditional grid access have been suggested as a way to move forward to balance the state-industry relationship in price sharing for energy generation and consumption.[8] In broader terms, the idea is to look into using “demand management pricing” to shift the energy provision burden to industrial users, but also via restructuring Taipower’s pricing mechanisms and structural restraints.[9]

Moving on to the question of what costs the most in Taiwan’s energy provision? The Levelized Cost of Energy (LCOE) is the modelling equation normally used to evaluate the pricing mechanisms of energy provision. It divides the facility’s current total lifetime costs by the total energy produced over the same lifetime.

In this equation, CapEx is the total capital expenditure used to construct the site. OpExt represents the annual operational expenditures in year t, whereas AEPt is the projected annual energy production in year t, while “n” and “r” are the “project economic life” and “real discount rate,” respectively. In the case of Taiwan, the issue is that the government does not have the capacity to invest in further capital expenditure and is more willing to acquire additional electricity supplements during peak usage seasons to fulfill the supply gap.

As seen in the equation above, the amendment to the “Energy Administration Act” seeks to outsource the operating expenditure and total capital expenditure to corporate entities. By doing so, this also attempts to decrease the pressure on Taipower, in which prices are regulated at a fixed rate. The LCOE thus offers insight into the two-way mechanism by which the state can redistribute energy costs.

Rethinking energy regulations, considering that the policy mainly targets large enterprises with equal capacity to pull off an exit threat scheme. In the end, governments might try to adhere to the lobbying of such companies, leading to an asymmetric balance between the resource acquisition of multinational enterprises and SMEs. Exit threat is a counter-balancing tool that could be deployed by private multinational firms. The idea of companies leveraging economic coercion is mainly seen in international relations literature, but in the case of state-industry relations, it is even more critical for public-private partnerships.

Currently, some studies related to multinational firm strategic choices regarding regulatory and competition policies have been using social media digital platforms as a case study to study the effectiveness of various political tools in different scenarios of market flexibility, spillover costs, and other economic trade-offs.[10] This inevitably leads to the question of whether high-tech manufacturing is like high-tech service platforms, considering that infrastructural opportunity and spillover costs are not the same between the two sectors. Nevertheless, the dynamics in which companies seek political retaliation are similar in cases of welfare redistribution, especially regarding public goods sharing. The study published by Khan et al. (2026) shows that firms are still likely to evade government regulations despite the state weakening regulatory control on platform oversight. Similar logic could be applied to manufacturing enterprises that attempt to utilize exit threats as a bargaining tool in lobbying activities to leverage against state environmental regulations. Host governments or local governments might see high-tech companies as a great source of foreign investment or local tax revenue, while simultaneously firms seek a favorable operational environment to optimize revenue. One study by Shirodkar and Konara has shown that the adjustment for policy favoritism is reciprocal. The paper concludes that having longer standing experience in a certain host country would more likely lead to firms being willing to commit more resources and perhaps dedicate more social responsibility by adhering to environmental policies. Likewise, the host government will gradually develop more confidence in the firm, hence leading to more favorable policies which could benefit the firm.[11] This shows the power of firm lobbying inevitably, but not necessarily to be seen as a form of negative political coercion, but also a form of social commitment, considering lobbying activities also come with significant capital and social costs for the firm.

As mentioned above, several policy instruments could be deployed both on the demand and supply side to expand current grid capacity and/or diversify energy sources. Below are three implemented by the European Union in 2024 during the electricity market reforms.

Power Purchase Agreements (PPAs) are long-term electricity supply agreements between the power producer and consumer, which are usually made for energy transition periods, during which companies try to seek stable electricity provision while also contributing to green energy transitions.[12] This could especially be lucrative for high-tech companies since energy stability is viewed as essential to production; thus, sharing the costs of green energy transition and expansion could be seen as a positive spillover effect derived from higher energy costs.

The second policy instrument is more of an incentive to the supply-side market. A contract for difference (CfD) allows renewable energy to enter the energy market without bearing the costs of market volatility, hence ensuring stable income to foster the business.[13] This also creates a favorable investment environment for private corporations to either invest in such renewable energy companies or establish subsidiaries for themselves. In most cases, the difference in cost is most likely to be absorbed by Taipower, but if corporates would see this as a form of collateral, then it encourages R&D efforts as well as business expansion of such renewables, indirectly diversifying the supply chain.

The above-mentioned tools are mainly used in the EU market and are subject to change in the Taiwanese market. However, this also demonstrates that states have various means to affect the energy market through price control, offering collateral, stable provision, etc. Within all the different methods, high-tech companies also have different opportunities to contribute and play a pivotal role in energy transition and diversification.

It is important to consider energy resilience in conjunction with national resilience. However, as resource management often entangles with power play between the public and private sectors, what is seen as essential now is no longer establishing numerous policies to redistribute resources and cost-bearing, but to find mechanisms to target those that profit more from infrastructure marginal gains rather than formal equality amongst all actors. This analysis started with the initial question of whether responsibility for electricity resilience should be allocated equally among legally defined major consumers, or proportionately according to consumption, capacity to pay, contribution to system stress, and benefits received from infrastructure.

The analysis shows that, first, the idea of energy resource diversification is indispensable when thinking about energy resilience. This is the best opportunity for corporates to share the cost burden in energy source expansion by investing directly in infrastructure and R&D efforts. Such in-kind commitments are also seen as the best way to gain corporate sponsorship, considering they become direct beneficiaries. The second point is the idea of demand-side balancing. While in Taiwan, Taipower is the sole entity in charge of energy provision, other countries have models of private energy provision which allow the energy sector to run on market-based values. Taiwan should seek to alleviate the cost absorption by Taipower, considering energy demand is only projected to rise in the future, with no immediate response to expand energy supply sources. This calls for reevaluation of formal equality, which hinders SMEs in business operations, while most targeted audiences of multinational enterprises remain unpunished. Finally, the final point related to the former issue suggests that corporate lobbying that leverages exit threats could exacerbate the unequal burden sharing between private companies. In this case, the public-private relationship is very important since firms are still likely to evade government policies despite regulations being relatively loose. Hence, long-term negotiations and partnerships could help build trust, which in turn leads to corporations being more willing to invest private resources and participate in energy infrastructure capacity building.