The proposal forms part of Taiwan's broader strategy to prepare its electricity system for a surge in demand from energy-intensive industries while improving resilience against power disruptions. Image: Roméo A. on Unsplash

Taiwan’s parliament is considering legislation that would require the island’s largest electricity consumers to install on-site power generation and energy storage systems, as the government seeks to strengthen energy resilience and reduce pressure on the grid from rapidly rising demand driven by semiconductor manufacturing and artificial intelligence (AI) data centres.

The economics committee of the Legislative Yuan, Taiwan’s highest legislative organ, reviewed amendments to the Energy Management Act on Wednesday that would require electricity users above a certain threshold to install self-generation and energy storage facilities, though key details, including the consumption threshold and minimum capacity requirements, have yet to be finalised.

The proposal, approved by the cabinet in May, forms part of Taiwan’s broader strategy to prepare its electricity system for a surge in demand from energy-intensive industries while improving resilience against power disruptions. The government estimates electricity demand will grow sharply over the next five years as infrastructure, advanced chip manufacturing and electrification expand.

Economy minister Kung Ming-hsin told lawmakers the government was using a contract capacity threshold of 5 megawatts (MW) as the basis for discussions, which would cover around 700 businesses, although the final figure would be determined after consultations with industry and other stakeholders.

The ministry has not yet decided what proportion of electricity large users would be required to generate or store themselves.

“The initial requirement may not be very high, but it will gradually increase,” Kung said, adding that the government was also considering a five-year transition period before the rules take effect.

Taiwan already requires companies with contracted electricity capacity of at least 5 MW to meet renewable energy obligations under amendments to the Renewable Energy Development Act adopted in 2019, including installing renewable energy facilities or using alternative compliance mechanisms. 

The proposed Energy Management Act amendments would go further by requiring on-site generation and storage to improve energy self-sufficiency and reduce dependence on the public grid.

The move reflects mounting concerns over Taiwan’s ability to meet soaring electricity demand as it cements its role as a global hub for advanced semiconductor manufacturing. Taiwan’s Ministry of Economic Affairs has already introduced stricter reviews for new data centres with power demand exceeding 5 MW, citing growing electricity consumption from AI infrastructure.

Lawmakers from both the ruling Democratic Progressive Party (DPP) and the opposition Kuomintang (KMT) questioned whether the legislation should retain the existing 5 MW threshold and argued that major implementation details should be specified in law rather than left to future regulations.

DPP lawmaker Chung Chia-pin said the ministry should clarify whether emergency backup generators already installed by companies could count toward the new self-generation requirement, noting that the proposal’s primary objective was to reduce demand on the public electricity network rather than simply provide emergency power.

He also said natural gas fuel cells could offer a safer alternative to diesel generators or lithium-ion batteries for some facilities, although installing associated gas pipelines would require coordination with fire safety regulations.

Another ruling party lawmaker, Chiu Yi-ying, said office buildings and large shopping centres in densely populated urban areas could exceed the proposed 5 MW threshold but lack sufficient space to install power generation or energy storage equipment.

Kung acknowledged that implementation would vary considerably depending on the type of facility and said the ministry would consult local governments, fire authorities and industry groups on issues including whether existing emergency power systems should qualify toward compliance.

The ministry expects to issue detailed implementing regulations within six months of the law’s enactment. New factories, which have greater flexibility to incorporate energy infrastructure into their designs, could face stricter self-generation and storage requirements than existing facilities, Kung said.