Taiwan blackout seen pressuring President Tsai to reconsider energy policy

[TOKYO] A blackout in Taiwan Tuesday that struck about 6 million households may force President Tsai Ing-Wen to reconsider her anti-nuclear stance and open the country's electrical grid to outside investment.

The island's energy security and the feasibility of Ms Tsai's plan to phase-out atomic reactors by 2025 and reduce coal-fired generation is coming under greater scrutiny, BMI Research said in an Aug 16 note.

So far Ms Tsai hasn't backed down on promises to shut the country's remaining nuclear power stations, but public pressure could determine the extent to which policies change, according to Gloria Hsu, a professor at National Taiwan University.

While the disruption Tuesday was caused by human error that resulted in about 9 per cent of Taiwan's generation capacity going offline, the outage highlighted the country's limited number of power plants. The reliability of that supply, generated and distributed by state-run companies, is crucial to the success of Taiwan's semiconductor industry that had sales of about US$71 billion in 2015 and supplies companies including Apple Inc.

"The government may be forced to reconsider its anti-nuclear stance," said Joseph Jacobelli, an analyst at Bloomberg Intelligence.

"Market liberalisation could be seriously advanced as Taiwan desperately needs private investment in its power infrastructure."

Taiwan plans to separate Taiwan Power Co, known as Taipower, into separate entities to handle power generation and transmission and distribution, according to electricity act amendments passed in January. But that effort is far too little and the government should should focus on more "rational and less populist" energy policies, said Mr Jacobelli.

Ms Tsai posted an apology on Facebook late Tuesday and included a reiteration of her determination to push forward with phasing out nuclear power in favor of renewable energy.

BLOOMBERG