Taiwan Plans 43 Substations as AI and Chip Demand Reshape Its Power Grid

A 15 year expansion to get electricity where it is needed

Taiwan Power Co. plans to build or expand 43 substations over the next 15 years, install 1,922 kilometres of transmission lines and add about 52 gigawatts of transformer capacity as semiconductor factories and artificial intelligence facilities increase their electricity needs.

Taipower Chairman Tseng Wen-sheng outlined the programme at Taiwan International Smart Energy Week in Taipei on October 14, 2026. The state utility expects semiconductor electricity consumption to rise from about 52 billion kilowatt hours in 2026 to 110 billion in 2035, when the sector could account for roughly 30% of national consumption.

The challenge extends beyond building power plants. Electricity must reach the right factory or computing centre at the right time, through substations and cables that often take longer to develop than the facilities they serve. Taiwan's crowded cities and industrial districts leave limited space for that construction.

Tseng described the proposed pace of substation construction as unprecedented:

"We need to build 43 substations in 15 years, averaging about three a year. This is unprecedented," he said.

Taipower also plans to spend approximately NT$30 billion on 12 static synchronous compensators, equipment that helps keep grid voltage steady when electricity conditions change. Alongside industrial expansion, it will prioritise ageing underground lines in 18 administrative districts across Taiwan's six special municipalities.

A substation changes voltage so electricity can move between different parts of the network. The proposed 52 GW increase describes how much power those facilities can handle. New generating units, covered by a separate programme, will produce the electricity that flows through them.

Chip manufacturing leads the increase

Taipower says its fastest growing electricity demand associated with AI currently comes from manufacturing: wafer fabrication, memory production, advanced packaging and testing, and powerful servers. Computing service providers are another growing group of customers.

The projected rise from 52 billion to 110 billion kWh represents an increase of 58 billion kWh, or approximately 112%. Taipower also forecasts semiconductor power demand of 10.7 GW in 2030 and 14.6 GW in 2035.

These measurements answer different planning questions. Gigawatts describe how much power equipment needs at a given moment. Kilowatt hours measure electricity used over time, much as a vehicle's speed and the distance it travels describe different things.

Tseng said investments in manufacturing processes below 3 nanometres offer useful clues about future electricity needs. Memory production, packaging, testing and server manufacturing currently use electricity equivalent to about 30% of wafer fabrication demand, and their share could grow. Memory manufacturing and prolonged server testing are expected to become larger contributors.

Taipower Deputy General Manager Tsai Chih-meng estimated that semiconductor power requirements would increase by about 1 GW annually over the coming decade, with growth running at roughly twice the pace of the previous decade.

Southern Taiwan faces concentrated demand

Southern Taiwan Science Park illustrates how factory expansion changes local grid requirements. An area once served by one extra high voltage substation now has Southern Taiwan Science Park No. 1 and No. 2, with a third planned.

Taipower expects the park's load to reach approximately 4 GW in 2031, equivalent to about 9% of national power demand. Supplying that concentration requires substantial infrastructure close to the factories.

The Chung-Hua Institution for Economic Research's Powering AI analysis, published on November 5, 2025, gives another measure of the regional pressure. It cites estimated annual consumption of about 9.2 billion kWh for TSMC's five Kaohsiung plants, equivalent to roughly 30% of the city's electricity use in 2023 and 1.6 times residential consumption.

The analysis also cites the International Energy Agency's estimate that TSMC alone consumed almost 10% of Taiwan's electricity in 2023. A review of environmental assessments identified projects associated with AI that could add at least 1.667 GW of demand.

Yu-Yu Teng, director of media and communications at Citizen of the Earth, Taiwan, raised concerns about the environmental review of development at the former Kaohsiung refinery site. He argued that reviewing projects separately, then combining them into a science park, limited the opportunity to assess their combined effects. Electricity planning in southern Taiwan therefore sits alongside decisions about land restoration, water, transport and emissions.

Songhu shows why construction schedules matter

Taipei's Songhu substation broke ground in September 2026 after 26 years of planning and administrative procedures, according to Taipower. Completion is scheduled for 2029.

That history gives a concrete measure of the task behind a programme averaging nearly three substations annually. Land availability, approvals and construction space can determine when electricity reaches a customer, even when generating capacity is available elsewhere.

Tseng said electricity access has become an early consideration for companies choosing factory locations. Taipower is coordinating sites and investment schedules with major users, including during industrial park development, because power infrastructure can take longer to complete than factory buildings.

The principal dates and planning milestones are:

• 2024: Taipower began suspending new applications for data centres above 5 MW north of Taoyuan.
• November 2025: Taipower had received 79 AI data centre applications totalling about 4,758 MW.
• September 2026: Construction began on the Songhu substation.
• October 14, 2026: Tseng outlined the grid expansion at the Taipei energy forum.
• 2029: Songhu is scheduled for completion.
• 2031: Southern Taiwan Science Park's load is forecast to reach about 4 GW.
• 2035: Semiconductor electricity consumption is forecast to reach 110 billion kWh.

Why a small national share can strain a local grid

Taiwan's semiconductor industry used about 42.38 billion kWh in 2025, nearly 15% of national electricity consumption. Data centres and internet portal services used about 1.5 billion kWh, around 0.5%. Using those figures, semiconductor consumption was roughly 28 times larger.

Data centres nevertheless create pressure because a large electricity requirement can be concentrated in a relatively small urban site. A local substation may need to serve homes, businesses and a computing facility operating continuously, all through the same constrained network.

Tseng used a GB200/NVL72 AI server rack to illustrate the scale. One rack requires approximately 120 to 140 kilowatts; about 20 racks would use as much power as Taipower's headquarters building. Twenty racks at those ratings represent 2.4 to 2.8 MW.

Tsai said Taipower's NT$564.5 billion grid resilience programme includes dedicated lines connecting five major power plants directly to seven major industrial parks. The aim is to give large industrial customers more direct supply routes while reducing the network's exposure to a single disruption.

Power reservations have outpaced completed projects

Taipower's application records explain its concern about allocating capacity. By November 2025, it had received 79 AI data centre applications seeking about 4,758 MW. Forty applications, totalling approximately 3,033 MW, were approved; 39, totalling about 1,725 MW, were rejected.

More than 70% of approved capacity subsequently lapsed because applicants failed to begin formal application procedures within six months. Only four sites were drawing electricity, with combined contracted capacity of about 303.5 MW. Five more were under construction, with approximately 567 MW approved.

Those operating and construction projects together represented 870.5 MW. The gap between initial approvals and progressing projects helps explain why Taipower wants to work directly with committed investors rather than reserve capacity for landowners hoping to attract a customer later.

Tseng said the increase in approved AI data centre supply during 2026 was 750 MW, bringing the total he cited to 1,441 MW. Google had approval for approximately 200 to 300 MW in Changbin, while telecommunications and communications companies were also applying.

A proposed AI data centre seeking 100 MW could require about NT$150 billion in investment, according to Tseng. Taipower is developing fair allocation rules and discussing actual investment plans and locations with applicants. It has not announced a final mechanism or implementation date.

Move computing closer to power plants

Taipower wants large AI data centres to locate near power plants, supported by designated areas and dedicated supply lines. Tseng said shorter cables would reduce construction time, engineering difficulties and costs. The Ministry of Economic Affairs' Energy Administration has discussed the approach with investors, who expressed support for dedicated connections.

The proposal described as replacing electricity with light concerns where computing happens and how its results travel. Electricity would move a shorter distance from a power plant to nearby servers. Information would then travel through fibre optic cables to users elsewhere.

Optical fibres carry data using light. The practical change is to move information over long distances while keeping the most demanding electrical equipment closer to its supply.

Tsai also discussed data centres providing renewable energy and pairing it with storage. Energy Usage Plan reviews introduced in November 2025 cover data centres above 5 MW, with power usage effectiveness thresholds below 1.3 for hyperscale centres and below 1.4 for colocation facilities, which rent computing space to customers.

Power usage effectiveness, or PUE, compares a facility's total electricity use with the electricity used by its computing equipment. A ratio of 1.3 means that for every unit used by the computers, the facility uses about 0.3 additional units for cooling and other support systems. Google's reported carbon free electricity share was 17% for its Taiwan operations, compared with 66% across its data centres and offices globally.

AI in homes could change the evening peak

Tseng said AI equipment spreading into businesses and potentially homes could push evening peak demand towards 8 p.m. to 10 p.m. Taipower is adjusting forecasts and assessing older urban networks in response.

A device's operating hours matter alongside its power rating. Tseng compared an H200 computing device using approximately 1 kW with an electric rice cooker of similar power. A cooker might operate for half an hour, while computing equipment could run for 20 hours.

At a steady 1 kW, those examples would consume 0.5 kWh and 20 kWh respectively, a difference of 40 times. Across many homes and offices, longer operating periods could change when neighbourhood cables and transformers carry their heaviest loads.

Taipower's plan to renew underground lines in 18 urban districts therefore addresses a different part of the AI expansion from dedicated connections for factories and large data centres. Industrial construction and city upgrades need to proceed together.

Gas expansion, carbon capture and construction costs

Tseng outlined an original programme of 25 additional natural gas generating units with about 26 GW of installed capacity over the coming decade; Tsai and another account of Tseng's presentation put the number at 26 units, with the latter giving capacity of about 25 GW.

Taipower separately said it expected 5.2 GW of new generating units to enter service in 2026 and planned another 26 GW to join the system by 2035.

Tseng said TSMC and private power producers were discussing carbon capture and storage. Taipower would also assess installations at major plants, subject to Ministry of Economic Affairs approval. The technology captures carbon dioxide from emissions and stores it, rather than releasing it into the atmosphere.

Tseng also said the Maanshan nuclear plant's restart plan had passed review by the Nuclear Safety Commission and that Taipower would work with original supplier Westinghouse on safety inspections. He discussed potential wind and geothermal investment, and solar power paired with storage.

Taipower spokesperson Huang Mei-lien rejected claims that major technology companies were being required to finance or build power plants themselves. The utility said cost sharing remained a concept without a concrete proposal or formal policy negotiations, and it was not planning special electricity rates for particular users.

Liu Che-liang, director of CIER's Center for Energy and Environmental Research, pointed out that power plants must undergo environmental assessment. Approval procedures add uncertainty to the construction schedules on which industrial investment depends.

Forecast transparency matters as much as headline numbers

CIER's November 2025 analysis describes a continuing debate over demand forecasts. Earlier government estimates suggested AI and semiconductor development could require an additional 4.32 GW by 2030. Later Taipower projections put additional demand from the two sectors above 5 GW between 2026 and 2030, including about 1.85 GW from AI and 3.24 GW from semiconductors.

The analysis says the 2024 National Electricity Supply and Demand Report removed the specific AI projections included in the 2023 edition. Projected average annual electricity growth fell to about 1.7%, from an earlier range of 2.5% to 2.8%.

Energy Administration Deputy Director General Chih-Wei Wu attributed the reduction partly to energy conservation measures. He gave the administration's AI consumption forecast:

"Based on data collected in 2025, we estimate that electricity demand from the AI industry will reach around 21.8 billion kWh by 2030," Wu said.

Chia-Wei Chao, research director at the Taiwan Climate Action Network, questioned the scale of earlier projections and the reliance on developers' plans. Hsin-Wei Hsu, an assistant professor at National Taipei University of Technology, said the published growth estimate appeared low and called for access to its underlying calculations.

Hsu explained why judging the forecast was difficult:

But I can't say whether the current estimate is right or wrong, because we don't have access to the underlying data.

Taipower's experience with expired reservations makes that debate practical. Project locations, investment commitments and construction schedules will help determine which proposed demand becomes real, and where substations and transmission lines must be ready.

The Essentials

• Taipower plans 43 new or expanded substations and 1,922 kilometres of transmission lines over 15 years.
• Semiconductor electricity consumption is forecast to rise from 52 billion kWh in 2026 to 110 billion in 2035.
• Southern Taiwan Science Park's power demand is projected to reach about 4 GW in 2031.
• Songhu substation began construction after 26 years of planning and procedures; completion is scheduled for 2029.
• Taipower is developing allocation rules to favour committed data centre investors.
• Large computing facilities would be encouraged to locate near power plants, with information carried to users through optical fibres.
• Urban cable upgrades, new generation and clearer demand forecasts are central to meeting the expansion.