Please see my post of “Nuclear power stocks spike as AI ignited electricity demand” as affiliated article.
Abandoned nuclear hits TSMC hard
TSMC’s Q3 2024 report
TSMC made two points during its Q3 2024 report meeting:
- The chief financial officer publicly declared that Taiwan’s electricity prices are the highest among TSMC’s factories in various countries. A public slap in the face of the lies our government has been claiming for years: The Taiwanese government has repeatedly told us that Taiwan has one of the cheapest electricity prices in the world.
- Taipower’s electricity price increase this time (in October 2024) will directly reduce TSMC’s gross margin by 1%!
Investors should understand that 1% is a big difference. For example, the net profit margin of the retail industry, or that of many large OEM companies in Taiwan, is below 3%!
The government has been subsidizing TSMC’s electricity prices for many years
After deducting 10% of TSMC’s own green electricity purchase, at least 20 billion kilowatt-hours are still purchased from Taipower. This means that Taipower received 10.6 billion yuan less from it last year, and Taipower’s subsidy is equivalent to a government subsidy. Finally, the whole country Pay the bill.
In fact, TSMC’s electricity bill will receive government subsidies in the future, and it may exceed NTD 10 billion in 2023 alone. TSMC can’t stand it anymore and want to vent its bitterness.
In my post of “Why is TSMC’s profit margin much greater than competitors?” I mentioned that originally cheap energy is the reason why TSMC’s net profit margin can reach 47%. But it seems that this advantage will become TSMC’s disadvantage in the future.
TSMC’s electricity consumption
Although the actual electricity consumption in 2023 has not yet been released, its maturity is inevitable and is estimated to be no less than 23 billion kilowatt-hours. That is, a single company will account for more than 8% of the country’s electricity consumption and will account for 12.5% of the country’s electricity consumption in 2025.
Note: According to media reports, Taipower held an extraordinary shareholder meeting on February 23, 2024. It is reported that losses are mounting and may exceed 500 billion by this year. An older minority shareholder of Taipower even questioned whether the reason for the huge losses was the low electricity prices for the industry. He scolded: “Does TSMC need your subsidies?” This is essentially an attempt to take advantage of the big electricity companies. They will collect information and use it against the directors. Chang Zeng Wensheng and others filed a lawsuit.
TSMC’s electricity consumption accounts for more than 8% of the country’s electricity consumption, and its profit in 2023 will be nearly one trillion yuan. However, it uses about 25 billion kilowatt hours of electricity a year, but has long enjoyed TSMC’s low electricity prices. In terms of domestic industrial electricity prices, the selling price is far lower than the cost, which is equivalent to one Taipower subsidizes its electricity bills by more than RMB 10 billion each year, which is quite astonishing.
In October 2024, Standard & Poor’s stated that TSMC’s power demand will triple in 2030, and power supply shortages are gradually becoming a risk. TSMC’s electricity consumption will account for 8.4% of Taiwan’s total electricity consumption in 2023; by 2030, electricity consumption may account for 15.6% of Taiwan’s total electricity consumption.
Taipower raises electricity prices 4 times in 3 years
TSMC’s chief financial officer made it clear at the third quarter legal meeting held on October 17, 2024: TSMC’s electricity price per kilowatt hour will increase by 15% in 2022, 17% in 2023, 25% in the first half of 2024, and again in October.
Compared with the electricity prices of all domestic and overseas factories, the electricity price of TSMC’s Taiwan factory has ranked first among all factories in the world. If the electricity price before the increase in 2022 is used as the benchmark, after the increase in October 2024, the electricity price per kilowatt hour will be It will be 1.92 times that of 2022, which is equivalent to nearly doubling.
What did American technology giants do?
The three major technology giants in the United States have recently signed long-term power supply contracts with nuclear energy manufacturers. Microsoft even purchased electricity from the Sanwei Island Nuclear Power Plant and signed a 20-year power supply agreement in one go. The Sanwei Island Nuclear Power Plant was the first power plant in the world to suffer a nuclear energy accident.
In order to meet the power demand of artificial intelligence (AI) data centers, Amazon and Google, owned by Alphabet, signed agreements with two major private SMR developers, X-Energy and Kairos Electric Power Company, respectively, during the week of October 14, 2024, to encourage companies in the United States to The stock price of its listed counterpart Oklo (ticker: OKLO) soared 99% last week.
Latest trends in various countries
USA
Constellation (tickere: CEG), which operates the largest number of traditional nuclear energy reactors in the United States, has more than doubled its share price since the beginning of this year. In September, the company signed a 20-year power supply agreement with Microsoft to restart the company that had suffered a serious nuclear energy accident.
NuScale Electric Power Company (ticker: SMR) surged 37% during the same period, and the stock prices of Cameco (ticker: CCJ), Constellation Energy, BWX Technologies (ticker: BWXT) and other companies are trading at record high levels.
Uranium producer Cameco’s stock price has soared 38% this year, and nuclear energy component supplier BWX has also jumped 65%.
Japan
Japan overturned its nuclear ban policy after the incident of 311 and restarted nuclear energy to cope with power shortages and rising electricity prices. Recently, Japan has restarted nuclear energy and even increased the proportion of nuclear energy supply from less than 10% of its electricity supply to 20% of its electricity supply by 2030. Among them, the recent announcement of restarting the Onagawa Nuclear Power Plant is the latest important indicator.
Czech Republic
South Korea Electric Power Company assists the Czech Republic in building a nuclear power plant.
The Philippines
South Korea Electric Power Company has signed a contract with the Philippines, and it is expected to spend five years to help restart the Bataan nuclear power plant that was built 50 years ago at a cost of 1.8 billion US dollars but has not been commissioned.
Taiwan
Go against the world trend
Taiwan is one of the only major countries in the world that resists nuclear energy. Wrong policies are driving up people’s living prices and business operating costs.
In my post of “Current developments in Nuclear Energy and related companies“, I mentioned that Taiwan is one of the few major countries in the world that resists nuclear energy.
Abandon nuclear
Taiwan has voluntarily abandoned the fourth nuclear power plant that it had built at a huge expense, preferring to pay astronomical amounts of taxpayers’ hard-earned money to its suppliers for breach of contract. According to media reports, the liquidated damages were NT$320.5 billion (US$ 10 billion), which was simply thrown into the water.
Countries around the world are voluntarily decommissioning old nuclear power plants to cope with power shortages and rising electricity prices. However, Taiwan bucked the current world trend and decommissioned Nuclear Power Plants 1 and 2, giving up the cheapest and most reliable source of electricity.
However, Taiwan bucked the current world trend and decommissioned Nuclear Power Plants 1 and 2, giving up the cheapest and most reliable source of electricity.
Not only that, The Taiwanese government even decided to shut down the third nuclear power plant which is not very old and is still in use and is the main power supply in Taiwan.
Taipower’s power generation method
It will be decommissioned in May 2025; from then on, Taiwan will have no nuclear power generation and must use other power generation methods that cost several times the power generation cost. However, Taiwan’s power supply relies heavily on imported coal and natural gas; natural gas is the most expensive power generation option, and all of it is imported. Hydropower is environmentally friendly, but unreliable, and Taiwan has repeatedly stopped building reservoirs; it accounts for a very low proportion of Taiwan Power’s power generation and cannot be an alternative.
Simulating Taipower without nuclear power
Taipower Nuclear Power Plant No. 3, which is expected to be decommissioned in 2025, has stopped operating Unit 1 for decommissioning on July 27, 2024, and Unit 2 will begin its 28th overhaul operation from October 21, 2024. The construction period is estimated About 41 days. The power generation of each Taiwan Power unit shows that the current nuclear power generation in Taiwan is “0”, and Taiwan has temporarily entered a “non-nuclear homeland”.
The power generation of each unit of Taipower system at 5:40 a.m. on October 22, 2024, the overall gas power generation accounted for 56.639%, coal-fired power generation accounted for 34.899%, and the total thermal power generation was as high as 98%.
Where is the green energy power generation? What about the green power such as solar power, wind power, and hydropower that the government has much promoted?
The impact of nuclear abolition on Taiwan has begun to appear
Hypocritical political group
For the sake of the environment in Taiwan, many naive and so-called environmentalists blindly agree with the government and brainwash the ignorant Taiwanese people everywhere. On the one hand, I want to enjoy cheap electricity prices and air-conditioning in the summer, but on the other hand, I act as a government thug.
For many years, the government and Taipower have used the name of environmental protection to claim that their efforts in the construction of new energy sources such as solar energy and offshore wind power are not only limited by seasonal factors, but also have been repeatedly reported to be cheating. In the end, we had to use the most mature, but least environmentally friendly, self-defeating thermal power generation.
Unfortunately, the disadvantages of thermal power generation far outweigh the advantages. Mainly coal-fired power generation, oil power generation, or natural gas power generation. Natural gas power generation is less polluting, but the cost is very high. This is the main reason why Taipower has increased the cost of power generation and has raised electricity prices four times in three years.
Coal-fired power generation has the lower cost among the three, but oil-fired power generation and coal-fired power generation are the least environmentally friendly and the most polluting. They are the power generation methods that countries around the world have agreed to phase out. Regardless of whether coal-fired power generation, oil power generation, or natural gas power generation are the main causes of the global greenhouse effect, Taiwan is doing the opposite and willfully.
As a result, Taipower’s Taichung Thermal Power Plant has repeatedly ranked number one among the top of the list of the world’s largest carbon emitters in recent years. The Mailiao Power Plant in Yunlin ranked sixth on the same list, and Taiwan actually occupied two places in the top ten carbon emission lists at once!
Source：
- Global GHG emissions from the most polluting power plants 2022）
- Countries with highest CO2-emitting power sectors，Nature Vol 450, November 2007）
Violating science and dragging the entire population to death
These absurdities are contrary to science and universal trends. They insist on pursuing their own ideologies and use politics to override professional and popular decisions. The result is that electricity prices have been repeatedly raised in recent years, pushing up the operating costs of Taiwanese manufacturers and driving up commodity prices.
The Taiwan government and anti-nuclear people, just for their own selfish interests and against their own conscience, hypocritically oppose nuclear power generation. For their own political interests, they kidnapped and buried all the people in Taiwan.
The impact to livelihood prices
Taipower has raised electricity prices four times in the past three years, and in October 2024, it raised electricity prices for the second time in one year.
In the name of taking care of people’s electricity consumption, it does not adjust electricity prices for people’s livelihood, but only increases the electricity prices for commercial users.
Unless you are a newborn rabbit or a three-year-old child, you will believe this kind of whitewashing statement. Modern people do not go into stores to buy things. Commercial electricity prices are the most important cost of business. After they increase, commodity prices It must rise. As long as you see how many times the prices at your alleyway convenience store have increased in recent years, you don’t need me to explain.
Taiwan suffers from power shortage due to anti-nuclear
If you have no ideology and live in Taiwan, many people may have had the opportunity to experience several power shortages in recent years. I myself experienced two sudden power outages without notice. One of them happened to be in front of my computer. After restarting, the motherboard was damaged.
The European Chamber of Commerce in Taiwan, the American Chamber of Commerce in Taiwan, and Taiwan’s major business groups have all pointed out in their meetings with Taiwan’s president many times, or in public media releases, that Taiwan is short of electricity and that the government must improve it. However, the president of Taiwan’s ruling party, driven by ideology, told lies and denied that Taiwan was short of electricity. He ignored the suggestions and turned a deaf ear.
In October 2024, Raymond Greene, director of the American Institute in Taiwan (AIT), whose status is equivalent to that of the U.S. ambassador to Taiwan, admitted this in an exclusive interview with the YouTube program Mindi World News. Raymond Greene said frankly, “Taiwan faces not only problems in electricity and labor Or water sources, and many semiconductor customers require that they must be manufactured with green energy (RE100, 100% renewable energy). Taiwan cannot meet this demand. Therefore, these major manufacturers invest in the United States, not because they are forced or attracted. They also believe that Taiwan’s manufacturing capacity will be insufficient in the future.”
Who do you believe?
Do people believe TSMC’s statement or the Taiwan government’s statement? The answer to this question is Taiwan’s current predicament.
If it is not corrected Taiwan’s electricity policy, it will affect Taiwan’s national competitiveness in the next few decades. Ordinary people, please don’t ignore things. Prices rise sharply every year, and your pocket will continue to shrink. Do you think it has anything to do with you?
Conclusion
In order to achieve the goal of “a nuclear-free homeland by 2025”, the Democratic Progressive Party government has successively decommissioned Taiwan Power Plant No. 1, No. 2 and No. 3 Nuclear Power Plant. The last nuclear power unit, Unit 2 of Nuclear Power Plant No. 3, will be officially decommissioned on May 17 next year.
Politics takes the lead, disrespecting professionalism, and forcing all Taiwanese to pay for it based on their own political self-interest. The following two points have been repeatedly brainwashed through various political internal propaganda:
- Anti-nuclear is the trend of the world.
- Taiwan’s electricity prices are among the cheapest in the world.
Now it has been proven that it was all a lie, leaving cheap power generation options unused, forcing the whole people to accept anti-nuclear power, and being forced to endure the bitter consequences of repeated increases in electricity prices and rising commodity prices.
Taiwan thinks that it is smarter than other countries in the world. Is it possible that all the countries in the world are fools? Are the decisions of the United States and Japan worse than those of Taiwan?
When the tide receded, it turned out that Taiwan was the only one in the world swimming naked.
When the King’s New Clothes was revealed by TSMC, the whole world is now laughing at Taiwan’s ridiculous decision.
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