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- 15 Feb 2022
- Oil & Gas
Key View: Taiwan, China's natural gas consumption is forecast to increase at pace over the next decade, driven by the authorities' natural gas and renewables-oriented energy policies and commitment to phasing out nuclear generation by 2025. Negligible domestic production means Taiwan, China would need to depend on LNG imports to meet rising demand for gas moving forward.
- A referendum seeking to restart works on Taiwan, China’s fourth nuclear power plant failed to pass.
- The power plant in question is the Fourth Nuclear Power Plant in the Gongliao district, construction for which has been on hold since 2014 due to public concern over its safety.
- The authorities are planning to phase out nuclear power generation by 2025, after which natural gas and renewables would take on larger roles to compensate.
- In spite of there being concerns about higher cost and that moving away from nuclear puts the energy supply security at risk, gas continues to find strong support in Taiwan, China due to it being a lower-carbon, lower-emissions alternative to coal and oil.
- The share of gas-fired generation in the power mix is expected to rise to 50% by 2025 from about 34% in 2019, while renewables’ share is set to grow to 20% from 6%, based on targets set forth by the Bureau of Energy.
The fundamentals in place are supportive for gas demand in Taiwan, China to see robust growth over the coming years. The bulk of the growth will be driven by the power sector, where the authorities are pushing to increase the dependence on gas-fired generation and electricity generated from renewables, as part of fuel-switching measures away from nuclear, oil and coal. We are optimistic about policy continuity and believe that support for clean energy sources will remain in place for the foreseeable future. In addition to increasing the share of gas-generation to 50% in the domestic power mix from 34% in 2019 and achieving 'nuclear-free' status by 2025, Taiwan, China has begun to plan to achieve net zero emissions by 2050.
'Nuclear-Free' Goal To Drive Demand Growth
Taiwan, China - Gas Production & Consumption Forecast (2020-2031)
e/f = Fitch Solutions estimate/forecast. Source: JODI, Fitch Solutions
The bid to increase gas-generated power consumption has also driven positive momentum in the LNG space, where CPC Corporation and Taipower are each working to increase exposure to LNG imports as domestic production volumes remain negligible. Four LNG regasification projects worth a combined 16.2bcm are in the pipeline to be commissioned over the coming decade. This will take Taiwan, China’s gas demand from 21.6bcm in 2019 to about 34bcm in 2031.
Gas And Renewables Share To Grow
Taiwan, China - % Share Of Power Generation
f = Fitch Solutions forecast. Source: EIA, World Bank, Fitch Solutions
In May 2019, the Legislative Yuan amended a provision of Taiwan, China's Electricity Act, which stipulated that all nuclear power generation facilities 'shall cease to operate by 2025'. Of the six, three reactors remain in operation. Two at Jinshan have been decommissioned in 2018 and 2019. One reactor at Kuosheng was decommissioned ahead of schedule in July 2021 and another is due to be brought offline in 2023. The licences for the remaining two reactors at Maanshan are due to expire in 2024 and 2025 respectively. In addition, the construction of a fourth nuclear plant in Lungmen has been suspended since 2014. A referendum took place in December 2021 asking whether the halted project should be restarted, although failed to pass with the majority of those who turned out voting ‘no’.
Gas Consumption (Taiwan, China 2020-2025)
|Indicator ||2020 ||2021e ||2022f ||2023f ||2024f ||2025f |
|Dry natural gas consumption, bcm ||23.9 ||25.8 ||24.7 ||26.8 ||27.1 ||27.7 |
|Dry natural gas consumption, % y-o-y ||10.5 ||8.0 ||-4.0 ||8.4 ||1.0 ||2.3 |
|e/f = Fitch Solutions estimate/forecast. Source: JODI, Fitch Solutions |
Gas Consumption (Taiwan, China 2026-2031)
|Indicator ||2026f ||2027f ||2028f ||2029f ||2030f ||2031f |
|Dry natural gas consumption, bcm ||29.2 ||29.7 ||30.6 ||32.0 ||33.2 ||34.2 |
|Dry natural gas consumption, % y-o-y ||5.5 ||1.5 ||3.0 ||4.7 ||3.8 ||2.9 |
|f = Fitch Solutions forecast. Source: JODI, Fitch Solutions |