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24 April 2023

Powering up Data Centres: Navigating energy challenges in Taiwan

Data centres are the critical infrastructure of the 21st century. The Internet traffic increased by 440% between 2015 and 2021, all passing through multiple points in a worldwide network.[1] As the digital transformation of the global economy continues, demand for both data processing and the energy to support it is set to grow. Due to continuing efficiency improvements, data centre power consumption has grown much more slowly than the activity they support. Nevertheless, the availability, reliability and cost of electricity remains a key factor in location decisions, not only for operators but for host countries as well.   

The importance of data centres drives economic growth as it offers a range of opportunities for businesses. However, the sector also presents challenges as it consumes a substantial and growing proportion of national energy supplies particularly in the world’s established data processing hubs. This has led to implementation of stringent approval norms or minimum efficiency requirements on new developments where local grids are already overburdened. For example, Irish transmission operator, EirGrid refused connections for projects in Dublin that did not meet the defined requirements. Data centres accounted for close to 14% of Ireland’s energy consumption in 2021.[2] EirGrid has predicted that if all the contracted capacity to data centres in Ireland would be utilised, then data centres would make up between 25% to 33% of Ireland’s electricity demand by 2030.[3] In Singapore, a three-year moratorium on data centre construction came to an end last year, and new proposals must now fulfil the energy efficiency and sustainability criteria such as a power usage effectiveness ratio (PUE) of at least 1.3, a Platinum rating under its Green Mark scheme etc.[4] 

Meanwhile in emerging economies experiencing the strongest growth, power is always a challenge and rolling blackouts may already be a reality. Taiwan is no exception. The island is particularly vulnerable to external shocks because approximately 98% of its energy demand is met by imports.[5] Its grid is also carbon-intensive, with the majority of its electricity derived from fossil fuels including coal and oil.[6][7] 

What sets Taiwan apart, however, is that it is already a high-tech hub, as one of the world’s largest producers of semiconductors. Its electricity consumption per capita is three times higher than the average for Asia, with more than 60% of the electricity is consumed by in the industrial sector.[8][9] To retain its manufacturing dominance, and to support future development, the Taiwanese government is well aware that it needs to increase the overall supply, shore up resilience, and shift to less carbon-intensive sources of energy.  

This has been a long-term preoccupation, which is starting to bear fruit. Since the 1990s, the Ministry of Economic Affairs' Bureau of Energy has been actively promoting energy research at several of the island’s universities. More recently, it has set a goal of generating 20% of Taiwan’s electricity from renewable sources by 2025, up from 4.8% in 2016.[10][11] Progress is being made – in the first 10 months of 2022, the share of renewables reached 8%.[12] Photovoltaic power is by far the greatest proportion of this, followed by wind, and supplemented by smaller installations of hydroelectricity, biomass and geothermal.  

State-owned electricity company Taipower has also set out plans to improve the resilience and sustainability of its isolated grid. This is a step in the right direction, but it will involve nothing less than a major overhaul of its infrastructure, which will take time to complete. Similarly, Taiwan’s wind farms are a longer-term play, with some not due to come online until 2030.  

In the shorter term, there are also demand-side solutions that data centre operators can use to reduce their reliance on national grids, both in the way facilities are designed and in the way they are managed.  

There are many strategies for optimising the energy efficiency of data centres themselves, from server virtualisation to better airflow management. By working with consultants to incorporate these at the design and planning stages, operators can not only cut their energy demand but improve their resilience and meet their ESG commitments.  

They can also use their significant purchasing power to help to drive the wider decarbonisation of national energy supplies by supporting investment in renewables. Taiwan has become a leader in corporate power purchase agreements (CPPAs) for renewable energy, where industrial users contract directly with producers to buy electricity at a pre-agreed price. Around the world, CPPAs are used to reduce costs and hedge against energy price fluctuations, but meeting sustainability goals has also become a key driver. In 2017, Taiwan’s electricity act was amended to allow the sale of renewable power to end users through direct supply or wheeling, and the renewable energy development act (REDA) was revised in 2019. The CPPA market has since experienced significant growth.[13] By the end of 2020, deals representing 1,300MW had been signed by both semiconductor manufacturers and data centre operators including large hyperscalers sourcing power from photovoltaics and on- and offshore wind farms.[14][15] 

There are still further opportunities. Taiwan has considerable, unexplored potential for solar generation, especially in the tropical south of the island, and the government could also take inspiration from battery storage initiatives underway elsewhere to offset the variability of renewable supplies. Taiwan’s data centre operators could themselves expand in-campus generation to address their overreliance on the grid. They could also take advantage of continuing innovation in energy efficiency, both of computing equipment and in MEP systems, to ensure facilities are performing at their best.  

Considerable investment into R&D is yielding a steady stream of new technologies, especially for cooling. For example, hot aisle/cold aisle containment can deliver significant savings by arranging racks in alternate rows to separate the cool air intake from the hot exhaust air. A newer technology is liquid immersion cooling, where server racks are submerged in a non-conductive liquid such as mineral oil or fluorocarbon fluid. This is more effective that traditional air cooling, enabling equipment to be installed at higher densities. Smart management systems are increasingly being deployed to monitor energy use and automatically adjust it to reduce consumption while keeping temperatures and humidity stable, while AI-based cooling will take this to the next level by using machine learning and algorithmic control to optimise operating conditions, security and maintenance.  

This is just a snapshot of the continuing innovation in data centre design and operation, which surely makes it one of the most exciting built environment sectors to work in. For Taiwan too, there is considerable cause for optimism – both for a more steady, secure supply of electricity, and a more sustainable one. 

The full report offers valuable insights into the impact of the energy crisis on data centres and strategies to overcome challenges. Download full report here







[6] Energy statistics Handbook 2021, Bureau of Energy MOEA 



[9] Energy statistics Handbook 2021, Bureau of Energy MOEA 








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