The Political and Economic Consequences of Brownouts and Power Rationing

The Political and Economic Consequences of Brownouts and Power Rationing
China Times Editorial (Taipei, Taiwan, ROC) 
A Translation 
June 24, 2016

Executive Summary: During late May Taiwan was on the verge of power rationing. The Executive Yuan considered restarting the Number One Nuclear Power Plant. But DPP legislators and anti-nuclear groups voiced strong opposition. As a result that plan was shelved. According to meteorological experts, this year will be an “Anti-El Nino” year. A long, hot summer is inevitable. Brownouts are probable. The new government has clearly failed to think things through. Once power rationing is imposed, serious political and economic consequences will follow.

Full Text Below:

During late May Taiwan was on the verge of power rationing. The Executive Yuan considered restarting the Number One Nuclear Power Plant. But DPP legislators and anti-nuclear groups voiced strong opposition. As a result that plan was shelved. According to meteorological experts, this year will be an “Anti-El Nino” year. A long, hot summer is inevitable. Brownouts are probable. The new government has clearly failed to think things through. Once power rationing is imposed, serious political and economic consequences will follow.

Less than two weeks after the new government took office, a heat wave struck Taiwan. Reserve transfer capacity plummeted. On May 31, it fell to a mere 1.64%.  Power rationing almost became necessary. More recently, temperatures have soared. Transfer capacity rate has fallen to 3-5%. Fortunately annual maintenance was completed in time to avoid brownouts. But the situation remains troubling. Taiwan already faces power rationing. That is no longer even in doubt. Premier Lin Chuan was being honest when he said "This year and next year will be the most difficult".

If the Number One Nuclear Power Plant is restarted, estimates are that the equipment transfer capacity will increase, from 1.5 to 1.7%. Frankly that is not enough to eliminate brownouts. But at least it will reduce the amount of power rationing. Nevertheless DPP legislators and anti-nuclear groups continue to voice strong opposition. The consequence has been brownouts caused by ignorance.

People were intitally skeptical of the DPP's energy policy. But Tsai Ing-wen repeatedly assured them that there would be no power shortages. When Minister of Economic Affairs Roy S. Lee took office, he met with the business community. He thumped his chest and also promised them there would be no power shortages for the next two years. These promises are still ringing in our ears. But Taiwan already faces brownouts. Once power rationing becomes a reality, trust in the new government will collapse. People will remember the solemn promises, repeated again and again, broken within a few short months. They will wonder what other promises the new government intends to break? Once the public loses faith in the new government, the political consequences will render it impotent.

The economic consequences will be even more serious and far-reaching. If power rationing is imposed, manufacturing and commerce will be affected. In the short term, manufacturing output and economic output will be reduced. But this is a relatively minor problem. The truly serious, hidden impact, will be to private investment.

Business investment must consider the investment environment. An abundant and stable power supply is one of the most important considerations. As TSMC Chairman Morris Chang noted, "TSMC cannot afford power shortages for even one minute". TSMC is hardly the only industry that cannot afford power shortages. Traditional industries and high tech industries alike cannot afford random interruptions of power during the manufacturing process. If sudden brownouts or blackouts occur during the manufacture of semi-finished products, they will be completely destroyed. Manufacturers will suffer huge losses. Orders and shipping will be delayed.

Last year Morris Chang publicly expressed concern for the future of power generation on Taiwan. Recently Lin Chuan revealed that TSMC, Google, and other major companies are building their own power plants. These companies say they have confidence in the new government's ability to solve problems. But the fact that they are building their own power plants is clearly a vote of no confidence in DPP energy policy. Otherwise why go to all the trouble and spend all that money to build privately owned power plants? TSMC and Google are large scale enterprises. They have the financial resources to build their own power plants. Most other companies lack this capability. In the event of power shortages, all they can do is suspend further investments.

Amidst the global economic downturn, Taiwan faces trade and economic marginalization. Cross-Strait relations have also deteriorated. Private investment is already low. Add to that the risk of power shortages, and additional private investment is unlikely, to say nothing of foreign investment. Investments are falling. Economic growth is sluggish. The new government's plans to create jobs and boost staff salaries will remain a rosy dream. This will seriously impact the future of Taiwan's economy.

Politicians and pressure groups who insist on a nuclear free homeland, who are strongly opposed to restarting the Number One Nuclear Power Plant, also ignore the impact brownouts will have on their agenda. When the power supply is ample, a majority of the people may support a nuclear-free homeland. But when power shortages make their lives miserable, undermine the economy, and take away their jobs, support for a nuclear-free homeland will evaporate. Political advisor Chang Ling-chen put it bluntly. "If power rationing is imposed over the next two years, the private sector anti-nuclear movement will collapse".

Regarding “civilian oversight” of power generation, the government should consider the matter carefully. Some people have accused Taipower of "hiding generating capacity". This is highly unlikely. But in order to dispel any remaining doubts, the government can release more information. It can commission credible experts to provide oversight. But it must not pander to populist sentiment by implementing "civilian oversight". Still less should it include individuals with axes to grind, and who lack professionalism. Doing so would would demoralize Taipower, making the power supply problem even more intractable.

To avoid brownouts and reduce their political and economic impact, to prevent the collapse of public support for a nuclear-free homeland, we suggest restarting the Number One Nuclear Power Plant. This will alleviate our immediate plight. The government should also increase power transfer capacity as soon as possible. It should accelerate the construction of new power plants and renewable energy. The timetable for the decommissioning of nuclear power plants need not be changed. But it should be adjusted depending on overall power supply and demand. This is probably the least risky and most pragmatic approach for the ruling party, for Taiwan society, and for the economy.

社論－正視限電的政治與經濟後果
2016年06月24日 04:10 主筆室

5月底瀕臨限電危機，行政院有意重啟核一廠1號機供電，在民進黨立委與反核團體強烈反對下已宣告擱置。依照氣象專家的說法，今年適逢反聖嬰年，酷暑高溫難免，限電風險很高。新政府顯然仍未想清楚一旦限電成真，可能帶來的嚴重政治與經濟後果。

新政府上台不到兩周，碰上提早報到的高溫天氣，電力備轉容量直線下降，5月31日甚至低到只有1.64%，幾乎就要宣告限電。近日氣溫飆高，備轉容量率又降到3～5%，幸而有機組完成歲修才免於限電。但以目前的態勢而言，無論如何台灣已步入限電風險，殆無疑義。行政院長林全很誠實，他說，「今年、明年是最辛苦的兩年」。

核一廠1號機如能加入發電，估計可增加1.5～1.7%的備轉容量，坦白說，也未必能完全消除風險，但至少降低限電機率，而民進黨立委與許多反核團體仍強力反對，顯然對限電帶來的後果無知。

外界原本就對民進黨的能源政策有疑慮，但蔡英文都信誓旦旦保證不缺電，經濟部長李世光上任後與工商界座談，也拍胸保證2年不缺電。言猶在耳，台灣馬上跌入限電危機中，一旦限電成真，新政府的承諾與社會信任度幾乎就要崩盤。民眾會聯想，一而再再而三的不缺電保證與承諾，短短幾個月就跳票，那新政府還有哪些承諾與保證註定要跳票？新政府一旦失去社會信任，其政治後果可能是未來施政寸步難行。

經濟方面的影響則更嚴重且深遠。如果限電發生，不論製造業或商業的生產、營業必受影響，短期而言，當然是折損了產出與經濟產值。不過，這還只是小問題，真正嚴重又屬「隱性」的影響是對民間投資的打擊。

企業投資必然考量與評估投資環境，電力供應充裕、穩定與否則是其中最重要的項目。台積電董事長張忠謀就說過：「台積電一分鐘都不能缺電」。豈止台積電不能缺電，不論是傳統產業或是科技產業，大部分製造業生產的製程是無法承受「隨機暫停」，若突然限電、停電，前面製程的半成品就要全毀，廠商蒙受損失，訂單與出貨時程也將延誤。

張忠謀去年底就曾公開表示對台灣未來電力供應的憂心，日前林全則透露包括台積電、谷歌等大企業，都準備要自蓋電廠；縱然企業表面上說對新政府解決問題的能力有信心，但某個角度而言，自蓋電廠其實就是對民進黨的能源政策投下不信任票，否則何需大費周章、花大筆錢蓋電廠？台積電與谷歌這種實力雄厚的大型企業，有財力與能力自蓋電廠，但其他多數企業絕無此能力，碰上缺電風險就只能暫停投資再觀望。

在全球景氣低迷、台灣又有經貿邊緣化之虞、兩岸關係也生變時，民間投資意願原本就低，再加上一個缺電風險，民間投資要好也難，更甭提吸引外資來台投資了。投資減少，當期經濟成長表現差事小，新政府期盼的創造就業、拉抬員工薪資，都將成鏡花水月一場空，這將真正重創台灣經濟的未來。

對那些堅持廢核、強烈反對重啟核一廠1號機的政客及民間團體而言，也同樣忽視了限電對他們的理念帶來的風險。在電力供應充裕時，表面上看到有超過半數民眾支持非核家園，但如限電讓民眾生活不便，甚至影響經濟與就業時，非核家園的支持度必然衰退。這點政務委員張景森說得最直白：「若這兩年一旦限電，民間反核的力量就會崩潰。」

至於民間監督電力供應，政府應慎思。外界指台電「藏電」，坦白說，可能性不高；但為釋疑，政府可讓資訊更公開、讓專業有公信力者去監督，但請千萬別再來那套「民間監督」的民粹。更何況列入民間監督小組名單中者，既有明確的特定立場、又乏專業，如此做只會搞垮台電士氣，電力問題更難解。

要避免發生限電，降低政治與經濟衝擊，防止民間非核家園支持度崩盤，我們建議應先讓核一廠1號機重新發電，紓解眼前困境；政府也應盡快強化電力調度能力、加快興建中的電廠與再生能源的推動。各核電廠的除役時間不必先變動，但要視整體電力供需情況而調整。這種作法對執政黨、台灣社會與經濟而言，應是風險最小、最務實的作法。