TSMC has decided to buy all electricity from an offshore wind project in the Taiwan Strait for 30 years. With power use rising quickly due to a surge in demand for artificial intelligence (AI) semiconductors, the move is seen as a strategy to secure stable power while expanding renewable energy at the same time.

On May 6 (local time), IT outlet Ars Technica reported that TSMC signed a power purchase agreement (PPA) for Taiwan’s Hai Long offshore wind project with Canadian power company Northland Power. The contract covers 100 percent of electricity generated by three offshore wind farms off Taiwan’s central and western coast, with capacity exceeding 1 gigawatt (GW).

Once completed, the Hai Long project will be able to supply enough electricity for more than 1 million households in Taiwan. The wind farms began supplying power from 2025 and are scheduled to reach full operation in 2027.

The agreement carries meaning beyond a simple green investment. That is because TSMC’s power consumption is surging as it expands AI semiconductor production, making stable energy procurement a key task.

The International Energy Agency (IEA) said TSMC’s electricity use in 2023 reached about 10 percent of Taiwan’s total power consumption. An S&P Global analysis cited by Data Center Dynamics raised the possibility that the share could expand to about a quarter of Taiwan’s total power use by 2030.

Taiwan’s government is also on edge about energy security. It is because instability in energy supply chains has grown due to recent geopolitical conflicts in the Middle East, highlighting Taiwan’s vulnerability given its heavy reliance on imported fuel.

In particular, after facilities were damaged by an Iranian drone attack in March, Qatar halted natural gas production, and Taiwan was reported to have lost about one third of its usual liquefied natural gas (LNG) supply. Taiwan currently relies on natural gas generation for about half of its total electricity, and its fuel stockpiles typically amount to only about 2 weeks.

Taiwan’s government is using alternative supply lines, including Australia and the United States, to prevent a short-term power shortage. At a recent energy forum, a vice minister of Taiwan’s Ministry of Economic Affairs said it had secured enough oil and gas volumes to operate normally until at least August, and as late as September.

Against this backdrop, Taiwan is speeding up efforts to reshape its energy mix by reviewing renewable energy and restarting nuclear power plants at the same time. The Global Taiwan Institute in Washington said Taiwan relies on imported fossil fuels for about 97 percent of its total energy demand, including electricity, transport and heating.

Expanding offshore wind is part of the same push. Taiwan’s government is pursuing a plan to develop a total of 15 GW of offshore wind capacity by 2035. TSMC has also set targets to raise the share of renewable energy use across its global sites to 60 percent by 2030 and 100 percent by 2040.

TSMC has already been actively securing large-scale renewable energy. In 2020, it signed an agreement to buy power from a 920 megawatt (MW) offshore wind project with Denmark’s Orsted, and in 2021 it also signed an onshore and offshore wind development deal of more than 1 GW with Germany’s WPD.

Industry watchers see TSMC’s power procurement strategy as becoming a factor that affects Taiwan’s broader industrial policy and energy security beyond the company level. As AI chip production expands, whether it can build a stable power supply chain is emerging as a key task for the future competitiveness of Taiwan’s semiconductor industry.