Growing concerns surrounding availability of adequate sustainable power sources have prompted the Taiwanese government to impose a 5 MW cap on new data center projects in the northern region of the country. Taipower, the state-owned power company, has also recommended that new data center developments should take place where there are adequate renewable energy sources, suggesting the central and southern regions.
This is significant given how a bulk of the data center facilities owned and operated by some of the biggest national and international players in Taiwan are located in northern data center hubs, Taipei being the largest data center market in the country.
Mordor Intelligence forecasts substantial growth for Taiwan’s data center market. The market is projected to expand from 213.8 MW in 2024 to 304.2 MW by 2029, reflecting a CAGR of 7.31%. The market is moderately consolidated with the top five players, including Chief Telecom, Chunghwa Telecom, Far EasTone Telecommunications, Taiwan Mobile, and Telstra Corporation, collectively holding a 60.48% market share. These companies are predominantly situated in Taipei, located in Northern Taiwan.
Reasons behind the 5 MW cap
According to Taipower, imposing a 5 MW cap on new data center projects aims to reduce the strain on the northern power grid while still accommodating the growing demand for data center capacity. Taipower has justified the cap by citing the need to balance the energy demands of data centers with the power needs of residential consumers and other industries.
In the official statement, Taipower said, “5MW is used as the standard because such power can supply more than 2,000 residential households, and the supercomputer power consumption required for AI computing and research and development in general enterprises and technologies usually does not exceed 5MW, so 5MW is set as the standard.”
The company has also highlighted the importance of ensuring a stable power supply for the entire population. However, as this cap may not be viewed as a business-friendly decision, Taipower has pointed to similar measures adopted by other countries: “Singapore, South Korea, the European Union, and other places have also adopted similar measures. These countries are not due to a lack of power, but to be effective.”
According to Taipower, the restrictions imposed on large-scale data center projects are aimed at managing their energy consumption and impact on the power grid.