As Taiwan accelerates its energy transition, public debate has focused heavily on how fast solar panels can be installed or how many offshore wind turbines can be deployed.
These discussions are important — but they increasingly miss the deeper challenge ahead. Taiwan’s energy problem is no longer about adding more renewable capacity. It is about how the power system functions once renewables dominate.
Solar and wind have transformed Taiwan’s electricity mix, but they also expose a structural weakness: intermittency. Power generation fluctuates by hour, season, and weather.
As renewable penetration rises, the grid requires more backup capacity, higher system reserves, and costly peak balancing that mostly still relies on natural gas. This is where geothermal power becomes strategically relevant.
Geothermal is not simply “another green energy option.” It is one of the few low-carbon sources that can deliver stable, round-the-clock electricity.
Quiet stabilizer
Its value lies less in headline cost comparisons and more in system reliability. For a power system increasingly shaped by variable renewables, geothermal functions as a quiet stabilizer. It reduces dependence on gas-fired plants and strengthens resilience during low-sun or low-wind periods.
Taiwan is not starting from zero. The country sits on a tectonically active zone, with geothermal resources identified in Yilan, Hualien, Taitung, and northern Taiwan.
The Chingshui geothermal plant in Yilan, operating since 2021, demonstrates that geothermal power can work under Taiwan’s environmental and regulatory conditions. Yet progress since then has been slow. The reason is not geology or engineering — it is policy design.
Geothermal development differs fundamentally from solar or wind. The main risks come before electricity is ever produced: underground exploration, drilling, and reservoir testing.
These early stages are capital-intensive and uncertain. A well may fail to deliver sufficient heat or flow. Reinjection may prove difficult. These risks emerge only after significant money has already been spent.
Risk and reward
Here lies the core policy problem. Banks will not finance unproven underground resources. Equity investors demand very high returns to compensate for geological uncertainty.
The result is a financing gap at the most critical stage of development. Without mechanisms to share early-stage risk, even promising geothermal sites struggle to move forward.
Taiwan has taken meaningful steps to address regulatory uncertainty. Amendments to the Renewable Energy Development Act and new geothermal permitting rules have clarified legal procedures.
Feed-in tariffs provide price certainty once a project is built. However, these tools address the back end of development. They do little to solve the front-end risk that stops projects from reaching construction in the first place.
If geothermal is to move beyond isolated demonstration projects, policy priorities must shift. Rather than raising subsidies, Taiwan should focus on reducing transaction costs and reallocating risk.
Supply and demand
International experience offers clear lessons. Governments do not need to replace private capital, but they do need to de-risk exploration. This can be done through targeted exploration grants, drilling insurance schemes, or milestone-based public co-financing that absorbs part of the downside if wells fail.
Another underused lever is demand. Corporate buyers increasingly seek 24/7 low-carbon electricity, not just daytime solar certificates.
The recent geothermal power purchase agreement between Google and an international developer in Taiwan signals that private demand exists. Long-term, creditworthy corporate contracts can significantly improve project bankability.
Policy should actively support such arrangements through clear grid access rules and predictable permitting timelines. Equally important is scale.
Taiwan’s geothermal resources are geographically dispersed, making single mega-projects unlikely. Instead, development should be regional and sequential.
Tech ready
Concentrating multiple projects in the same area allows drilling expertise, maintenance practices, and supply chains to mature. This is how costs fall — not through one-off projects, but through repetition.
Finally, geothermal must be evaluated differently from other renewables. If policy frameworks continue to judge it solely by cost per kilowatt-hour, geothermal will always appear expensive.
Its true contribution lies in capacity reliability, grid stability, and reduced reliance on fossil-fuel backup. As renewable penetration increases, these attributes become more, not less, valuable.
Taiwan’s energy transition is entering a new phase. The question is no longer how fast renewables can grow, but how the system holds together when they do.
Geothermal will not dominate Taiwan’s energy mix. But without it, or something like it, the system will remain more fragile and more gas-dependent than necessary.
The technology is ready. The resources exist. What remains is a policy choice: whether Taiwan is willing to design institutions that recognize where the real risks lie and to address them directly.
