Eating electric tigers may face soaring costs!
According to InterfaceNews, citing foreign media reports, Taiwan, China is considering raising the electricity price of TSMC up to 30%. According to Jiwei.com, Taiwan, China will raise the electricity price in April, and the industry is worried that it will impact large power users such as TSMC.
With the opening of the era of artificial intelligence and electric vehicles, the demand for electricity by humans is continuously increasing. The International Energy Agency (IEA) previously stated that global electricity demand will accelerate in the next three years. From now until 2026, electricity demand will increase by an average of 3.4% per year. According to the Uptime Institute in the United States, the proportion of artificial intelligence business in global data center electricity consumption will soar from 2% to 10% by 2025.
So, how much impact will this have on the power industry?
TSMC electricity prices will increase
Today, multiple media reports suggest that TSMC's electricity prices may be raised.
In fact, similar news flowed out last week. According to the news from Jiweinet, Taiwan, China will raise the electricity price in April, and the industry is worried about the impact on large power users such as TSMC. In this regard, Wang Meihua, an official of Taiwan, China's economic department, said on March 8 that the electricity price in Taiwan, China is still low compared with that in other regions.
Wang Meihua said that when there is an increasing amount of renewable energy around the world, using renewable energy for scheduling is also a good practice for a friendly environment on Earth. As for TSMC's electricity use, Wang Meihua said that TSMC's electricity use efficiency is still high 24 hours a day, not to mention that such fabs are exported after manufacturing. If compared with the cost of fabs in other regions, the price of electricity in Taiwan, China is still low.
It is reported that wafer foundries are a true "power black hole", and the reason for power consumption is firstly due to the introduction of high-end lithography equipment. Currently, ASM's EUV lithography machine requires 125 kilowatts of power input to maintain an output power of 250 watts; The second is that wafer manufacturing requires an ultra clean production environment, and the entire ultra clean room requires refrigeration and constant temperature to control stability at 22 ° C# 8451; This means that the normal operation of the ultra clean room will consume a large amount of electricity every day; Thirdly, heat treatment equipment and ion equipment are also needed to handle the high temperatures generated during chip production, and the power consumption involved in this part is extremely astonishing.
From TSMC's energy consumption perspective, the company's energy consumption continued to increase significantly from 2016 to 2022. In 2022, TSMC consumed nearly 22000 GWh of energy, with electricity being the most important source of energy.
A new report released by the United States on March 6th shows that after reviewing the expansion wave of factories by the world's four major semiconductor manufacturers in the United States, it was found that despite publicly promising to use 100% renewable energy throughout the country, the IT industry and federal and state government subsidy projects, as well as rapidly expanding facilities, will drive unprecedented new demand for traditional energy. The new semiconductor factories currently under construction by the four major semiconductor manufacturers - Intel, TSMC, Samsung, and Micron - are expected to generate approximately 2.1 GWh of new electricity demand, exceeding 200% of Seattle's annual electricity consumption. Intel and TSMC are building four new semiconductor factories in Arizona, expected to consume electricity equivalent to 260000 households, but have not signed renewable energy contracts to match this expansion.
Global electricity demand is accelerating growth
According to the latest report released by the IEA, driven by the booming development of emerging economies, artificial intelligence, cryptocurrencies, and data centers, electricity demand is expected to grow by an average of 3.4% per year from now until 2026.
According to The New Yorker magazine, OpenAI's popular chatbot ChatGPT may consume over 500000 kilowatt hours of electricity per day to respond to approximately 200 million requests from users. In contrast, American households use an average of about 29 kilowatt hours of electricity per day, which means that ChatGPT's daily electricity consumption is more than 17000 times that of households.
According to relevant data, the global data center market consumed 10 billion watts of electricity ten years ago, but now the level of 100 billion watts is very common. According to the Uptime Institute in the United States, the proportion of artificial intelligence business in global data center electricity consumption will soar from 2% to 10% by 2025.
If generative AI is further adopted, it may consume more power. In a paper, data scientist Alex de Fries from the Dutch National Bank estimates that by 2027, the entire artificial intelligence industry will consume 85 to 134 terawatt hours of electricity per year (1 terawatt hour=1 billion kilowatt hours).
Musk had predicted that in the next two years, there would be a transition from "silicon shortage" to "power shortage", which could hinder the development of artificial intelligence. In his view, power shortages could have serious consequences, just like the recent chip shortage hindering the technology and automotive industries.
China's electricity demand
The demand for electricity in our country is also continuously increasing. On the afternoon of March 6th, Zheng Zhajie, Director of the National Development and Reform Commission, stated at a press conference that since the beginning of the new year, the Chinese economy has continued to rebound and improve. The leading indicators such as physical quantity have grown rapidly. In the first two months, the national unified regulation power generation increased by 11.7% year-on-year, and industrial electricity consumption increased by 9.7%. The consumption of culture, tourism, catering, and other industries is strong. During the Spring Festival holiday, the number of domestic tourism trips in China increased by 34.3% year-on-year, with a comparable increase of 19% compared to the same period in 2019. In February, the expected production and operation activity index of manufacturing enterprises was 54.2%, and the expected non manufacturing business activity index was 57.7%, continuing to be in the expansion range. Based on comprehensive analysis, the first quarter is expected to achieve a good start.
In this context, the overall market's expectations for electricity are also high. From the market perspective of the past year, the power sector has continued to strengthen, with Yangtze Power continuing to hit new highs, and stocks such as Huaneng Hydropower and Inner Mongolia Huadian also continuously strengthening. On March 8th, the market unlocked the logic of photovoltaics and energy storage. This morning, Ningde Times and Sunshine Power saw another surge in prices.
According to multiple media reports from China Post Securities, canceling the consumption red line and allowing the market to allocate resources will become a trend for future development, and related policies are expected to be implemented within the year. In early January, the National Energy Administration issued a new version of the "Electricity Quality Management Measures", which proposed that if the electricity quality of a power plant does not meet the standards, it should cooperate with power grid enterprises to implement output control or off grid control. New energy power plants with strong volatility such as photovoltaics and wind power are the first to be affected, and the power grid is gradually promoting the legalization of "wind and solar power abandonment".
In terms of energy storage, the 10GWh energy storage bidding project in China was launched in February, with a year-on-year increase of 223% and 96%, respectively. Despite the Spring Festival holiday in February, the energy storage bidding market still maintained a high momentum, with a nearly doubling growth compared to the previous month. At the same time, "new energy storage" was included in the government's work report for the first time, and domestic energy storage expectations continued to improve. Huaan Securities stated that looking ahead to 2024, competitive allocation of guaranteed grid connected projects+an increase in the proportion of market-oriented grid connected projects+some existing projects beginning to require storage, will support the high growth of domestic energy storage scale. The United States is expected to enter the channel of interest rate reduction, coupled with the easing of grid connection policies, and the gradual implementation of delayed projects, with a focus on PCS, transformers, and temperature control.
