Taiwan Energy Stocks Panorama: New Investment Opportunities Amid the Green Energy Wave

The Background of the Global Green Energy Transition Era

Clean energy is sparking a strong wave of transformation worldwide. According to the latest statistics from the International Energy Agency, in 2022, renewable energy accounted for nearly 30% of the global power system, an increase of 1.5 percentage points compared to the previous year. The driving forces behind this shift come from three aspects: significant reductions in the costs of solar and wind energy, increased policy support from developed countries, and a global consensus on sustainable development.

In this green energy wave, progress varies greatly across regions. Advanced European countries perform outstandingly, with Germany, the UK, and the Netherlands each exceeding 40% renewable energy share in their power systems. Australia and New Zealand follow closely, reaching levels between 31% and 41%. Although Asian developing countries are accelerating, China, Japan, and Thailand have renewable energy penetration rates of 32%, 22%, and 18%, respectively.

Development Potential of Taiwan’s Energy Stocks

In contrast, Taiwan’s energy transition journey has just begun. According to data from the Ministry of Economic Affairs’ Energy Bureau, in 2022, Taiwan’s renewable energy accounted for only 8.27% of the power system, far below the international average and major Asian countries. This figure reflects the reality that Taiwan’s energy structure remains highly dependent on traditional fuels, with coal and natural gas together making up 80.88%.

More notably, Taiwan imports 97.3% of its energy consumption, with only 2.7% produced domestically. Against the backdrop of unstable international situations and rising energy prices, developing local renewable energy has become an inevitable choice for energy security.

The government has explicitly set the goal of “Non-Nuclear Homeland by 2025,” meaning that in the next 2 to 3 years, the electricity generated by nuclear power must be supplemented by other energy sources. It is estimated that Taiwan’s renewable energy share in the power system could increase from the current 8% to about 15%, with growth potential multiple times higher.

Blueprint for Clean Energy Development and Market Opportunities

Taiwan has a concrete roadmap for renewable energy construction. By 2025, the target installed capacity for solar power is 20GW, offshore wind power is 5.6GW, supplemented by geothermal, small hydropower, and other renewable sources. Achieving this goal will drive growth across the entire new energy industry chain, including equipment manufacturing, engineering construction, operation, and maintenance.

With the progress toward the “15.1% renewable energy share by 2025” goal, related companies will experience sustained growth momentum. Whether investing in new energy facilities, upgrading grid infrastructure, or developing supporting technologies, there are enormous business opportunities.

Summary of Recommended Taiwanese Energy Stocks

Delta Electronics (2308): Leader in Energy Storage and Automotive Electronics

Delta Electronics is well known for its electronics and battery products, but its technological reserves in renewable energy are equally strong. Due to the high volatility of solar and wind power outputs, energy storage systems play a crucial role in regulation. Delta’s expertise in energy management and storage technology is a key component in promoting green electricity.

More notably, its rapid expansion in automotive electronics is attracting attention. 75% of the top 20 global automakers are Delta’s customers. As electric vehicle penetration continues to rise and industry certification demands increase, the revenue scale of its automotive electronics is expected to accelerate growth.

In the first half of 2023, Delta’s monthly revenue reached approximately NT$35 billion, an increase of about 8% year-on-year, setting a new high for the same period. Revenue data over the past three years show a clear acceleration trend: NT$28.26 billion in 2020, NT$31.47 billion in 2021, and NT$38.44 billion in 2022, with annual growth rates expanding each year.

Walsin Energy (6806): Integrated Solar and Wind Power Service Provider

Walsin Energy focuses on solar and wind development investments, offering comprehensive solutions from early assessment to completion warranty. After listing on the stock market in November 2022, the company’s first-year revenue was NT$4.3 billion, maintaining stable scale. In 2023, its performance trajectory improved significantly.

In April, revenue surged to NT$774 million, mainly benefiting from revenue recognition from Taipower’s offshore wind project phase two. This project is expected to gradually recognize revenue over the next two years, laying a foundation for profit growth. Monthly revenue data shows a positive trend since the beginning of the year.

Wanhua (1519): Dual Engines of Grid Upgrade and Charging Pile Development

Wanhua, as a long-term partner of Taipower, mainly supplies transformers and other grid equipment. In 2022, Taipower announced an investment of NT$564.5 billion to implement the “Strengthening Grid Resilience Construction Plan,” which will directly benefit equipment suppliers like Wanhua.

The company also leads Taiwan’s electric vehicle charging pile market, with a market share close to 20%. As EV penetration increases, demand for charging infrastructure rises sharply. In the first half of 2023, Wanhua’s revenue hit a new high, with NT$1.403 billion in June, up 50% year-on-year; second-quarter revenue was NT$3.102 billion, up 52%; and total revenue for the first half of the year was NT$4.643 billion, an increase of 35%.

Driven by US policies promoting manufacturing return and Southeast Asian economic development boosting demand for power equipment, Wanhua, as a major exporter of Taiwan’s heavy electrical industry, is expected to benefit. However, its stock price has already risen over 240% since the beginning of the year, so short-term correction risks should be watched.

China Steel (5483): Beneficiary of US Green Energy Policy Bonuses

The US Senate passed the “Inflation Reduction Act” in 2022, allocating USD 369 billion to support energy transition, making it the largest climate and energy investment in US history. According to the US Solar Industry Association’s forecast, this act will drive a 69% increase in solar installation capacity over 10 years.

As Taiwan’s leading solar energy company, China Steel will directly benefit from expanding US green energy demand. In 2022, its solar business revenue surpassed NT$10 billion, reaching NT$10.25 billion, an increase of 34.5%. Although facing cost pressures this year due to falling upstream silicon prices, this also provides potential for future rebounds.

Dual Considerations for Green Energy Stocks Investment

Investing in renewable energy stocks has obvious dual characteristics. On one hand, the enormous growth potential cannot be underestimated. The global energy structure transformation is still in its early stages, and the process of increasing renewable energy share from single digits to triple digits contains multiple times the investment opportunities. The rising ESG concept, government support policies, and continuous decline in green energy technology costs are all long-term positive factors.

On the other hand, risks and challenges must also be acknowledged. Renewable energy stocks tend to be more volatile than traditional power stocks, heavily influenced by policy changes and energy prices. Many green-focused companies are still in expansion phases, with relatively weaker performance and dividend stability. Additionally, market competition is becoming increasingly fierce, making stock selection more challenging.

Considering the low correlation between renewable energy industry and traditional industries, including these stocks in a portfolio can help diversify risks. However, due to the lack of related hedging tools, investors need to manage positions cautiously.

Investment Recommendations and Risk Alerts

Taiwan’s new energy transition has entered the fast lane. The government’s clear development blueprint, ample policy support, and increasing market demand create a favorable environment for green energy concept stocks. However, investors should recognize that this is a long-term track rather than a short-term hot spot.

For those planning to enter, focus on: 1) the company’s position in the industry chain and competitive advantages; 2) the sustainability and strength of policy support; 3) the progress of market penetration. Meanwhile, implement risk control measures, adjust positions according to your risk tolerance, and regularly review whether your investment logic remains valid.

The green energy wave is still rising, and Taiwan’s energy stock development story has just begun a new chapter.