What are the energy stocks in Taiwan? A complete guide to investing in the green energy industry

Why Should You Pay Attention to Taiwan’s New Energy Concept Stocks?

The wave of global energy transition is sweeping in, and Taiwan is standing at this historic turning point. According to data from the International Energy Agency (IEA), in 2022, the share of renewable energy in the global power system approached 30%, an increase of 1.5 percentage points from the previous year. Interestingly, Taiwan’s renewable energy proportion is only 8%, far below China’s 32%, Germany’s 44%, and even behind Thailand.

In other words, what potential do Taiwan’s energy stocks have? This gap is the potential.

According to statistics from the Energy Bureau of the Ministry of Economic Affairs, in 2022, coal and natural gas accounted for 80.88% of Taiwan’s total power generation, with renewable energy contributing only 8.27%. However, the government has set the “2025 Non-Nuclear Homeland” goal, which means that the 8.24% share of nuclear energy must be replaced by other energy sources, and renewable energy must at least double. Over the next three years, there is huge room for expansion in this sector.

Why is Taiwan eager to develop new energy?

Ultimately, it’s about energy security. Taiwan imports 97.3% of its energy consumption, with only 2.7% domestically produced. Against the backdrop of frequent international tensions and the ongoing Russia-Ukraine conflict, energy prices have become volatile. Developing renewable energy from a strategic perspective is not just an environmental issue but also crucial for the stability of the entire economy.

The government’s development blueprint is also very clear: by 2025, solar photovoltaic capacity will reach 20GW, offshore wind capacity will reach 5.6GW, and renewable energy will account for 15.1% of the national power generation. With clear timelines and numerical targets, this provides real order guarantees for related industry chain companies.

Which Taiwan new energy concept stocks are worth buying?

Delta Electronics (2308): A Green Energy Player in the Electronics Giant

Many people think of Delta Electronics only in terms of electronics products and batteries, but in fact, it has enormous potential in renewable energy technology applications. Since solar and wind power outputs are unstable, strong energy storage systems are needed for regulation; otherwise, promoting green electricity remains a theoretical goal. Delta Electronics has core competitiveness in this area.

Additionally, its automotive electronics products have already taken shape. Among the top 20 global automakers, 75% are its customers. As electric vehicle penetration increases, the revenue space for Delta’s automotive business is significant.

Performance data makes this clear: in July 2023, it announced a June revenue of NT$34.825 billion, an 8% year-on-year growth, reaching a record high for the same period. Revenue has accelerated over the past three years—2020: NT$28.26 billion; 2021: NT$31.47 billion (11.35% growth); 2022: NT$38.44 billion (22.17% growth). This growth trend is quite promising.

Senvion Energy (6806): A One-Stop Service Provider for Solar and Wind Power

Senvion Energy focuses on solar, wind, and new energy investment development, offering integrated services from site assessment to completion warranty. It was listed in November 2022, with revenue of NT$4.301 billion that year. Although it slightly declined by 0.77% from NT$4.334 billion in 2021, performance improved significantly in 2023.

The key growth driver is Taiwan Power Company’s offshore wind phase II project. In April, monthly revenue surged to NT$774 million, benefiting from revenue recognition of this major project. As revenue from this project will be gradually recognized over the next two years, the company expects profits to grow substantially. Growth driven by such projects is often more certain.

Huasheng (1519): Dual Beneficiary of Grid Upgrades and Charging Stations

Huasheng is a long-term partner of Taiwan Power Company, supplying key products like transformers. In September 2022, Taiwan Power announced a 10-year “Enhanced Grid Resilience Construction Plan” with an investment of NT$564.5 billion to comprehensively improve grid disaster prevention capabilities. As a major supplier, Huasheng will undoubtedly benefit from this large-scale upgrade.

Moreover, Huasheng is also a leader in Taiwan’s electric vehicle charging station industry, with nearly 20% market share. As EV penetration continues to rise, demand for charging stations is soaring. In June, revenue reached NT$1.403 billion, up 50.15% year-on-year; second-quarter revenue was NT$3.102 billion, up 51.72%; first-half revenue was NT$4.643 billion, up 34.96%, all reaching new highs for the same period.

However, it’s important to note that Huasheng’s stock price has already risen by 242.56% since the beginning of the year, which may lead to short-term correction pressure. Investors might consider waiting for a better entry point.

Motech Industries (5483): The Big Winner of the US Green Energy Act

The US Inflation Reduction Act passed by the Senate in August 2022 allocated US$369 billion to support energy transition, representing the largest investment in US history on energy and climate issues. The US Solar Energy Industry Association predicts that this act will increase solar capacity by 69% over the next decade.

As a major Taiwanese solar manufacturer, Motech Industries will naturally benefit greatly. In 2022, solar installation grew rapidly, and Motech’s solar business revenue broke the billion-dollar mark, reaching NT$10.25 billion, a 34.5% increase. However, this year, prices for silicon materials, wafers, and cells have been affected by upstream raw material price declines, impacting revenue. Investors should closely monitor upstream raw material prices and consider positioning when prices rebound.

Opportunities and Risks of Investing in Taiwan Energy Stocks

Opportunities:

• ESG Concept Benefits: Renewable energy aligns with sustainable development trends and may be included in ESG-themed funds
• Huge Growth Potential: Global demand for renewable energy continues to increase, offering substantial return potential
• Government Policy Support: Many governments provide tax incentives, subsidies, and other support to foster industry growth
• Portfolio Diversification: Renewable energy has low correlation with other sectors, reducing overall investment risk

Risks:

• High Stock Price Volatility: Affected by policy changes and energy price fluctuations, stock prices can be highly volatile
• Unstable Performance and Dividends: Most green energy companies are in expansion phases, with less stable earnings and dividends
• Difficult Stock Selection: The industry has entered a highly competitive stage, requiring careful screening of potential companies
• Lack of Hedging Tools: Emerging sectors lack sufficient options like options for hedging

Final Words

Which Taiwan energy stocks are worth paying attention to? Not just the few mentioned above. The entire renewable energy sector is on the verge of explosion, but this also means risks and opportunities coexist.

Investors need to understand that the new energy industry is a long-term project and should not adopt a short-term trading mindset. Companies focused solely on green energy are relatively young, with often volatile performance, so risk management is essential. Also, keep a close eye on government policies, international energy prices, and upstream raw material costs, as these factors will directly impact stock performance.

In this era of energy transition, those who can grasp industry cycles and individual stock opportunities will be able to benefit from the new wave of wealth redistribution. But the prerequisite is sufficient knowledge and risk awareness.