The Rise of Taiwan's Green Energy Sector: An Overview of Investment in New Energy Concept Stocks

Taiwan’s new energy concept stocks are accelerating their rise, becoming a key focus for A-share and Hong Kong investors. As an important part of the global supply chain, Taiwan has deep layouts in renewable energy, electric vehicle industries, and related fields, with related concept stocks demonstrating strong growth potential. Behind this trend are both the global energy transition trend and Taiwan’s intrinsic demand for energy structure optimization.

Urgency and Opportunities in Taiwan’s Energy Transition

According to data from the International Energy Agency, in 2022, renewable energy accounted for nearly 30% of the global power system, a 1.5% increase from the previous year. However, Taiwan’s renewable energy share is only 8%, far below neighboring Asian regions and developed European countries. This gap reflects Taiwan’s energy structure fragility—imported energy makes up 97.3% of total consumption, with domestic energy only 2.7%.

Faced with international instability and ongoing fluctuations in energy prices, the Taiwanese government has set the “2025 Non-Nuclear Homeland” goal, planning to fully phase out nuclear power within the next three years. This means the share of renewable energy in Taiwan’s overall power generation needs to rapidly increase from 8.27% to about 15.1%—a doubling growth opportunity.

The government has clarified its development roadmap: by 2025, solar photovoltaic capacity should reach 20GW, and offshore wind capacity should reach 5.6GW. These policy signals open up imagination space for new energy concept stocks.

Core Investment Logic of New Energy Concept Stocks

Taiwan’s new energy concept stocks mainly fall into two categories: one is emerging companies focused on pure green energy, with strong performance growth but higher volatility; the other is traditional power companies shifting toward renewable energy, with solid fundamentals but a relatively small proportion of new business.

The key to investing in this sector is understanding the systemic demand for energy transition—not only on the power generation side with solar and wind, but also on the transmission side with grid upgrades, energy storage systems, and on the application side with the full electric vehicle industry chain.

1. Delta Electronics (2308): Dual Engines of Energy Storage and Automotive Electronics

Many investors are familiar with Delta Electronics’ electronic products, but its technological advantages in renewable energy are equally noteworthy. Solar and wind power generation outputs are unstable, requiring energy storage systems for regulation—this is Delta’s core competitive advantage.

Another growth curve comes from automotive electronics. Among the top 20 global automakers, 75% are Delta’s clients. As electric vehicle penetration increases and industry certification thresholds rise, Delta’s automotive electronics business is expected to grow significantly.

The company’s revenue in June 2023 was 34.825 billion yuan, an 8% annual growth, reaching a new high for the same period. Over the past three years, revenue has shown accelerating growth—2020: 28.26 billion yuan, 2021: 31.47 billion yuan, 2022: 38.44 billion yuan, with growth rates of 5.4%, 11.35%, and 22.17%, respectively. This acceleration warrants attention.

2. Senwei Energy (6806): Growth Catalyst in Wind Power Projects

Senwei Energy was listed in November 2022, focusing on solar photovoltaic and wind power development, providing one-stop engineering and operation services. Its revenue in 2022 was 4.301 billion yuan, relatively flat. But after entering 2023, the situation has improved significantly.

In April, monthly revenue surged to 774 million yuan, mainly due to the recognition of income from the second phase of Taipower’s offshore wind project. As this project’s revenue is gradually recognized over the next two years, the company’s profit growth space is substantial. This is a typical “wait for performance release” investment opportunity.

3. Huacheng (1519): Beneficiary of Grid Upgrades and Charging Ecosystem

As a long-term partner of Taipower, Huacheng supplies core products like transformers. In September 2022, Taipower launched a 10-year “Enhanced Grid Resilience Construction Plan” with an investment of up to 564.5 billion yuan. This massive grid upgrade project will directly boost Huacheng’s performance.

At the same time, Huacheng is also a leader in Taiwan’s electric vehicle charging pile industry, with a market share close to 20%. As electric vehicles become more popular, demand for charging piles is exploding. In the first half of the year, the company’s revenue was 4.643 billion yuan, a 34.96% increase year-on-year, both hitting record highs for the same period.

It should be noted that Huacheng’s stock price has risen 242.56% since the beginning of the year, with short-term correction pressure. Savvy investors might wait for a better price to re-enter.

4. Motech (5483): Direct Beneficiary of US Energy Legislation

The US Senate passed the Inflation Reduction Act in August 2022, investing 369 billion USD into energy transition. The US Solar Energy Industry Association predicts that this law will increase solar installation capacity by 69% over the next 10 years.

As Taiwan’s leading solar company, Motech will inevitably benefit from this policy dividend. In 2022, its solar business revenue broke through the 10 billion yuan mark, reaching 10.25 billion yuan, a 34.5% increase.

Currently, prices for silicon materials, wafers, and batteries are under pressure, posing short-term challenges for revenue. But in the long term, upstream raw material prices will rebound, and investors should closely monitor cost-side changes, entering when prices bottom out and rebound.

Risks and Rewards of Investing in New Energy Concept Stocks

Investing in Taiwan’s new energy concept stocks requires a clear understanding of their dual nature. On one hand, this sector benefits from the global ESG wave, strong government support, and explosive demand growth; on the other hand, stock price volatility is high, performance stability is poor, and industry competition is intensifying.

Pure green energy companies tend to be younger and smaller, with more dramatic performance fluctuations. Investing in such targets requires good risk management, controlling position sizes and pace. While traditional power companies have solid fundamentals, their proportion of new energy business is small, limiting growth potential.

The key is recognizing the long-term nature of the new energy industry—this is a century-long project, not suitable for short-term trading. Investors should set a 3-5 year layout cycle, using dollar-cost averaging or phased building to smooth risks.

Also, be alert to policy change risks. Adjustments in energy policies and subsidy levels can impact stock prices. Industry competition is also intensifying; whether companies can maintain technological leadership and cost advantages will determine their long-term value.

Conclusion

The investment opportunities in Taiwan’s new energy concept stocks are real, but require investors to have sufficient patience and risk tolerance. Choosing quality targets, controlling positions, and preparing for the long term are essential to gain ideal returns amid this wave of energy transition. Market opportunities are fleeting, but for strategic investors, the timing window for deployment is opening.