Power production is failing to keep pace with demand because of a ban on new nuclear plants and delays in completing projects already under way, says Jeffrey Bor, a fellow at the Chung-hua Institution for Economic Research, which advises the government.
"The chance of large-scale blackouts is quite high," he says. "Defense against missiles should be of lower importance because the chance of an attack is slim."
President Chen Shui-bian's government has ignored long-term economic planning because of his drive to secure Taiwan's formal independence from China, says a political scientist, Yang Tai-shuenn. Power supply disruptions may accelerate the exodus of Taiwanese manufacturers, who already fill more than 40 percent of their export orders through overseas factories.
Taiwan Power is counting on the nation's fourth nuclear plant to help prevent shortages. Approved in 1981, the station is only 63 percent complete. The project, in the northern city of Kungliao, probably will not open until 2011, Bor says.
Without Kungliao, which is designed to produce 6 percent of Taiwan's electricity, the island may face outages in 2010, say Bor and Liang Chi-yuan, a government adviser and economist at Academia Sinica, a state-funded research institute.
"Every walk of life will be affected," Liang says.
Taipower estimates that the island's reserve margin, the spare capacity available during peak times, will shrink to 8.5 percent in 2010 without Kungliao.
That is less backup than the state-run company needs to shut generators for maintenance, meaning one faulty unit could trigger blackouts, says Yang Feng-shuo, director of energy studies at the Taiwan Institute of Economic Research. Taipower generates about 75 percent of the island's power.
"The trend of the reserve margin falling is quite worrisome," Yang says. Clint Chou, a spokesman for Taipower, says at least one of Kungliao's two reactors will be operating by 2010, allowing the company to maintain a reserve margin of 12 percent.
"As long as it's above 10 percent, it'll be OK," Chou says.
The risk of blackouts may prompt manufacturers to leave Taiwan, says Niven Huang, secretary general of the Taiwan Business Council for Sustainable Development, whose 25 members include Taiwan Semiconductor Manufacturing, the world's biggest supplier of custom-made computer chips.
"Electricity outages disrupt operations and prompt companies to rethink investment locations," Huang says.
Eric Tang, vice president of Powerchip Semiconductor, Taiwan's biggest memory-chip maker, says he is not aware of the falling reserve margin.
"If there are power outages, we'll be worried," he says.
Taiwan must add 1,200 megawatts of generating capacity, equal to 4 percent of the island's production, each year to meet demand. A government panel this month recommended that a 1,600-megawatt coal-fired power station be mothballed because of pollution concerns.
Without new coal plants the island may see its backup capacity slip to almost zero by 2015, says Tu Yueh-yuan, Taipower's chief engineer.
"We'll be very nervous," she says. "A power system can't allow a situation like that."
Environmental concerns also triggered a 2001 decision to ban new nuclear plants. Reactors were not considered safe on an island that suffers an average of 200 earthquakes each year.
Finding a solution to Taiwan's dawning energy crisis is not a pressing issue for the government, says Yang, a professor of politics at Chinese Culture University in Taipei.
"Chen Shui-bian is wooing supporters by stirring up issues that may have a short-term benefit," Yang says. "His main strategy is to focus on the independence issue."
Y. L. Chen, secretary general at the Bureau of Energy, rejects the charge that Chen is ignoring energy issues. Conservation, renewable energy and increased power production by private companies will ensure adequate supplies, she says.
"There aren't expected to be power shortages," Chen says.
The government is pushing environmentally friendly technologies, paying as much as half the cost of building solar systems and offering tax-breaks for wind power projects.
By 2025, hydroelectric power and other forms of renewable energy may account for 17 percent of installed capacity, up from 12 percent now, the Ministry of Economic Affairs says.
Liang says the projects the government is promoting cannot provide stable supplies.
"Renewables can't make up for the loss of nuclear power," he says.