The influence of sea level rise on tidal power output and tidal energy dissipation is investigated by means of numerical simulations. The hydrodynamics in the Taiwan Strait were simulated using a new unstructured-grid, depth-averaged numerical model. Eight tidal constituents (M2, S2, N2, K2, K1, O1, P1, and Q1) were used to specify the open boundary conditions to drive the model. The observed data, including the time-series water level and tidal current, were used to validate the numerical model. The model results were in reasonable agreement with the measured data. The values of root mean square error (RMSE) for water level and tidal current are in the ranges of 0.06–0.19 m and 0.12–0.20 m/s, respectively. Moreover, the modeling amplitudes for eight tidal constituents determined using the present model were also similar to those determined using the regional inverse tidal model. The model predicted results indicated that the Penghu Channel is an appropriate location for deploying a tidal power plant because of its deep water (>100 m) and fast tidal current (>1.5 m/s). Furthermore, four sea level rise (SLR) scenarios were adopted to investigate the influence of SLR on tidal energy dissipation and tidal power output in the Penghu Channel. The simulation results showed that the total tidal energy dissipation was 11.23 GW for the baseline condition and increased corresponding to different SLR scenarios. The mean tidal power output was 42.15 MW when the additional turbine friction coefficient was set to 0.225. The extractable tidal energy increased by 1.62 MW, 2.09 MW, 2.63 MW, and 3.52 MW for SLR values of 0.87 m, 1.11 m, 1.40 m, and 1.90 m, respectively. We found that sea level rise increased tidal energy dissipation and energy output in the Penghu Channel.