Economic Evaluation of Offshore Wind Investments in Taiwan: An Uncertainty Approach

Abstract

The offshore wind technology in Taiwan's market is in its early stages and has many uncertainties, despite its high growth potential. The emerging market is facing the challenge of establishing a cost-competitive offshore wind industry. This paper aims to evaluate offshore wind power investments in Taiwan using the probability-based Levelized Cost of Electricity (LCOE) model in order to investigate ways to overcome this challenge. To capture the project's uncertainties, a probabilistic approach and the Monte Carlo technique are utilized, and their effects on project evaluation are portrayed through the probability distribution of LCOE and sensitivity analysis. Additionally, a simulation based on a chronological approach is developed to directly investigate the probability density function of the capacity factor for a specific wind farm site. The study concludes that the proposed approach provides better insights into projects and performs better in project evaluation, especially for projects located in high-frequency wind areas.


Research paper


Keywords: Offshore Wind; Energy; Investment Evaluation; Uncertainty; Monte Carlo


Reference to this paper should be made as follows: Nguyen, T. H. N., Chang, C., & Chen, H. (2023). Economic Evaluation of Offshore Wind Investments in Taiwan: An Uncertainty Approach. Journal of Entrepreneurship, Business and Economics, 11(2), 1–28.

Published
Jul 4, 2023
How to Cite
NHUNG, Nguyen Thi Hong; CHANG, Chia-Hua; CHEN, Hsiao-Jung. Economic Evaluation of Offshore Wind Investments in Taiwan: An Uncertainty Approach. Journal of Entrepreneurship, Business and Economics, [S.l.], v. 11, n. 2, p. 1-28, july 2023. ISSN 2345-4695. Available at: <http://www.scientificia.com/index.php/JEBE/article/view/208>. Date accessed: 28 nov. 2023.
Section
Articles