Impact of government subsidies on economic feasibility of offshore wind system: Implications for Taiwan energy policies

Abstract

This paper proposes an approach to analyze the economic feasibility of offshore wind energy under influences of government financial subsidies, dynamic weather conditions (including typhoon), taxation, expectation of investor, optimal maintenance schedule, generated electricity under real weather conditions, and benefits from reduction of CO2 emission. Economic criteria are calculated and used to assess efficiency of the government financial subsidies. This paper further proposes more appropriate subsidies for the government in term of satisfying both of investor’s expectation and the government’s target. In the case of Taiwan, government has been currently adopting Feed-in-tariff (FIT) subsidy and offering subsidy on capital cost to promote the development of offshore wind system. However, the currently applied subsidy on capital cost is not attractive enough for the investors and the current FIT subsidy is applied equally for all regions of Taiwan regardless the distinct conditions of each region. This paper proposes a more appropriate subsidy for capital cost, and suggests establishing regional FIT subsidy to subsidize differently for different regions. The results indicate that the proposed subsidy for capital cost and the proposed regional FIT subsidy are more appropriate to promote the expansion of offshore wind system.