Factor conditions

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Nevertheless the Taiwanese feed-in scheme represents the best option of the 3 possible subsidy methods from an investor point of view. With guaranteed fixed feed-in rates, potential investors can easily calculate their expected revenues, which decreases the risk and makes an investment more attractive. This information will help in the following chapter to calculate the expected revenue for the profitability analysis.

When comparing the paid subsidies with the current electricity prices, it can be discovered that the subsidies are in some cases higher than the power prices for consumers. This means that with every unit of electricity produced by an offshore wind farm, the state owned power utility company is making a loss. If the Taiwanese government really wants to increase the share of renewable energies, an increase of the electricity prices will be unavoidable. That means, with an increase of the share of renewable energies, including offshore wind power, an increase of Taiwanese power prices can be expected.

3.3. Factor conditions

Besides high demand and subsidies, wind conditions are an important factor for a profitable operation of wind farms. Wind power density maps can be used to evaluate the available wind power. The world’s first offshore wind farms were built in Europe and Europe is still the world leader in offshore wind power. Currently the European North Sea and Baltic Sea are the areas with the world’s most offshore wind farms. To evaluate the available wind in Taiwan on its sufficiency to operate offshore wind farm, the wind conditions in Europe will be used as benchmark.

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Table 3: Comparison of wind conditions in Europe and Taiwan

Europe Taiwan

Wind power density is a useful figure to evaluate the wind resources at a potential site. The higher the wind power density the higher is the potential energy output at a potential wind farm site. The wind power density, measured in watts per square meter, shows how much wind energy is available for conversation by a wind turbine at the site. Wind power density maps give an approximate value for the wind power density for a whole region. When comparing the wind power density maps of Europe and Taiwan, it can be discovered that both regions have areas with high wind power density of 650 watts per square meter or above. In Europe, those areas can be found in the North Sea, Baltic Sea, Irish Sea, Celtic Sea and North Atlantic Ocean. The Baltic Sea, North Sea and Irish Sea are also the areas, where most of the European offshore wind parks are located. In Taiwan areas with a high wind power density are especially in the Taiwan Strait between Mainland China and Taiwan Island. Those areas have wind power

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densities, which are similar to the ones at the European offshore wind farm sites. In addition to that, those areas with high wind power density are very close to the west coast, which makes them very eligible for offshore wind farms.

3.3.2. Depth of water

Besides the available wind, also the depth of water is an important factor which determines the feasibility of offshore wind farms. As mentioned in the previous chapter, only foundations for a depth of water of up to 50 meters are in mature stage at the moment. Therefore, offshore wind projects will be limited to a depth of water of up to 50 meters until foundations for deeper waters are matured.

The following graph shows the depth of water on Taiwan’s coast. While water at the eastern coast gets deep very near to the shore, there is a very big area with a water deepness of less than 50 meters in the Taiwan Strait on the coast between Taichung and Miaoli.

Figure 12: Water depth map of Taiwan²¹

The Taiwanese Industrial Technology Research Institute estimated about 57 GW potential

21 (Hu, 2015)

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capacity for offshore wind power in an area with a depth of water up to 50m, from which are 6.2 GW feasible. Compared to the worldwide installed capacity in 2015 of about 12 GW, the potential capacity for Taiwan is very big and an investment in the Taiwanese offshore wind market seems to be a highly extendable business.

3.3.3. Country specific risks of natural disasters

Compared to Europe, in Taiwan wind turbines face additional risks, particular through earthquakes and typhoons. Taiwan is located in a very seismically active zone, the Pacific Ring of Fire. This also means additional requirements for a potential wind park. The effect on foundations and turbines need to be assessed before realization of a projects. Eventually different or adjusted turbines and foundations need to be used in order to assure a smooth operation over the whole lifecycle of the offshore wind farm.

The same also applies to the risk of typhoons. Every year between July and October, Taiwan is hit by several strong typhoons. These tropical storms can reach wind speeds of more than 200 km/h particularly on the ocean, where the offshore wind parks will be build. Foundations, turbines and blades need to build robust enough to withstand such strong winds in order to avoid damages.

In order to test feasibility of offshore wind farms in Taiwan, there are 3 test offshore wind farms currently under construction.²² These wind farms will also show, how different turbine models sustain earthquakes and typhoons. It is to expect that changes to the wind turbines will increase turbines costs. On the other hand, those costs might not be significant, since common

22 (Hu, 2015)

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offshore wind turbines already withstand wind speeds of around 250km/h²³.