IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v15y2011i5p2185-2198.html
   My bibliography  Save this article

Enhancing renewable and sustainable energy development based on an options-based policy evaluation framework: Case study of wind energy technology in Taiwan

Author

Listed:
  • Lee, Shun-Chung
  • Shih, Li-Hsing

Abstract

Global warming and climate change have shifted the focus of industrial development towards low-carbon renewable energy (RE), as evidence by global efforts to develop RE-based sustainable energy policies. However, the generally cost-ineffective nature of RE investments explains continued governmental subsidies and draft assistance measures to encourage related industrial development, reduce research and development (R&D) costs, and increase innovativeness. Besides measures to accelerate supply and reduced demand for energy, sustainable energy policies must enact thoroughly planned legal and regulatory mechanisms. Notable examples of establishing a legal basis for a low-carbon society in Taiwan include the Energy Management Act, Renewable Energy Development Bill, Greenhouse Gas Reduction Act (Draft), and Energy Tax Act (Draft). However, such legislative efforts occasionally conflict or compete with each other, warranting further integration. Additionally, RE technologies are characterized by high R&D costs, long-term planning, and high investment risks. Therefore, based on global trends in wind power development and related policy planning, this study analyzes the feasibility of implementing management strategies in the development process and the correlations between such strategies. Additionally, the achievements, polices, functions, mechanisms, promotion measures, and future plans for related renewable and sustainable energy laws in Taiwan is thoroughly reviewed. An options-based policy evaluation framework is also constructed based on governmental administrative considerations. Moreover, the characteristics of options that lead to unforeseen circumstances during the planning of RE development policies are discussed, allowing us to derive real-time response measures with a decision-making value. Results of this study provide a valuable reference for governmental efforts to evaluate the merits and limitations of related policies concisely, ultimately facilitating the formulation of RE development policies.

Suggested Citation

  • Lee, Shun-Chung & Shih, Li-Hsing, 2011. "Enhancing renewable and sustainable energy development based on an options-based policy evaluation framework: Case study of wind energy technology in Taiwan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(5), pages 2185-2198, June.
  • Handle: RePEc:eee:rensus:v:15:y:2011:i:5:p:2185-2198
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364-0321(11)00026-8
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Venetsanos, Konstantinos & Angelopoulou, Penelope & Tsoutsos, Theocharis, 2002. "Renewable energy sources project appraisal under uncertainty: the case of wind energy exploitation within a changing energy market environment," Energy Policy, Elsevier, vol. 30(4), pages 293-307, March.
    2. Kumbaroglu, Gürkan & Madlener, Reinhard & Demirel, Mustafa, 2008. "A real options evaluation model for the diffusion prospects of new renewable power generation technologies," Energy Economics, Elsevier, vol. 30(4), pages 1882-1908, July.
    3. Chen, Falin & Lu, Shyi-Min & Chang, Yi-Lin, 2007. "Renewable energy in Taiwan: Its developing status and strategy," Energy, Elsevier, vol. 32(9), pages 1634-1646.
    4. Davis, Graham A. & Owens, Brandon, 2003. "Optimizing the level of renewable electric R&D expenditures using real options analysis," Energy Policy, Elsevier, vol. 31(15), pages 1589-1608, December.
    5. Saidur, R. & Islam, M.R. & Rahim, N.A. & Solangi, K.H., 2010. "A review on global wind energy policy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(7), pages 1744-1762, September.
    6. Wang, Qiang, 2010. "Effective policies for renewable energy--the example of China's wind power--lessons for China's photovoltaic power," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(2), pages 702-712, February.
    7. -, 1978. "Normas para preparar trabajos de investigacion," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 20, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. Chen, Falin & Lu, Shyi-Min & Wang, Eric & Tseng, Kuo-Tung, 2010. "Renewable energy in Taiwan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(7), pages 2029-2038, September.
    9. Kjaerland, Frode, 2007. "A real option analysis of investments in hydropower--The case of Norway," Energy Policy, Elsevier, vol. 35(11), pages 5901-5908, November.
    10. Ku, Se-Ju & Yoo, Seung-Hoon, 2010. "Willingness to pay for renewable energy investment in Korea: A choice experiment study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(8), pages 2196-2201, October.
    11. Siddiqui, Afzal S. & Marnay, Chris & Wiser, Ryan H., 2007. "Real options valuation of US federal renewable energy research, development, demonstration, and deployment," Energy Policy, Elsevier, vol. 35(1), pages 265-279, January.
    12. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    13. Liou, Hwa Meei, 2010. "Policies and legislation driving Taiwan's development of renewable energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(7), pages 1763-1781, September.
    14. Chen, Falin & Lu, Shyi-Min & Tseng, Kuo-Tung & Lee, Si-Chen & Wang, Eric, 2010. "Assessment of renewable energy reserves in Taiwan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(9), pages 2511-2528, December.
    15. Hwang, Jenn Jiang, 2010. "Promotional policy for renewable energy development in Taiwan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(3), pages 1079-1087, April.
    16. Liou, Hwa Meei, 2010. "Overview of the photovoltaic technology status and perspective in Taiwan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(4), pages 1202-1215, May.
    17. Wu, J.H. & Huang, Y.H., 2006. "Renewable energy perspectives and support mechanisms in Taiwan," Renewable Energy, Elsevier, vol. 31(11), pages 1718-1732.
    18. Agnolucci, Paolo, 2007. "Wind electricity in Denmark: A survey of policies, their effectiveness and factors motivating their introduction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 11(5), pages 951-963, June.
    19. del Río, Pablo & Unruh, Gregory, 2007. "Overcoming the lock-out of renewable energy technologies in Spain: The cases of wind and solar electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 11(7), pages 1498-1513, September.
    20. Tsai, Wen-Tien, 2010. "Energy sustainability from analysis of sustainable development indicators: A case study in Taiwan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(7), pages 2131-2138, September.
    21. Cox, John C. & Ross, Stephen A. & Rubinstein, Mark, 1979. "Option pricing: A simplified approach," Journal of Financial Economics, Elsevier, vol. 7(3), pages 229-263, September.
    22. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Streimikiene, Dalia & Balezentis, Tomas, 2013. "Multi-objective ranking of climate change mitigation policies and measures in Lithuania," Renewable and Sustainable Energy Reviews, Elsevier, vol. 18(C), pages 144-153.
    2. repec:eee:appene:v:201:y:2017:i:c:p:354-362 is not listed on IDEAS
    3. Benjamin McLellan & Qi Zhang & Hooman Farzaneh & N. Agya Utama & Keiichi N. Ishihara, 2012. "Resilience, Sustainability and Risk Management: A Focus on Energy," Challenges, MDPI, Open Access Journal, vol. 3(2), pages 1-30, August.
    4. repec:eee:appene:v:217:y:2018:i:c:p:336-345 is not listed on IDEAS
    5. repec:eee:enepol:v:109:y:2017:i:c:p:463-472 is not listed on IDEAS
    6. repec:eee:rensus:v:75:y:2017:i:c:p:354-367 is not listed on IDEAS
    7. Chen, Wei-Ming & Kim, Hana & Yamaguchi, Hideka, 2014. "Renewable energy in eastern Asia: Renewable energy policy review and comparative SWOT analysis for promoting renewable energy in Japan, South Korea, and Taiwan," Energy Policy, Elsevier, vol. 74(C), pages 319-329.
    8. Zhang, Mingming & Zhou, Dequn & Zhou, Peng, 2014. "A real option model for renewable energy policy evaluation with application to solar PV power generation in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 944-955.
    9. Zhang, M.M. & Zhou, D.Q. & Zhou, P. & Chen, H.T., 2017. "Optimal design of subsidy to stimulate renewable energy investments: The case of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 873-883.
    10. Lee, Shun-Chung, 2011. "Using real option analysis for highly uncertain technology investments: The case of wind energy technology," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4443-4450.
    11. Park, Taeil & Kim, Changyoon & Kim, Hyoungkwan, 2014. "A real option-based model to valuate CDM projects under uncertain energy policies for emission trading," Applied Energy, Elsevier, vol. 131(C), pages 288-296.
    12. repec:eee:rensus:v:80:y:2017:i:c:p:180-196 is not listed on IDEAS
    13. Ghasemi, Hosein & Gharehpetian, G.B. & Nabavi-Niaki, Seyed Ali & Aghaei, Jamshid, 2013. "Overview of subsynchronous resonance analysis and control in wind turbines," Renewable and Sustainable Energy Reviews, Elsevier, vol. 27(C), pages 234-243.
    14. Kim, Kyung-Taek & Lee, Deok-Joo & Park, Sung-Joon, 2014. "Evaluation of R&D investments in wind power in Korea using real option," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 335-347.
    15. Martín-Barrera, Gonzalo & Zamora-Ramírez, Constancio & González-González, José M., 2016. "Application of real options valuation for analysing the impact of public R&D financing on renewable energy projects: A company′s perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 63(C), pages 292-301.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:15:y:2011:i:5:p:2185-2198. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.