Replacing conventional energy resources with wind: An integrated economic, environmental, and social assessment

Abstract

Replacing fossil fuels with renewable energy resources has become an imminent global objective in this era. This paper investigates the economic, social, and environmental aspects of constructing and operating the wind farm through a comprehensive social cost-benefit analysis (SCBA) to assess the project's feasibility for the local Taiwanese population. The monetary values obtained were analyzed using net present value (NPV) methodology, evaluated from both publicly funded and privately owned perspectives. Key findings reveal significant differences between the two options when social and environmental factors are incorporated. Specifically, the NPV results for the publicly funded fixed-rate version are approximately 55.48 billion NTD, while the privately owned version stands at 4.18 billion NTD. Both versions are identified as profitable and feasible projects, provided the annual discount rate remains below 10.5% and 3.2%, respectively. The sensitivity analysis highlights that NPV results are particularly susceptible to fluctuations in capital costs and electricity sales income, with a 25% decrease in the feed-in tariff rate leading to a 43% drop in NPV. This finding suggests the need for a more thorough examination of these critical elements. This study is among the first to apply a comprehensive SCBA framework to an Asian offshore wind farm project, Formosa 2, incorporating not only economic but also environmental and social dimensions. By quantifying these factors, we provide novel insights into the comparative viability of publicly funded versus privately owned models, offering a holistic evidence base to guide renewable energy policy and investment in emerging markets.