Wind generation has been drawing more attention since the advent of global warming. How to reduce CO2 emissions has currently become the central goal of the energy policy for the developed countries around the world. In Taiwan, apart from the expansion of nuclear power plant in the generation mix, there are no other effective ways to curtail CO2 emission. However, the resource of wind energy is abundant in Taiwan and if it can be developed for power generation CO2 mitigation problem will be tackled in the right direction. Wind generation is economically unfavorable compared with the fossil fuels because of its low reliability and energy yield. The objective of this study is to develop a reasonable framework to assess the benefit of wind energy for power generation. To achieve this, the appraisal method currently used by Taipower was analyzed first and then a modified method based on avoided costs of power system was provided. Finally, the wind power generation plan in Penghu Island was used as a demonstration to compare these two methods.
The results indicate that Taipower underestimate the economic value of wind generation because it only takes reliable power generated into account in the calculation of capacity value. However, the modified method includes not only the reliable part of wind generation but also the power generated in the peak-load period. In the meantime, because the economic benefits calculated still cannot cover generation costs the promotion of wind generation development has to obtain a subsidy from government. This subsidy is justified by the environment protection and pollution reduction from the wind generation.
