Managing the Volatility Risk of Renewable Energy: Index Insurance for Offshore Wind Farms in Taiwan

Shih-Chieh Liao, Shih-Chieh Chang and Tsung-Chi Cheng
Additional contact information
Shih-Chieh Liao: Department of Risk Management and Insurance, National Chengchi University, Taipei 11605, Taiwan
Shih-Chieh Chang: Department of Risk Management and Insurance, National Chengchi University, Taipei 11605, Taiwan

Sustainability, 2021, vol. 13, issue 16, 1-27

Abstract: Renewable energy is produced using renewable natural resources, including wind power. The Taiwan government aims to have renewable energy account for 20% of its total power supply by 2025, in which offshore wind power plays an important role. This paper explores the application of index insurance to renewable energy for offshore wind power in Taiwan. We employ autoregressive integrated moving average models to forecast power generation on a monthly and annual basis for the Changhua Demonstration Offshore Wind Farm. These predictions are based on an analysis of 39 years of hourly wind speed data (1980–2018) from the Modern-Era Retrospective analysis for Research and Applications, Version 2, of the National Aeronautics and Space Administration. The data analysis and forecasting models describe the methodology used to design the insurance contract and its index for predicting offshore wind power generation. We apply our forecasting results to insurance contract pricing.

Keywords: renewable energy; index insurance; offshore wind farm; time series modeling; ARIMA (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.mdpi.com/2071-1050/13/16/8985/pdf (application/pdf)
https://www.mdpi.com/2071-1050/13/16/8985/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:16:p:8985-:d:612495

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().