Accepted Manuscript

Strategy analysis for the development of a green energy industry: A Taipei case study

Shyi-Min Lu, Ching Lu

PII: S0959-6526(13)00579-9

DOI: 10.1016/j.jclepro.2013.08.039

Reference: JCLP 3643

To appear in: Journal of Cleaner Production

Received Date: 21 February 2013

Revised Date: 27 August 2013

Accepted Date: 29 August 2013

Please cite this article as: Lu S-M, Lu C, Strategy analysis for the development of a green energyindustry: A Taipei case study, Journal of Cleaner Production (2013), doi: 10.1016/j.jclepro.2013.08.039.

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Strategy analysis for the development of a green energy industry: A Taipei case study

Shyi-Min Lu*,a, Ching Lub,c

aEnergy Research Center, bDepartment of Internal Medicine, National Taiwan

University Hospital Hsin-Chu Branch., National Taiwan University, No. 1, Section 4,

Roosevelt Road, Taipei 10617, Taiwan, R.O.C. cInstitute of Molecular Medicine, National Tsing Hua University, No. 101, Section 2,

Guangfu Road, Hsin-Chu, 30013, Taiwan R.O.C.

Abstract Taipei, a modern, subtropical, medium-sized city, is distinguished by its high population density, scarce land, and heavy traffic flow. There are also abundant green energy resources in Taipei, which, if fully developed, could generate 13,040 GWh of electricity per year, resulting in a total of 9.37 million tons of carbon dioxide emissions abatement. The development of the green energy industry in this city can not only bring significant energy-saving and carbon-reducing benefits but also could create significant derivative business opportunities; for example, the total output values of the solar PV and electric vehicle industries could be as high as 700 billion yuan. In this study, we use a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis and conclude that the top priorities for Taipei’s green energy industry development are building energy conservation and electrified transportation, specifically electric vehicles, LED (Light-Emitting Diode) lighting, inverter air conditioning, and ESCOs

(Energy Service Company). Taipei is a domestic and international hub for politics, transportation, technology, commerce, and finance. Taipei is very likely to become an internationalized green energy industrial hub, achieving the 3E goals of economic prosperousness, environmental protection, and energy security.

Keywords: Green energy industry; Development Strategy Analysis; Taipei.

* Corresponding author. Tel.: +886 2 3366 8275; fax: 886 2 3366 8279. E-mail address: shyiminlu@yahoo.com.tw

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1. Foreword “Green energy” generally means clean, pollution free and environmentally friendly energy. In this study, green energy also means no or less environmental pollution resulting from the processes of energy production and consumption. That is, after being consumed, green energy can be regenerated naturally with nearly no pollution, as in the case of the renewable sources of solar, wind and hydro energy. According to the Green Energy Industry Sunrise Program released by Bureau of Energy, Ministry of Economic Affairs (BOEMOEA) in October 2009 (BOEMOEA, 2009), the narrow definition of the green energy industry generally encompasses the following seven energy technologies: solar photovoltaics, LED lighting, wind power, biofuel, hydrogen energy and fuel cells, energy-related information and communication, and electric vehicles. The green energy industry has expanded under the globally prevalent trends of carbon reduction and energy conservation to combat climate change and protect the environment. Therefore, the comprehensive definition of the green energy industry should also include all the low-carbon energy technologies. Although covering a wide technical range, an expanded definition does not deviate from the following two major areas: energy conservation and clean energy. Examples include efficiency improvement in the industrial sector and renewable energy development in the energy sector. In terms of the cost effectiveness of GHG emissions abatement, energy conservation is superior to clean energy. In the green energy industry, the economic benefits of decreased expenditures are far larger than those of increased income.

In 2009, Taiwan launched the Green Energy Industry Sunrise Program (BOEMOEA, 2009), in which a total of 138.4 billion yuan has been invested over 3 years. Overall, Taiwan's green energy industry is globally competitive, overtaking Japan to have the world’s second largest solar PV power capacity at 3 GWp. The yield of Taiwan's LED lighting sources is number one in the world, while its output value is ranked second. Moreover, in the industries of LED lighting and solar PV, entire chains have been established in Taiwan, including technology developments, systems integration, and application-related services. Moreover, after the domestically complete production of a wind turbine of 2 MWp, Taiwan has become the world’s eighth largest wind turbine manufacturer. According to statistics from the Ministry of Economic Affairs (MOEA), in 2010, the total output value of Taiwan’s green energy industry was 380 billion yuan, representing a growth of 1.3 times that of 2008. Employment in the green energy industry has also grown exponentially, reaching 55,900 jobs in 2010 from 16,000 in 2008. In 2009, the Taiwanese government launched its largest ever national science and technology development plan, the National Science and Technology Program-Energy (NSTPE), with a total budget of up to 30 billion yuan to be disbursed over five years (2009-2013). In conjunction with trends and demands for green energy industry development at home and abroad, the main purpose of NSTPE is to break through the technological bottlenecks in the development of Taiwan's green energy industry by means of research and development in basic and applied science and technology. In

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addition, the MOEA has continued driving industrial development such as new energy storage technology, cross-domain integration and innovation in science and technology, fostering practical, implementable procedures to solve difficulties and investing in various enterprises. Since the Fukushima nuclear disaster in Japan, the promotion of renewable energy has been surging globally. The MOEA has proposed two plans, One Million Rooftop PV Systems and One Thousand Offshore Wind Turbines, to expand the development and utilization of domestic renewable energy. However, the sound setup of offshore wind power generation is closely related to environmental regulations and administrative procedures. Interdepartmental cooperation is particularly important, as, for example, among the Environmental Protection Department, the Council of Agriculture, the Ministry of the Interior, the Ministry of Defense, and the Ministry of Transportation. Passed in July 2009, the Renewable Energy Development Act set the installed capacity goal of RE at 6,500 MW over the next 20 years (namely, by the year 2025), with 12,500 MW to be installed by 2030. At the same time, the Green Energy Industry Sunrise Program had targeted 1.158 trillion yuan as the annual output value in 2015, accounting for 6.6% of that in the manufacturing sector (BOEMOEA, 2009). Following domestic and international trends, this study proposes a policy analysis for the development of the green energy industry in a modern medium-sized city, using Taipei as an example. Although we apply a SWOT analysis as the methodology, this study is both qualitative (Young et al., 2010) and quantitative in nature. Generally speaking, the questionnaire survey is a bottom-up methodology (Liu et al., 2012), which is quite different from the top-down SWOT analysis. However, we also note that developing green energy industry is in fact a public

goods game, because it benefits society not only on prosperity and wealth, but also

with sustainability. Those public goods could be lost due to individual selfish

incentives not to care for going green energy. There are many studies concerning

which factors could alleviate the tragedy of the commons (deterioration of the

environment). For example, in 2010, Perc and Szolnoki mentioned that the prevalence

of cooperation within groups of selfish individuals is puzzling in that it contradicts

with the basic premise of natural selection. Favoring players with higher fitness, the

latter is a key for understanding the challenges faced by cooperators when competing

with defectors. Evolutionary game theory provides a competent theoretical framework

for addressing the subtleties of cooperation in such situations, which are known as

social dilemmas. Secondary, Perc et al. (2013) mentioned that cooperation in groups

is crucial for the remarkable evolutionary success of the human species, and it is

therefore of importance to identify mechanisms that might have spurred its later

development.

Original researches (Szolnoki et al., 2012; Chen et al., 2012a; Chen et al., 2012b;

Chen et al., 2012c) addressing this important aspect of industry that going green not

only saves environment but also can create new opportunities. All these show clearly

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that without stringent incentives and in fact mandatory measures, the industry is very

likely to choose the environmentally less friendly option, which is a threat to all green

energy incentives.

2. The status and development potential of Taipei’s green energy industry

Taipei’s current green energy power generation status is as follows: hydropower, 227.93 GWh/yr; refuse incineration, 245.7 GWh/yr; refuse landfill biogas, 19.98 GWh/yr; and solar PV, 0.23 GWh/yr (28 systems). The total power generation of the above green energies is 493.84 GWh, accounting for 3.05% of the city's entire electricity consumption (16,168 GWh). Taipei’s total power consumption accounts for approximately 9.22% of Taiwan’s national power consumption. In 2010, Taipei’s average electricity consumption—22.23 kWh per day per capita—was much lower than that of Taiwan as a whole (28.3 kWh per day per capita). However, Taipei’s demand for electricity continues to increase. Under this trend, if the share of RE (6%) does not improve, it will be difficult for Taipei to meet the RE development goal (16%) set by MOEA for 2030 (NCKU, 2011).

2.1. Status analysis of green energy industries in Taipei

There are a total of 72 green energy-related companies in Taipei, including 14 for solar PV, 20 for LED lighting, one for wind power, seven for biofuel, 12 for energy-related information-and-communication, five for hydrogen energy and fuel cells, seven for electric vehicles, four for HVAC, and two for energy services (BOEMOEA, 2012). Their products are primarily exported. Thirteen companies are located in Neihu Technology Park and six in Nankang Software Park, with the remainder distributed across various locations. If distinguished by industrial categories, most of them belong to the solar PV and LED lighting industries. Like other enterprises in Taiwan, the offices of green energy industries are primarily located in Taipei, while their production facilities are built in other regions. Currently, the industrial park is divided into Zone A (13.43 hectares), Zone B (68.52 hectares), and the Great South Bay region. To cluster the green energy industries, a specific zone can be set up in this park (or elsewhere) that provides greater incentives and concessions (e.g., tax incentives, protection of investors’ interests, governmental investment to help raise funds, and other measures) to attract the domestic and international green energy industries. When the manufacturers increase, following the establishment of the bunching effect, the green energy industrial cluster will be created. Currently, there are three science and technology parks in Taipei: Neihu, Nankang, and Beitou-Shilin. The turnover of Neihu Technology Park, housing over 3,000 manufacturers, exceeded 3.5 trillion yuan in 2011 The municipal government plants to further integrate the adjacent industrial zones and mixed small businesses into a Great Neihu Technology Park occupying a total area of 542 hectares, with the

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expectation of infusing new energy into the research and development of Taipei’s industrial technologies. By attracting a greater presence of green energy industries, green energy technology will further improve and the output value of the park will also increase (Wikipedia, 2011). At present, the major industries represented within the science and technology parks are car repair and maintenance, electronics, electrical machinery and apparatus manufacturing, and information services. Because of the dense population of Taipei, in addition to traditional green energy industries that already exist in the city, such as solar photovoltaics, LED lighting, wind turbines, and biofuel, secondary emphasis may be placed on the energy service industry, which can assist the industry to identify energy-saving opportunities and execute the related measures. Broadly speaking, green energy services have the lowest operational cost and represent the biggest business opportunity. Green energy services can not only create employment opportunities, but may also help Taipei’s government rapidly achieve its carbon-reduction target. Meanwhile, financial opportunities in green energy also rely on the following items: carbon credit transactions, financing for energy-saving products, green energy industry setup investment, carbon trading, insurance, etc. (Commercial Times, 2011). Carbon trading was implemented in the EU region a few years ago and is still expanding. Starting in 2012, all flights entering the EU area are required to declare their carbon footprint, meaning that the carbon trading system has extended to the aviation industry. It is foreseeable that the pressure of reducing emissions will bring tremendous business opportunities for the financial sector. Financial methods are also helpful in reducing carbon emissions. For example, enterprises could be refused loans if they fail to fulfill their carbon reduction commitments (BAROC, 2011).

2.2. Assessing the potential of Taipei's green energy industry

Taipei’s traffic flow is huge and congested, while the traditional, fossil-fueled means of transport are the major source of GHG emissions. Therefore, Taipei is suitable for the development of electric vehicles on a large scale. Secondly, a large amount of municipal waste is generated every day, which can be used in biomass electric generation. Additionally, Taipei is a subtropical, medium-sized and modern city that enjoys abundant sunshine and many high buildings; this makes Taipei an appropriate setting for the development of building-integrated photovoltaics (BIPV) and the use of solar hot water. Lastly, Mt. Tatum, located on Taipei’s outskirts, is Taiwan’s most abundant geothermal site. The comprehensive use of electric vehicles powered by the above-mentioned three renewable energy sources will help Taipei fulfill the vision of being a completely carbon-free city.

2.2.1. Electric cars

The congestion of Taipei’s traffic is because there are 1.8 million registered cars and motorcycles for a population of 2.6 million living on 27,200 hectares of land (ITRI, 2011). These facts indicate that nearly everyone in this crowded city has

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his or her own private transport. According to statistics (EPA, 2011a), Taipei’s annual energy consumption and carbon dioxide emissions are approximately 73 million kiloliters of oil equivalent (MKLOE) and 2.6 million tons, respectively (EPA, 2011a). If all the city’s cars and motorcycles were powered by electricity, not only would carbon dioxide emissions be reduced by one million tons, but also, 0.46 MKLOE of energy might be saved. At the same time, the value of derivative business opportunities has been estimated to be as high as 620.4 billion yuan.

2.2.2. Biomass energy utilization

According to online data from the Environmental Protection Bureau, Taipei generated 910,932 tons of litter in 2010 (EPA, 2011b). Processing such a large amount of waste has become a significant burden on the municipal sector. Rather than consuming large amount of human and financial resources, space, and land to bury them, biomass energy utilization provide the city with an excellent option to take advantage of garbage. For example, refuse incineration and landfill methane can be harnessed for electric generation. According to this study’s calculations, Taipei can obtain 840 GWh of electricity and 102,000 KLOE of heat annually through biomass energy utilization (i.e., landfill and garbage incineration). Based on electricity prices of 2.6 yuan/kWh and crude oil prices of $90 per barrel (at 30 yuan to the dollar), Taipei’s garbage output could derive 2.23 billion yuan of business opportunities annually. At a thermoelectric conversion efficiency of 40% (Chen et al., 2010), Taipei’s biomass electricity would be 1,270 GWh. As an alternative to the grid, the carbon-reducing benefit is 0.78 Mt-CO2, equivalent to 0.3 ton-CO2 per capita per year.

2.2.3. Solar PV

With average population density at approximately 10,000 people per square kilometer, Taipei is full of high-rise buildings. In addition, for half of every calendar year, especially in the summer, the extensive use of air conditioning results in severe power peak load. Therefore, building-integrated photovoltaics (BIPV) is an option worth considering, because the generation of PV systems is directly proportional to the solar insolation; that is, stronger the sunshine, the greater the amount of generated electricity. Therefore, BIPV has a unique advantage over conventional power generation in its ability to mitigate the peak load caused by air conditioning. Like generators installed on a building's rooftop and facade, BIPV is an energy solution for any city that has hot weather and expensive land. According to related data on solar energy and buildings in Taipei, assuming that solar panels were installed on all rooftops, the annual power generation would be 5.8 billion kWh. On the other hand, if half of all building facades were covered with PV panels, they would generate 2.4 billion kWh of electricity annually. Summarizing the above assessments, in one year, Taipei’s BIPV has the potential to generate 8.2 billion kWh of electricity and reduce carbon dioxide emissions by 1.88 tons per capita. The total installed PV capacity would be approximately 3.74 GW,

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with a generation efficiency of 10% of and daily generation time of 6 hours. The derivative business opportunity will be worth $3.7 billion with a PV cell sale price of 1 USD/W. The annual electricity output value will be approximately 21.3 billion yuan, with investment costs recouped in approximately 5 years under a residential electricity sale price of 2.6 yuan/kWh.

2.2.4. Geothermal energy

Hot springs, unique thermal energy, can also be used for power generation. Located on the outskirts of Taipei, Mt. Tatum reserves abundant geothermal energy. An early survey by the China Petroleum Company (CPC) and the Industrial Technology Research Institute (ITRI) found that the temperature of water-steam in Mt. Tatum was up to 290°C with a flow of 33 tons per hour. It was estimated that the installed capacity could be as large as 514 MW. In one year, the power generation would be 4,000 GWh, assuming a utilization of 90%. Meanwhile, the annual derivative business opportunities could be worth 10.4 billion yuan, with GHG reductions of 2.45 Mt-CO2 per year. As shown in Table 1, the analysis of the development potential of Taipei’s four major green energy industries, namely, electric vehicles, biomass energy, solar energy, and geothermal energy, shows that Taipei possesses abundant green energy potential. If all the above green energies were fully developed, they would generate a combined 13,040 GWh of electricity per year, which is nearly equivalent to the entire electric consumption of Taipei (16,200 GWh), resulting in a total carbon dioxide emissions reduction of 9.37 million tons. This can not only bring significant energy-saving and emissions-abating benefits but also create enormous derivative business opportunities. For example, the total output values of the solar PV and electric vehicles industries would be 700 billion yuan, not to mention the potential employment market.

Table 1 The development potential, effectiveness of energy conservation and carbon reduction, and derivative business opportunity of Taipei’s renewable energies.

BIPV Biomass Geothermal Electric car Subtotal

Power generation (GWh) 8,200 840 4,000 - 13,040 Energy saving (103 KLOE) - - - 458 458 Carbon reduction (Mt-CO2) 5 0.78 2.45 1.14 9.37 Derivative business opportunities (billion yuan) 111 2.23 10.4 620.4 744.03 Power generation value (billion yuan) 21.3 2.2 10.4 - 33.9

Note: electricity price = 2.6 yuan/kWh; 1 US dollar = 30 yuan.

3. SWOT analysis of the development of Taipei’s green energy industry

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Clustering a set of important satellite towns, Taipei City is the most populous metropolitan in Taiwan, in addition to being Taiwan’s political, cultural, commercial and communications center. Taipei also competes against international cities across East Asia, such as Shanghai, Hong Kong, Seoul, Tokyo and Singapore. On October 20, 2011, the World Bank released its Report on the 2012 Business Environment (Doing Business 2012) (World Bank, 2011), in which Taiwan ranked 25th among 183 economic bodies, showing that Taiwan is internationally competitive in terms of its business environment. Meanwhile, since Taiwan’s retrocession, Taipei has played a very important role in the development of national industry and commerce. As of the end of 2010, a total of 158,107 companies, 54,120 stores, 1,235 factories and 737,168 square meters of factory floor space was registered in Taipei (DGBAS, 2011), reflecting Taipei’s great advantages in terms of industrial investment environment. SWOT analysis (Weihrich, 1982), a strategic planning method for business management, was pioneered by Professor Weihrich at the University of San Francisco and has been successfully applied in the analysis of internal advantages and weaknesses and external opportunities and threats in business and industry. SWOT analysis can help managers clearly understand the business advantages and disadvantages of an enterprise itself, as well as systematically analyze the opportunities of the external environment and threats from competitors, such that they can make decisions quickly. This study would like to examine the strengths (S), weaknesses (W), opportunities (O), and threats (T) for the development of a green energy industry in Taipei from various dimensions, such as industrial, internal, and external environments.

3.1. Developing strengths

Through political, social, technologic, economic, and environmental aspects, this study first presents the internal niches and strengths for the promotion of Taipei’s green energy industry as the following.

1) Political aspect: determined to promote the green energy industry, Taipei’s city government has proposed a number of related measures, such as the Standard Operating Procedure (SOP) for the Application of Photovoltaic Power Generation System Planning and Design Fees and Gasohol Promotion Program Subsidy Operational Guidelines.

2) Social aspect: Taipei’s citizens possess a high quality of life, significant environmental knowledge, Taiwan’s highest income levels, high acceptance of green energy, and strong spending ability. Popular acceptance is a critical factor affecting the development of green industry and the promotion of related products. In Taipei, the residents require relatively high environmental quality, accept green products easily, understand green energy-related knowledge more thoroughly, and support the development of a green energy industry.

3) Technological aspect: Taipei is home to many national universities that have established solid foundations with respect to academic research, thus facilitating the development of the green energy industry through

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university-industrial cooperation, innovation and incubation. Taipei is Taiwan’s academic research center, housing both national universities and first class international research institutes, which cluster domestic and international talent. These institutes provide not only professional development in terms of manpower training and industry-university cooperation but also business-oriented consultation. The three existing science and technology parks—Nankang, Neihu, and Beitou-Shilin—have the potential to become the clusters of green energy industry. Currently, these three parks have brought together manufacturers of various cutting-edge technologies. There are a total of 72 green energy-related companies in Taipei, of which 13 companies are located in Neihu Technology Park and six in Nankang Software Park; most of the manufacturers are in the solar PV and LED lighting businesses (BOEMOEA, 2012).

4) Economic aspect: Taipei has a population density of approximately 10,000 people per square kilometer, while the total energy consumption in residential and business sectors accounts for 71% of that of the entire city (BOEMOEA, 2011). The convenience store density of Taipei—5.13 stores per square kilometer—is the highest in the world. The convenience store belongs to the commercial building sector, so it consumes a great deal of energy in terms of air conditioning and lighting. The energy intensity of the convenience store is 31 times that of the general domestic residence and 10 times that of the general office. Therefore, the convenience store is the most energy-intensive commercial building category in the municipal energy infrastructure (Chien, 2011), and is highly conducive to the development of LED lighting and building energy conservation. Taipei’s transport is characterized by a large number of motor vehicles, while the parking space availability is only 60%; in other words, 40% of motor vehicles have no regular parking space. Therefore, the development of a public transportation system is indispensable for Taipei (Chien, 2011). In addition, the electric car can fill a niche in the metropolitan area, where driving distances are short and routes are fixed. According to online data from the Environmental Protection Bureau, Taipei generated 910,932 tons of waste in 2010 (EPA, 2011b). This level of waste processing engineering places a tremendous burden on the municipal sector. To avoid large human resource and financial expenditures, the land-intensive buried waste in the form of biomass power generation is a good solution. As a subtropical city, sunshine is abundant in Taipei and the metropolitan area is full of skyscrapers. Large cities are suitable for the development of building-integrated photovoltaics (BIPV). The electricity-generating volume of PV is proportional to the amount of available sunlight. Solar PV has the ability to mitigate the power peak load caused by air conditioning, which is an inherent advantage non-existent in any other traditional power generation. In addition, due to integration with buildings (e.g., on the rooftop or facade), BIPV becomes part of the building and is used as a construction material.

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Without expensive land use, BIPV is the metropolitan area's future "Energy Star."

5) Environmental aspect: land, sea, and air transportation are all convenient if you live in Taipei. Songshan International Airport downtown and Keelung Harbor in the neighborhood give Taipei a strong competitive advantage to be shaped as a multinational logistics management center for the development of goods carriage. There are also there are vibrant public transport systems in the city, comprised of the MRT and buses that rapidly and densely cross the whole city to form an interconnected network. The smooth flow of goods is the most important condition for a city to develop industry and commerce, and Taipei’s convenient transportation network is highly beneficial to the industry's development.

3.2. Decreasing weaknesses

1) The green energy industry cluster has not been formed: in Taipei, there is no science and technology park devoted exclusively to the green energy industry. Therefore, the municipal government’s industrial department should actively create a sound industrial investment environment for green energy and provide appropriate incentives or subsidies to attract green energy manufacturers to Taipei, thereby strengthening the upstream and downstream industrial chain, enhancing vendors’ cluster effect, and increasing industrial competitiveness.

2) Scarce and expensive land and rents are detrimental to industrial development: industrial land in the Taipei urban area is saturated, and land prices and rents are the highest in Taiwan, a very unfavorable factor for industrial development. If the municipal government intends to promote industrial development, it is necessary to provide related factory accommodation tax breaks or subsidies to make up this shortcoming.

3.3. Grasping opportunities

1) Central government's active promotion of green energy policies and subsidy measures: in December 2011, the Executive Yuan extended policy resources for the promotion of green energy consumption. In 2012, there will be 326,000 LED streetlight replacements to drive LED output at a value of 4.481 billion yuan. Simultaneously, due to the energy-efficient appliance purchase subsidy, people can save 2,000 yuan when buying energy-efficient air-conditioners, refrigerators, and washing machines. It is estimated that there will be a total of 7.9 billion yuan of output value of energy-saving appliances. In addition, the government exempts the license tax when buying an electric vehicle.

2) Fukushima nuclear crisis facilitating the development of green industry: The Fukushima nuclear crisis shook the world and triggered global energy policy’s pursuit of pollution-free renewable energy development, which was

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already incentivized by the international rise of the green energy industry. At the same time, Taiwan holds abundant renewable energy, and the domestic utilization of renewables will boost the development of the green energy industry in this country.

3.4. Avoiding threats

1) Higher prices for green energy devices: the cost of traditional power generation is low, while that of renewables such as solar PV is high and has a longer payback period. At the same time, the sale prices of energy-saving appliances (e.g., inverter air conditioners and LED lighting) are also higher than the traditional ones. This situation also exists for biofuel. Boosting the consumption of green energy products will require government subsidies for some time to avoid the high price deterrent of green energy.

2) Chinese and Korean vendors are strong competitors, while Taiwanese manufacturers lack the government's solid support: South Korea and China are strong competitors to Taiwan in green energy industries because all three countries have similar industrial structures and the same export objects: Europe and the United States. The South Korean and Chinese green energy industries have strong governmental support, however, while Taiwanese firms are primarily independent and lack structured government support. It is difficult for Taiwanese manufacturers to compete with vendors that are vigorously backed by the Korean or Chinese governments.

3) The European debt crisis is threatening the global green energy industry: as mentioned above, the EU is a very important export region for Taiwan. At the same time, the EU is the largest green energy market in the world. Therefore, the debt crisis in Europe will lessen the green energy subsidies supported by European countries, which in turn affects the distribution and ecology of the global green energy industry.

4) Due to excessive patent procurement, the Taiwanese green energy industry lacks research and development capabilities: although Taiwan is ranked first in the world in LED chip production, Taiwan’s LED lighting and backlighting products still lag behind those of Japan, Korea, and the United States due to the relative lack of R&D activity. A powerful patent is not only a weapon protecting intellectual property rights and recognition but also a very important marketing tool. Taiwanese manufacturers must strengthen their research and development capabilities and seize the patent initiative to make the green energy business truly viable in the long term.

The SWOT analysis for the development of the green energy industry in Taipei is summarized in Table 2.

Table 2 SWOT analysis for the development of the green energy industry in Taipei.

SWOT analysis for the development of the green energy industry in Taipei

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Strengths Weaknesses � Municipal government is determined to promote the

green energy industry and has proposed a number of

policies to this end.

� The people of Taipei have a high quality of life,

adequate environmental knowledge, the highest per

capita annual income in Taiwan, high acceptance of

green energy, and strong purchasing power.

� There are many national universities in Taipei and

their solid foundation and academic research helps the

development of green energy technology through

university-and-industry cooperation in terms of

innovation and incubation.

� The existing science-and-technology parks of Neihu,

Nangang, and Beitou-Shilin have the potential for the

development of a green energy industrial cluster.

� Taipei’s energy consumption is primarily in the

residential and commercial sectors, while the

convenience store density in Taipei is the highest in

the world, facilitating the development of

residential-and-commercial energy conservation

through the utilization of LED lighting and inverter

air conditioners.

� The higher carbon emissions in the transport sector

facilitate the development of electric buses and cars.

� Plentiful waste provides a niche to develop biomass

electric generation.

� Tall buildings are prevalent, facilitating the

development of BIPV.

� Convenient land, sea, and air transport.

� The municipal government will provide ESCO

financing.

�The green energy industry cluster has not yet

formed.

�Scarce land and high prices and rents work

against industrial development.

�Other cities promote the green energy industry

more aggressively than Taipei.

�Due to building usage rights, the installation of

solar panel systems and wind turbines in urban

areas is difficult.

Opportunities Threats � Taiwan’s central government is actively pushing

green energy policy and subsidy measures.

� A green electricity-pricing system will be

implemented early next year.

� Taiwan has a solid foundation in the IT industry.

� The development of a green energy industry is an

international trend.

� The European Union and Australia have implemented

carbon tax systems, thus facilitating the development

of green energy industry worldwide.

� Green energy’s devices and products are

generally more expensive, making people less

willing to purchase them.

� Insufficient green energy knowledge keeps

people from properly understanding the

benefits of green energy products.

� Due to its small domestic market, Taiwan

must rely mainly on exports.

� China and South Korea are strong competitors

to Taiwan, while domestic vendors lack

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� The Fukushima nuclear crisis is an incentive factor

for the development of a global green energy

industry.

government support.

� The European debt crisis is a threat for the

global development of the green energy

industry.

� Taiwanese industries lack research and

development capabilities, such that most

patents are procured from foreign companies.

4. Business opportunities and advantages for the development of a green energy industry in Taipei

As described in the last section, Weihrich (1982) proposed a SWOT-Crossing Analysis Method, which compares external opportunities and threats to internal strengths and weaknesses such that strengths and opportunities are maximized while weaknesses and threats are minimized, as shown in Table 3. Appropriate strategies are developed from the results of the analysis. Four types of crossing analyses and the resulting priorities for the development of green energy industries in the Taipei urban area are detailed in Table 4 and below.

(1) SO strategies, in accordance with the principle of maximizing both strengths and opportunities (Max-Max), which enhance merits and take advantage of chances.

(2) ST strategies, in accordance with the principle of maximizing strengths and minimizing threats (Max-Min), which strengthen advantages and avoid risks.

(3) WO strategies, in accordance with the principle of minimizing disadvantages and maximizing opportunities (Min-Max), which reduce weaknesses and use chances.

(4) WT strategies, in accordance with the principle of minimizing both threats and disadvantages (Min-Min), which decrease threats and overcome shortcomings.

Table 3 SWAT matrix strategies table.

Source: Weihrich, 1982. Internal analysis

SWOT Matrix Strengths (S) Weaknesses (W)

Opportunities (O)

SO strategy (Max-Max)

WO strategy (Min-Max)

External analysis Threats (T)

ST strategy (Max-Min)

WT strategy (Min-Min)

The SO, ST, WO, and WT strategies for the development of a green energy industry in Taipei are as follows:

4.1. SO strategies to develop green industry in Taipei

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SO strategies, which combine internal strengths and external opportunities and are supplemented with principles of maximizing strengths and opportunities (Max-Max), suggest that electric vehicles, LED lighting, inverter air conditioning, and energy service companies (ESCO) are the most advantageous and promising green energy industries for Taipei. The appropriate development policies for these four green energy industries are strengthening their own merits and using any opportunity to enhance existing competitive advantages, as well as promoting the industries by further expanding current scales.

4.2. ST strategies to develop green industry in Taipei

In considering internal strengths and external threats, ST strategies supplemented with principles of maximizing strengths and minimizing threats (Max-Min) suggest that solar energy and wind power are two green energy industries with higher technological bottlenecks; consequently, their advantages are developing, but they confront more challenging threats. The appropriate development policies for these two industries are eliminating the weak and retaining the strong, strengthening companies’ own merits, and avoiding external threats. The most urgent and substantial measures are promoting cooperation and interaction between institutions and industry and ensuring the fruits of institutional and academic R&D able to fulfill industrial technical requirements, thereby enhancing industrial competitiveness significantly.

4.3. WO strategies to develop green industry in Taipei

Here, we combine internal weaknesses and external opportunities to explore WO strategies. Supplemented with the principle of minimizing disadvantages and maximizing opportunities (Min-Max), WO strategies suggest that smart meters and biomass energy are two green energy industries holding disadvantageous positions in Taipei, but which still hold development opportunities. For these two industries, the appropriate development policies are to make the best use of their advantages while avoiding the threats, thereby improving their competiveness. In the early stage of these industrial developments (e.g., cellulosic ethanol R&D), we propose that the resources of government and industry should be integrated to carry out the development of key items.

4.4. WT strategies to develop green industry in Taipei

In addition to the principle of minimizing both threats and weaknesses (Min-Min), from the viewpoint of internal weaknesses and external threats, WT strategies suggest another green energy industry—geothermal energy—for Taipei. Although geothermal technology has matured in neighboring countries like the Philippines and Japan, there is still no operational geothermal power plant in Taiwan because most geothermal resources are located in mountains or national parks.

The results of the SWOT-Crossing Analysis for the development of Taipei’s

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green energy industries have been compiled in Table 4. Additionally, as mentioned in section two, this study has found that there are abundant renewables reserved in Taipei, representing a huge potential for energy savings and carbon reduction and tremendous business benefits. If Taipei’s government aggressively grasps internal advantages and delicately decreases the internal weaknesses in the development of the green energy industry as detailed in the SWOT analysis, there could be gigantic derivative business benefits, including electric vehicles (6,204 billion yuan), BIPV (1,110 billion yuan), geothermal energy (104 billion yuan), and biomass (23 billion yuan). These tremendous business opportunities will bring more people to support the Green Taipei.

Table 4 SWOT matrix strategies to develop the green energy industry in Taipei.

SO strategies: Enhancing strengths, using opportunities, and

augmenting existing scales.

WO strategies: Enhancing advantages, avoiding disadvantages, and

carefully selecting appropriate industries.

The following green energy industries possess advantages and opportunities and are also technologically mature:

1. Electric cars. 2. Green industries related to building

energy conservation; namely, LED lighting, inverter air conditioners, and ESCO.

The following green energy industries possess disadvantages but still hold opportunities for development:

1. Smart meters. 2. Biomass.

ST strategies: Taking advantage of opportunities, avoiding threats,

eliminating weakness, and enhancing competitiveness

WT strategies: Lowering threats, reducing weaknesses, and driving

innovation and transition.

The following green energy industries have advantages but still face threats:

1. Solar energy. 2. Wind power.

The following green energy industry is not yet ready or development and faces weaknesses and threats:

1. Geothermal energy

5. Conclusions and recommendations

After discussing the advantages and opportunities, the most promising items for the development of green energy industries in Taipei in terms of technological maturity are electric vehicles, residential and commercial energy conservation services, LED lighting, and inverter air conditioning. Meanwhile, we also propose secondary priorities: smart meters, biomass energy, and solar energy. In terms of ecological benefits, the development of the relatively clean energy resources above can move the lifestyle of Taipei’s citizens in the direction of a low-carbon environment to realize the vision of a green city. Furthermore, the establishment of

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green energy industries in Taipei can promote R&D activities in cutting-edge green technologies and derive tremendous green opportunities, not to mention the contributions of taxes, added values, and employment. The reasons, relevant policy planning and practical directions for the development of the above key industries are as follows:

1) Electric vehicles: the most advantageous aspects of electric vehicles are that they are pollution-free and energy-efficient. However, due to the current constraints of electric vehicles—for example, long battery charging time and limited range—the new energy vehicles cannot completely replace conventional cars in the short term. Additionally, the population of electric cars requires significant infrastructure (e.g., charging stations and battery exchange spots). If used in a particular environment or on specific lines, such as shuttle and city bus lines, the public transport system is a more feasible arena for electric vehicles. There is also a niche for the promotion and development of electric vehicles in the metropolitan area, where the transport needs or routes are short and fixed. At present, wireless roadside charging technology is key to the development of electric vehicles.

2) LED lighting: LED lighting—a low-power luminous electronic device—can be used in the residential and commercial sectors of metropolitan areas. In modern cities, the electricity consumption for lighting is particularly high; the energy consumption of LED lighting, however, is much lower than that of traditional light bulbs. At the same time, the backlights of a variety of optoelectronic products can also use LEDs. Street lights, traffic signals and signs, commercial signs, and advertisements are other potential commercial niches for LED lighting.

3) ESCO: The high initial investment costs for the implementation of energy-saving measures or the development of green energies requires bank financing. Meanwhile, the application of governmental carbon-reducing measures, construction technology, and cost assessments also require the assistance of specific experts. Therefore, ESCOs play an important meditating role among government, consumers, and banks to effectively provide the capital, techniques, and supervision for green energy implementation.

4) Inverter air conditioning: air-conditioning power consumption is particularly high in the summer in Taiwan, and air conditioning is the main source of peak power load. In traditional air conditioners without inverters, regardless of size, the motor and compressor are suddenly turned on or off at a certain temperature range, which is highly electrically consumptive and energy inefficient. Under the application of high-tech controllers, or inverters, air conditioning units are able to maintain power operation optimally and efficiently. The inverter is both highly energy efficient and will not cause rapid changes in the power load.

5) Biomass energy: According to online data from the Taipei Environmental Protection Bureau, Taipei’s citizens produced 910,932 tons of garbage in 2011

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(EPA, 2011b), and this amount of waste processing has become a heavy burden on the municipal sector. Biomass power generation is an excellent alternative to spending vast human and financial resources, space, and land to bury garbage. Thanks to the city’s excellent garbage collection and classification systems, Taipei’s incinerators not only have superior efficiencies but also create less air pollution in comparison to other cities (Cheng et al., 2007). In the meantime, biofuel is carbon neutral. Because Taipei is population-intensive with heavy traffic flow, it is easy to promote the use of biofuel. Buses and government vehicles can be the first transport objects to use gasohol. It is also very convenient and feasible to set up additional gasohol pumps at gas stations.

6) Solar energy: Solar energy can relieve the power peak load. Meanwhile, Taipei is crowded, with an average population density of approximately 10,000 people per square kilometer, resulting in a high concentration of high-rise buildings. In addition, in the hot summers, the heavy use of air conditioning results in severe power peak load. Therefore, BIPV built as part of buildings is an option worth considering.

Lastly, through the above analysis, this study makes the following specific recommendations for the future development of a green energy industry in Taipei:

(1) Taipei is population-intensive due to scarce land, so it is appropriate to develop green energy high-tech parks on the pattern of the like Neihu Software Park or Nankang Biotech Park.

(2) Taking advantage of politics and the economy, in the blueprint of developing the green energy industry, green energy company headquarters can be set up in Taipei while the manufacturing sites may be located in other regions of Taiwan, or even around the world.

(3) To remove the key technologic constraints from abroad, it is necessary to create a closely cooperative relationship between academic institutions and domestic industry. The establishment of centers of technological transfer and industrial incubation for any kind of advanced green energy technology is an absolute priority.

(4) Green Energy Services (ESCO) bring the greatest business opportunities at the lowest cost in the development of a green energy industry. ESCOs not only create employment markets and promote energy-saving industries but also help the government to rapidly achieve its carbon-reduction goals.

Similar to Li et al. (2009), who propose a development policy for a renewable energy industry in Beijing using SWOT analysis, this study assesses the development potential of a green energy industry for Taipei, which has a more comprehensive content, as described in Table 1 and the prior literature (Maatallah et al., 2013, Liu and Ma, 2010). As in the findings from Zhang et al. (2013) and Liu et al. (2009), this study finds that public awareness is key to the promotion of green energy or clear production in a city. As described in Table 2 and prior literature (Sedlacek, 2013), because there are many national universities in Taipei, there is a solid foundation of

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academic research to help the development of green energy technology under university-and-industry cooperation in terms of innovation and incubation.

Acknowledgements: the authors would like to thank RDEC of the Taipei City Government for the administrative and financial supports of this research program, which made the completion of this article possible.

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� building energy conservation and electrified transportation are top priorities.

� specifically, electric vehicles, LED lighting, inverter air conditioning, and ESCO.

� 13,040GWh electricity would be generated per year from Taipei's rich

Renewables.

� resulting in a total of 9.37 million tons of carbon dioxide emissions reductions.

� the derivative business opportunities would exceed 700 billion Yuan.