Evaluating Taiwan’s Geothermal Sites: A Bounded Rationality Data Envelopment Analysis Approach

Amid rising global demand for renewable energy, geothermal power emerges as a vital, low-carbon solution to enhance energy security and sustainability. Taiwan, strategically located on the seismically active Pacific Ring of Fire, possesses an untapped geothermal potential that is underutilized due to complex site selection challenges. This study specifically addresses the need for a more precise and psychologically attuned site selection process, aiming to optimize the development of geothermal resources in regions with complex geological settings. Utilizing the Modified Bounded Rationality Data Envelopment Analysis (MB-DEA) model, this research integrates traditional DEA with bounded rationality to factor in the risk preferences of decision-makers, offering a novel approach that enhances accuracy in evaluating geothermal sites. This study addresses the critical challenge of accurately selecting geothermal energy sites in geologically complex regions like Taiwan, where traditional methods fall short, aiming to significantly boost the efficiency and effectiveness of geothermal energy exploitation as part of Taiwan’s transition to renewable energy sources. Applied to 30 potential sites across Taiwan, our model provides a detailed assessment based on technical, economic, and psychological criteria, revealing variations in site suitability influenced by stakeholder risk attitudes. Key locations such as Datun Mountain, Maoxing, and Taolin consistently rank highly, confirming their robust potential irrespective of risk preferences. At the same time, other sites show marked sensitivity to shifts in decision-making attitudes. This work significantly advances the methodology of renewable energy site selection by demonstrating the utility of incorporating psychological factors into analytical models, which not only refines decision-making processes but also aligns with Taiwan’s strategic energy planning goals. This study also underscores the importance of accurate geographical data in complex terrains, suggesting further refinement and dynamic integration of bounded rationality for future research.