Wind power feasibility analysis under uncertainty in the Brazilian electricity market

Giancarlo Aquila, Paulo Rotela Junior, Edson de Oliveira Pamplona and Anderson Rodrigo de Queiroz
Authors registered in the RePEc Author Service: Paulo Rotella Junior

Energy Economics, 2017, vol. 65, issue C, 127-136

Abstract: Investors must be able to plan and analyze their investments in order to optimize decisions and turn them into profits associated with a particular project. Since electricity producers in the Brazilian electric power system are exposed to a short-term market, the goal of this paper is to propose a framework for investment analysis capable of encompassing different uncertainties and possibilities for wind power generators in a regulated market, characterized by auctions. In order to reach the proposed objective we employ a simulation technique which allows modeling cash flows considering uncertainties in variables related to project financial premises, electricity generation and producer exposure to the short-term market. For such goal, this study presents a new approach for investment analysis that allows the identification of the main uncertainty parameters and risks associated to this class of projects in the Brazilian electricity market. We also employ the Value at Risk technique to perform a risk management analysis in such context.

Keywords: Wind power; Stochastic power generation; Electricity markets; NPV; Renewable energy (search for similar items in EconPapers)
JEL-codes: C15 G3 G31 G32 G38 M1 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:65:y:2017:i:c:p:127-136

DOI: 10.1016/j.eneco.2017.04.027

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