Investment in Stochastic Electricity-Production Facilities

Luis Baringo () and Antonio J. Conejo ()
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Luis Baringo: University of Castilla-La Mancha
Antonio J. Conejo: University of Castilla-La Mancha

Chapter Chapter 14 in Handbook of Risk Management in Energy Production and Trading, 2013, pp 353-383 from Springer

Abstract: Abstract This chapter considers a profit-oriented private investor interested in building stochastic electricity-production facilities, such as solar and wind power plants. This investor sells its production in a competitive pool-based electricity market and faces uncertainties related to demand growth, its production level, and its investment cost. Adopting a multistage approach, a stochastic complementarity model is formulated to determine the optimal capacity to be built by the investor to maximize its expected profit while minimizing its profit volatility. An example considering a wind power investor is presented to illustrate the working of the proposed model.

Keywords: Wind Power; Planning Horizon; Investment Cost; Expected Profit; Demand Growth (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-1-4614-9035-7_14

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DOI: 10.1007/978-1-4614-9035-7_14

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