Valuation of wind power distributed generation by using Longstaff–Schwartz option pricing method

Guzmán Díaz, Blanca Moreno, José Coto and Javier Gómez-Aleixandre

Applied Energy, 2015, vol. 145, issue C, 223-233

Abstract: In the context of decaying capital cost and uncertain revenues, prospective valuation of a wind power distributed generation (DG) project is difficult. The conventional net present value (NPV) presents a static picture that does not account for the value of waiting for better market conditions to proceed with a DG investment. On the contrary, real options (RO) analysis does account for the managerial flexibility to switch between options over the investment horizon.

Keywords: Real options; Wind energy conversion; Learning curve; Stochastic processes (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (8)

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DOI: 10.1016/j.apenergy.2015.02.046

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