Offshore Wind Farm Economic Evaluation Under Uncertainty and Market Risk Mitigation

Antonio C. Caputo (), Alessandro Federici, Pacifico M. Pelagagge and Paolo Salini
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Antonio C. Caputo: Department of Industrial, Electronic and Mechanical Engineering, University Roma Tre, Via Vito Volterra, 62, 00146 Roma, Italy
Alessandro Federici: Department of Industrial Engineering, Information and Economics, University of L’Aquila, Zona Industriale di Pile, 67100 L’Aquila, Italy
Pacifico M. Pelagagge: Department of Industrial Engineering, Information and Economics, University of L’Aquila, Zona Industriale di Pile, 67100 L’Aquila, Italy
Paolo Salini: Department of Industrial Engineering, Information and Economics, University of L’Aquila, Zona Industriale di Pile, 67100 L’Aquila, Italy

Energies, 2025, vol. 18, issue 9, 1-29

Abstract: Renewable energy systems (RES) are strongly affected by many sources of uncertainty and variability. Nevertheless, traditional technical and economic evaluation methods often neglect uncertainty by deterministically assuming average nominal values, using simple sensitivity analysis to explore effects of changing conditions, or limiting to a few sources of uncertainty. Furthermore, long-term variability and changing scenarios during the life of the system are not considered. This leads to inaccurate estimation of inherent investment risk. To address this gap, this work proposes a framework for the economic evaluation of offshore wind farms, considering the effects of both epistemic and aleatory uncertainty. Uncertainty of correlations used to model the system, the variability of resources and energy prices, as well as the use of a financial hedging tool to cope with market risk, the impact of failures and disruptive events, the changing of long-term scenarios during the system’s life, and the wake effect due to wind direction variability are all considered. As demonstrated through an example of an application, this methodology will be useful to practitioners and academics to achieve a more realistic assessment of the profitability of the investment based on a more comprehensive propagation of uncertainty.

Keywords: offshore wind power system; economic evaluation; risk analysis; uncertainty propagation (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2025
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