Optimal Structuring of Investments in Electricity Generation Projects in Colombia with Non-Conventional Energy Sources

Juan D. Saldarriaga-Loaiza, Sergio D. Saldarriaga-Zuluaga, Jesús M. López-Lezama (), Fernando Villada-Duque and Nicolás Muñoz-Galeano
Additional contact information
Juan D. Saldarriaga-Loaiza: Research Group on Efficient Energy Management (GIMEL), Department of Electrical Engineering, Universidad de Antioquia (UdeA), Medellin 050010, Colombia
Sergio D. Saldarriaga-Zuluaga: Departamento de Eléctrica, Facultad de Ingenieria, Institución Universitaria Pascual Bravo, Calle 73 No. 73A-226, Medellin 050036, Colombia
Jesús M. López-Lezama: Research Group on Efficient Energy Management (GIMEL), Department of Electrical Engineering, Universidad de Antioquia (UdeA), Medellin 050010, Colombia
Fernando Villada-Duque: Research Group on Efficient Energy Management (GIMEL), Department of Electrical Engineering, Universidad de Antioquia (UdeA), Medellin 050010, Colombia
Nicolás Muñoz-Galeano: Research Group on Efficient Energy Management (GIMEL), Department of Electrical Engineering, Universidad de Antioquia (UdeA), Medellin 050010, Colombia

Sustainability, 2022, vol. 14, issue 22, 1-21

Abstract: Taking full advantage of fiscal and economic incentives has become a complex process for investors, who must find the right portfolio or capital structure to obtain viable and competitive generation projects. In this context, this paper proposes a methodology for the optimal structuring of investments in non-conventional energy sources (NCRES) considering fiscal and economic incentives. Three methods were evaluated: (1) levelized cost of electricity (LCOE) combined with three metaheuristic techniques; (2) discounted cash flow (DCF) with Monte Carlo simulation and value at risk (VaR); and (3) real options with Black and Scholes. The proposed approach presents as the main financial indicator the generation cost (GC), as well as three other financial indicators, namely: net present value (NPV), value at risk (VaR) and net present value for real options (NPV R O ). The propose approach allows for defining different investment portfolios from where an investor can choose; each of which minimizes the GC. Furthermore, the methodology can be adapted to countries with different policies and fiscal incentives for the development of NCRES projects. The results show that for each metaheuristic, an optimal capital structure that minimizes GC is obtained; in this way, a GC of 0.032 (USD/kWh) is achieved for solar photovoltaic technology, with a reduction of 49.2%, when tax incentives are considered.

Keywords: non-conventional energy sources; levelized cost of electricity; real options; Monte Carlo simulation; investment optimization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/22/15123/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/22/15123/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:22:p:15123-:d:973223

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().