Abstract
Wind energy is a reliable source for fulfilling energy demand. However, the wind power usage remains limited due to the investmental risks. Governments’ support on renewable energy compensates these risks partially. Traditional investment evaluation techniques that do not consider the compensations and risks associated with the wind energy investments are one of the main reasons for the limited usage of wind power. In this study a real option and Monte Carlo simulation–based methodology, which considers both risks and compensations associated with these investments, is proposed to evaluate wind energy investments. The model is applied to a wind turbine investment in Turkey in order to show the applicability of the proposed model. The results indicate that the option value created through wind energy investments due to the governmental compensations is very high; therefore the traditional investment techniques are not appropriate for evaluating wind energy investments.
| Original language | English |
|---|---|
| Pages (from-to) | 1230-1245 |
| Number of pages | 16 |
| Journal | Human and Ecological Risk Assessment (HERA) |
| Volume | 21 |
| Issue number | 5 |
| DOIs | |
| Publication status | Published - 4 Jul 2015 |
Bibliographical note
Publisher Copyright:© 2015, Copyright © Taylor & Francis Group, LLC.
Keywords
- investment evaluation
- real options
- renewable energy
- risk analysis
- wind energy
