Abstract
The present paper adopts a real options approach to value wind power investments under uncertainty. Flexibility arises from the possibility to defer the construction of a wind farm until more information is available, the alternative to abandon the investment, and the options to select the scale of the project and up-scale the project. Taking into account uncertainties in future electricity prices, subsides, and investment costs, the problem is solved by dynamic stochastic programming. The motivation rests on a real business case of the major Norwegian power producer Agder Energi and experience from the Nordic power market at Nord Pool.
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Vogstad, K., Kristoffersen, T.K. (2010). Investment Decisions Under Uncertainty Using Stochastic Dynamic Programming: A Case Study of Wind Power. In: Pardalos, P., Rebennack, S., Pereira, M., Iliadis, N. (eds) Handbook of Power Systems I. Energy Systems. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-02493-1_14
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DOI: https://doi.org/10.1007/978-3-642-02493-1_14
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