Methods for Financial Assessment of Renewable Energy Projects: A Review

Delapedra-Silva, Vanderson Aparecido; Ferreira, Paula Varandas; Cunha, Jorge; Kimura, Herbert

doi:10.3390/pr10020184

Cited by 28 publications

(15 citation statements)

References 98 publications

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“…Our research is exploratory and forward-looking, exploring the financial impacts of climate change, on cash flows. The construction and evaluation of financial cash flows is a well-known, widely used and researched concept in financial analysis (Delapedra-Silva, et al, 2022), (Desai, 2019), (Damodaran, 2012). It is qualitative in that it requires expert opinion and it is quantitative in that we perform basic Excel-based calculations of a company's cash flow.…”

Section: Methodsmentioning

confidence: 99%

A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries

Sánchez González,

Lochmuller,

Builes-Vélez

et al. 2023

Preprint

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Climate change and net zero are expected to have a significant impact on eco-nomic activity in developing countries, and thus, on the financial cash flow of organizations. In this paper, we propose a procedure for assessing the financial impact of climate change on organizational cash flow in developing countries. Our study contributes to the research on scenario-based climate change impact analysis. The applied research design is exploratory and mainly qualitative, constructing financial impact scenarios combined with narratives to determine the impact of climate change on individual cash flow line items. The narra-tives rationalize cash flow variations and enrich the estimates by adding expert knowledge, in the form of financial micro-stories and descriptions to the pro-posed procedure. We present a hypothetical citrus farming company in a de-veloping country to demonstrate the application of the proposed measurement procedure. The results obtained suggest that (1) the procedure is practical be-cause financial cash flows are known and widely used in financial analysis and because they can be implemented in a spreadsheet; that (2) the procedure pro-vides flexibility because it can be adapted to suit the specific needs of different companies, depending on a selected climate change scenario, the company’s exposure to climate change, its resilience and vulnerability; (3) that the prac-tice of thinking in terms of financial worst-case, base-case and best-case sce-narios, which reflect different levels of uncertainty, helps to model the finan-cial impacts of climate change and provides a forward-looking perspective on how much a company’s cash flow could change.

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Section: Methodsmentioning

confidence: 99%

A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries

Sánchez González,

Lochmuller,

Builes-Vélez

et al. 2023

Preprint

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“…According to Delapedra-Silva et al (2022), the literature on the financial evaluation of renewable energy sources (RES) projects has extensively explored various methods, but there have been changes over time, driven by different factors. This article aims to analyze publications on the financial evaluation of RES projects from 2011 to 2020 and provide a critical analysis of the literature.…”

Section: Literature Reviewmentioning

confidence: 99%

Untitled

2023

IJBESAR

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A research article is a regular article which aims to present new findings. 2. Letters to the Editor: A letter to the editor is a short article which aims to present new findings that require fast publication procedures. 3. Notes: A note is an article (regular or short) which aims to present rather new findings. 4. Comments: A comment is a short article that makes comments on another article already published by this journal or replies to a comment; 5. Review Articles: A review article is an article which aims to present comprehensively already existing findings.6. Lecture Notes: A lecture note is a short review article. 7. Monographs: A monograph is a thesis of one or more authors on a unique subject; apart from the standard reviewing procedures, a monograph must also be accepted from a committee of specialists appointed by the Editor. 8. Innovations: An innovation is an article which aims to present new procedures or devices. 9. Selected conference articles: Upon an agreement with a conference committee, selected papers may be published by the Journal in a special section. In this case the editor will appoint in collaboration with the conference committee guest editors.

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“…Therefore, it must be taken into account that these projects face financial challenges that are associated with their characteristics and that, according to Santos et al [14], influence the choice of the best method to evaluate them financially: (i) they are carried out in competitive markets; (ii) they demand investments of significant amounts; (iii) with high irreversibility levels; and (iv) they are exposed to multiple factors of uncertainty, so the associated investment decisions deserve to be analyzed holistically to compare projects, support investment decisions, and, thus, achieve a sustainable, viable and profitable energy future [15]. Hence, studying and developing valuation methods for these projects is essential to encourage these investment initiatives, not only due to the technical advances anticipated in these technologies but also because their assessment must consider the multiplicity of variables that influence their viability [16].…”

Section: Introductionmentioning

confidence: 99%

“…The methods that have been used to financially evaluate investment projects range from the traditional one, based on the construction of deterministic cash flows and the calculation of financial indicators such as the net present value (NPV), the internal rate of return of the project (IRR), payback period (PR), return on investment (ROI), and, for energy projects, levelized cost of energy (LCOE) [14,16], to more advanced methods such as that of Real Options (ROs), Games Theory (GT), and Option Games (OGs), which allow us to overcome the limitations of the traditional one (it does not consider uncertainty and the effect of interactions among competitors) on the value of investment initiatives [16,17].…”

Section: Introductionmentioning

confidence: 99%

Financial Investment Valuation Models for Photovoltaic and Energy Storage Projects: Trends and Challenges

Gómez-Restrepo,

González-Ruiz,

Botero Botero

2024

Energies

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Energy production through non-conventional renewable sources allows progress towards meeting the Sustainable Development Objectives and constitutes abundant and reliable sources when combined with storage systems. From a financial viewpoint, renewable energy production projects withstand significant challenges such as competition, irreversibility of investments, high uncertainty levels, and considerable investment amounts. These facts make their financial valuation fundamental for all the agents involved. Using the Web of Science (WoS) and Scopus databases, a scientometric analysis was carried out to understand the methods that have been used in the financial appraisal of photovoltaic energy generation projects with storage systems. The present research project was developed from 268 studies published between 2013 and 2023; tools such as Bibliometrix 4.1.3, VOSViewer 1.6.19, and Tree of Science 0.0.1a9 were used. Two main findings stand out: (i) the most used methods in the literature are the traditional ones, and within them, the levelized cost of energy has been used with greater frequency; and (ii) there is an interest in analyzing the investments of these systems for residences within the framework of distributed energy generation. Two gaps were found in the literature: (i) the studies that were carried out have not comprehensively incorporated the financial challenges faced by these investments; and (ii) the evaluation of these projects has not been addressed from the perspective of a utility-based power generator.

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Methods for Financial Assessment of Renewable Energy Projects: A Review

Cited by 28 publications

References 98 publications

A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries

A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries

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Financial Investment Valuation Models for Photovoltaic and Energy Storage Projects: Trends and Challenges

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