Valuation of projects for power generation with renewable energy: A comparative study based on real regulatory options

Why Do Electricity Policy and Competitive Markets Fail to Use Advanced PV Systems to Improve Distribution Power Quality?

“…Nonetheless, it is clear that new clean energy systems and support infrastructure on the distribution network have the capability to decrease network emission factors, improve frequency and voltage control, and improve network infrastructure and many other technical benefits [3]. Conversely, while there are technical limitations and variability issues associated with many decentralised renewable energy systems, there are several electricity market advantages including short capacity construction times, reduced transmission and distribution power losses, a deferral of traditional transmission and distribution upgrades, fuel supply diversity and associated security, and improvements in power quality [2,7,45]. Unfortunately, due to policy failures many of these benefits and costs remain outside market transactions and are either positive or negative externalities that are increasingly leading suboptimal electricity network outcomes.…”

“…As a general response to peak demand, electricity sector reforms towards competitive electricity market structures oversaw large investments in new generation capacity. In many jurisdictions this has arguably disregarded investments in fuel supply diversity and security, and not reinforcing the electricity network or improving the power quality [2,7]. In terms of new renewable energy capacity, while solar photovoltaics (PV) are enjoying a large surge in generation capacity, there is a perception that highpenetration PV variability and integration with conventional electricity infrastructure are technically and economically challenging to achieve [6,8].…”

Valuation of wind power distributed generation by using Longstaff–Schwartz option pricing method

“…Thus, the computation of the project hurdle rate in (2) rests on a relevant number of ''tuning'' parameters, which in turn depend on country and market factors, and on subjective judgments. Accordingly, in the recent wind energy related literature we can find a broad range of r values: 5.7% in [1], 5.8% in [2], 6.8% in [3], 8.0% in [4,5], 9.8% in [6], or 10.3% in [7]. In general for wind energy projects in which all cash flows would be expected to be positive after the initial investment, the larger the discount rate, the lower the expected NPV [8, S.11].…”

“…In [14] the authors valuated the capability of switching between tariffs to improve revenues. Finally, the authors of [1] employed RO analysis to compare the value of wind power investment in three different countries.…”

Research and development project assessment and social impact

“…In fact, traditional models for projects investment appraisal may rise some difficulties when there is uncertainty in the cash flows, forecasts or volatility of key variables. This has led many authors to question the adequacy of those techniques when uncertainty is the key factor in determining the viability of a project (Barroso & Iniesta, 2013). Furthermore, the selection process of R&D projects faces various difficulties, namely how to measure the impact of the R & D projects, and which selection process optimisation to use among projects with multiple, and sometimes incomparable, performance indicators (Duch-Brown et al, 2012).…”