Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Valuation of Wind Energy Turbines Using Volatility of Wind and Price

Version 1 : Received: 9 January 2021 / Approved: 11 January 2021 / Online: 11 January 2021 (12:33:54 CET)

How to cite: Greenberg, D.; Byalsky, M.; Yahalom, A. Valuation of Wind Energy Turbines Using Volatility of Wind and Price. Preprints 2021, 2021010190 (doi: 10.20944/preprints202101.0190.v1). Greenberg, D.; Byalsky, M.; Yahalom, A. Valuation of Wind Energy Turbines Using Volatility of Wind and Price. Preprints 2021, 2021010190 (doi: 10.20944/preprints202101.0190.v1).

Abstract

The limitedness of the nonrenewable local energy resources in Israel, even in background of the later gas fields’ findings, continues to force the state to devote various efforts for the ‘green’ energy development. These efforts include installations both in the solar and in the wind energy, with a purpose to improve the diversity of energy sources. While the standard discounted cash flow (DCF) method using the net present value (NPV) criterion is extensively adopted to evaluate investments, the standard DCF method is inappropriate for the rapidly changing investment climate and for the managerial flexibility in investment decisions. In recent years, the real options analysis (ROA) technique is widely applied in many studies for valuation of renewable energy investment projects. Hence, we apply in this study the real options analysis approach for the valuation of wind energy turbines and apply it to the analysis of wind energy economic potential in Israel.

Subject Areas

Wind energy; Renewable resources; Black-Scholes model

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