Evaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review

The use of renewable energy sources, especially wind energy, has been widely developed, mostly during the last decade. The main objective of the present study is to conduct a literature review focused on the evaluation under uncertainty of wind energy investment using the real options approach to fi...

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Autores principales:	Benjamin Murgas, Alvin Henao, Luceny Guzman
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	wind energy investment appraisal real options uncertainty NIMBY projects public opposition Technology T Engineering (General). Civil engineering (General) TA1-2040 Biology (General) QH301-705.5 Physics QC1-999 Chemistry QD1-999
Acceso en línea:	https://doaj.org/article/b467c94067b04744845713648c2a892c
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spelling	oai:doaj.org-article:b467c94067b04744845713648c2a892c2021-11-11T15:15:56ZEvaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review10.3390/app1121102132076-3417https://doaj.org/article/b467c94067b04744845713648c2a892c2021-10-01T00:00:00Zhttps://www.mdpi.com/2076-3417/11/21/10213https://doaj.org/toc/2076-3417The use of renewable energy sources, especially wind energy, has been widely developed, mostly during the last decade. The main objective of the present study is to conduct a literature review focused on the evaluation under uncertainty of wind energy investment using the real options approach to find out whether public opposition (NIMBY projects) has been contemplated, and if so, what have been the flexible strategies applied for its intervention. Overall, 97 publications were analyzed, identifying 20 different models or approaches, which were grouped into eight categories: 1. Real options, 2. Optimization, 3. Stochastics, 4. Financial evaluation, 5. Probabilistic, 6. Estimation, 7. Numerical prediction, and 8. Others. The real options approach, present in 32% of the studies, was the most popular. Twenty-eight types of uncertainties were identified, which were grouped, for better analysis, into nine categories. In total, 62.5% of the studies included the price of electricity as a source of uncertainty; 18.8%, the velocity of wind; and 15.6%, the feed-in rates-subsidy. Both random and non-random techniques were applied to assess the real options and to model the uncertainties. When evaluating real options, the Monte Carlo simulation technique was the most preferred, with 16 (51.6%) applications, followed by non-randomized techniques, decision tree, and dynamic programming, with eight (25.8%) applications each. There is a marked tendency to use stochastic processes to model uncertainty, particularly geometric Brownian motion, which was used in 61.3% (19) of the studies in the sample. When searching for “real options AND (nimby OR public opposition)”, no study was found, which shows the possibility of developing research on this aspect to determine its impact on investments in wind energy projects.Benjamin MurgasAlvin HenaoLuceny GuzmanMDPI AGarticlewind energyinvestment appraisalreal optionsuncertaintyNIMBY projectspublic oppositionTechnologyTEngineering (General). Civil engineering (General)TA1-2040Biology (General)QH301-705.5PhysicsQC1-999ChemistryQD1-999ENApplied Sciences, Vol 11, Iss 10213, p 10213 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	wind energy investment appraisal real options uncertainty NIMBY projects public opposition Technology T Engineering (General). Civil engineering (General) TA1-2040 Biology (General) QH301-705.5 Physics QC1-999 Chemistry QD1-999
spellingShingle	wind energy investment appraisal real options uncertainty NIMBY projects public opposition Technology T Engineering (General). Civil engineering (General) TA1-2040 Biology (General) QH301-705.5 Physics QC1-999 Chemistry QD1-999 Benjamin Murgas Alvin Henao Luceny Guzman Evaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review
description	The use of renewable energy sources, especially wind energy, has been widely developed, mostly during the last decade. The main objective of the present study is to conduct a literature review focused on the evaluation under uncertainty of wind energy investment using the real options approach to find out whether public opposition (NIMBY projects) has been contemplated, and if so, what have been the flexible strategies applied for its intervention. Overall, 97 publications were analyzed, identifying 20 different models or approaches, which were grouped into eight categories: 1. Real options, 2. Optimization, 3. Stochastics, 4. Financial evaluation, 5. Probabilistic, 6. Estimation, 7. Numerical prediction, and 8. Others. The real options approach, present in 32% of the studies, was the most popular. Twenty-eight types of uncertainties were identified, which were grouped, for better analysis, into nine categories. In total, 62.5% of the studies included the price of electricity as a source of uncertainty; 18.8%, the velocity of wind; and 15.6%, the feed-in rates-subsidy. Both random and non-random techniques were applied to assess the real options and to model the uncertainties. When evaluating real options, the Monte Carlo simulation technique was the most preferred, with 16 (51.6%) applications, followed by non-randomized techniques, decision tree, and dynamic programming, with eight (25.8%) applications each. There is a marked tendency to use stochastic processes to model uncertainty, particularly geometric Brownian motion, which was used in 61.3% (19) of the studies in the sample. When searching for “real options AND (nimby OR public opposition)”, no study was found, which shows the possibility of developing research on this aspect to determine its impact on investments in wind energy projects.
format	article
author	Benjamin Murgas Alvin Henao Luceny Guzman
author_facet	Benjamin Murgas Alvin Henao Luceny Guzman
author_sort	Benjamin Murgas
title	Evaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review
title_short	Evaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review
title_full	Evaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review
title_fullStr	Evaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review
title_full_unstemmed	Evaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review
title_sort	evaluation of investments in wind energy projects, under uncertainty. state of the art review
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/b467c94067b04744845713648c2a892c
work_keys_str_mv	AT benjaminmurgas evaluationofinvestmentsinwindenergyprojectsunderuncertaintystateoftheartreview AT alvinhenao evaluationofinvestmentsinwindenergyprojectsunderuncertaintystateoftheartreview AT lucenyguzman evaluationofinvestmentsinwindenergyprojectsunderuncertaintystateoftheartreview
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Evaluation of Investments in Wind Energy Projects, under Uncertainty. State of the Art Review

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