Influence of the Discount Rate in the Economic Analysis of a Floating Offshore Wind Farm in the Galician Region of the European Atlantic Area

Abstract

The aim of this study is to evaluate the influence of the discount rate in some economic parameters which are relevant to study a floating offshore wind farm: the Net Present Value (NPV), the Levelized Cost Of Energy (LCOE) and the Discounted PayBack Period (DPBP). For this purpose, several maps have been created considering a particular location of the Atlantic Area: the Galician coast (North-West of Spain); and four alternatives, depending on the type of electric tariff or the type of discount rate. Results indicate the importance that the discount rate has in the economic feasibility of a floating offshore wind farm. In this context, the NPV is reduced when the discount rate is increased, the LCOE is reduced when the discount rate is increased, the IRR does not vary depending on the discount rate and the DPBP is increased with the discount rate. The discount rate can vary depending on the sector, the investor or the country where the floating offshore wind farm is installed. The motivation of this paper is to analyze the influence of one of the most important economic parameters in a floating offshore wind farm: the discount rate. Therefore, this type of analysis is very interesting in order to study its influence on the economic results, which are very important to take decisions for investors of the offshore renewable energy industry.