Wind Power Projects Planning Considering Real Options for the Wind Resource Assessment

Abstract

Investments in wind power projects (WPPs) have increased in the last few years. This trend is partially due to the availability of support schemes, which increase the economic attractiveness of WPPs. Alternatively, the value of WPPs can be enhanced by improving available techniques used for their planning and design. After reviewing WPP literature, it was concluded that available tools for the planning and design of WPP could be improved by addressing the uncertainty of the wind resource assessment (WRA), and this source of uncertainty could be used to enhance the value of WPPs with real options (ROs) theory. ROs theory is known for its potential to increase the expected worth of projects by exploiting the value of flexibility within the projects' investment decisions and designs. Nevertheless, ROs literature has to be extended to properly address the design of WPPs. Based on the gaps in ROs theory and WPPs planning, this paper proposes a methodology that relies on ROs theory to incorporate WRA uncertainty in the planning and design process of WPPs. The methodology is illustrated with a small case study and its potential to increase the value of WPPs under different conditions is analyzed for a wide range of case studies. The results illustrate the circumstances and assumptions that can improve and weaken the effectiveness of the methodology. It is concluded that the application of the proposed ROs methodology results in increased value for WPPs in most scenarios.