Investment Timing and Capacity Choice for Small-Scale Wind PowerUnder Uncertainty

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This paper presents a method for evaluation of investments in small-scale wind power under uncertainty. It is assumed that the price of electricity is uncertain and that an owner of a property with wind resources has a deferrable opportunity to invest in one wind power turbine within a capacity range. The model evaluates investment in a set of projects with different capacity. It is assumed that the owner substitutes own electricity load with electricity from the wind mill and sells excess electricity back to the grid on an hourly basis. The problem for the owner is to find the price ... continued below

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Fleten, Stein-Erik & Maribu, Karl Magnus November 28, 2004.

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This paper presents a method for evaluation of investments in small-scale wind power under uncertainty. It is assumed that the price of electricity is uncertain and that an owner of a property with wind resources has a deferrable opportunity to invest in one wind power turbine within a capacity range. The model evaluates investment in a set of projects with different capacity. It is assumed that the owner substitutes own electricity load with electricity from the wind mill and sells excess electricity back to the grid on an hourly basis. The problem for the owner is to find the price levels at which it is optimal to invest, and in which capacity to invest. The results suggests it is optimal to wait for significantly higher prices than the net present value break-even. Optimal scale and timing depend on the expected price growth rate and the uncertainty in the future prices.

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  • IASTED International Conference on Power andEnergy Systems, Clearwater Beach, Florida, November 28- December 1,2004

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  • Report No.: LBNL--58072
  • Grant Number: DE-AC02-05CH11231
  • Office of Scientific & Technical Information Report Number: 860791
  • Archival Resource Key: ark:/67531/metadc778767

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  • November 28, 2004

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  • Dec. 3, 2015, 9:30 a.m.

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  • April 1, 2016, 7:39 p.m.

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Fleten, Stein-Erik & Maribu, Karl Magnus. Investment Timing and Capacity Choice for Small-Scale Wind PowerUnder Uncertainty, article, November 28, 2004; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc778767/: accessed August 23, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.