Investment Timing and Capacity Choice for Small-Scale Wind Power Under Uncertainty

Date Published
11/2004
Publication Type
Report
Authors
LBL Report Number
LBNL-58072
Abstract

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.

Year of Publication
2004
Pagination
8
Institution
LBNL
City
Berkeley
Refereed Designation
Unknown
Keywords
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Research Areas
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