Investment in mutually exclusive transmission projects under policy uncertainty

Bakke, Ida; Fleten, Stein–Erik; Hagfors, Lars Ivar; Hagspiel, Verena; Norheim, Beate

doi:10.1016/j.jcomm.2016.08.002

Cited by 7 publications

(4 citation statements)

References 18 publications

(31 reference statements)

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“…AES invests 41 billion tenge in its Kazakhstan assets in 2013-2015. "KazTransGas" has carried out capital investments in 2009 with a volume of about 245 billion tenge (Bakke et al, 2016).…”

Section: Features Of Investment In the Energymentioning

confidence: 99%

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2018

IJEEP

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Energy is an important branch of any economy. In this paper the authors analyze the investments that are directed to the energy sector. The energy complex of the Republic of Kazakhstan is deeply analyzed. It is determined that the actual capacity of all power plants in Kazakhstan is 15,000 MW. It is established that the territory has the opportunity to use non-traditional renewable energy sources. But because of the low reliability of mechanical systems, the uneven generation of energy is the more common use of traditional energy sources. Therefore, the sector needs to attract investments. It is established that investment in the energy complex until 2025 will be increased. Investments are increasing, on average, by 28% per year.

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“…AES invests 41 billion tenge in its Kazakhstan assets in 2013-2015. "KazTransGas" has carried out capital investments in 2009 with a volume of about 245 billion tenge (Bakke et al, 2016).…”

Section: Features Of Investment In the Energymentioning

confidence: 99%

Untitled

2018

IJEEP

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“…It will be used to electrolyze water to produce hydrogen. The hydrogen either returns to the grid through methods such as fuel cells or is used as energy carrier ending up in industrial or commercial application (Chen et al, 2009;Ipsakis et al, 2009;Bakke et al, 2016;Javed et al, 2020;Mayyas et al, 2020). According to the Global Energy Storage Database of the Department of Energy of the United States, as of June 2018, the world's total installed capacity of energy storage systems had reached 195.74 GW, and 1747 projects are running in operation.…”

Section: Introductionmentioning

confidence: 99%

“…They established a stochastic valuation model of energy storage in the large-scale electricity market. Bakke et al (2016) suggested considering the uncertainty of electricity price fluctuation when conducting power storage investment evaluations. The spot price of electricity generally shows strong seasonality, mean recovery, high volatility, clustering effect, and extreme price changes.…”

Section: Introductionmentioning

confidence: 99%

Environmental Benefit and Investment Value of Hydrogen-Based Wind-Energy Storage System

2021

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Alongside the rapid expansion of wind power installation in China, wind curtailment is also mounting rapidly due to China’s energy endowment imbalance. The hydrogen-based wind-energy storage system becomes an alternative to solve the puzzle of wind power surplus. This article introduced China’s energy storage industry development and summarized the advantages of hydrogen-based wind-energy storage systems. From the perspective of resource conservation, it estimated the environmental benefits of hydrogen-based wind-energy storages. This research also builds a valuation model based on the Real Options Theory to capture the distinctive flexible charging and discharging features of the hydrogen-based wind-energy storage systems. Based on the model, simulation results, including the investment value and operation decision of the hydrogen energy storage system with different electricity prices, system parameters, and different levels of subsidies, are presented. The results show that the hydrogen storage system fed with the surplus wind power can annually save approximately 2.19–3.29 million tons of standard coal consumption. It will reduce 3.31–4.97 million tons of CO2, SO2, NOx, and PM, saving as much as 286.6–429.8 million yuan of environmental cost annually on average. The hydrogen-based wind-energy storage system’s value depends on the construction investment and operating costs and is also affected by the mean-reverting nature and jumps or spikes in electricity prices. The market-oriented reform of China’s power sector is conducive to improve hydrogen-based wind-energy storage systems’ profitability. At present, subsidies are still essential to reduce initial investment and attract enterprises to participate in hydrogen energy storage projects.

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“…The cases in which the firm can choose among different investments, each with its own price and cost processes, are not new to the literature about investment under uncertainty. Such cases have been analyzed in the theoretical studies of Dixit (1993); Décamps et al (2006); Hagspiel et al (2016) and in applied studies dealing with real-estate Capozza and Li (1994); Geltner et al (1996), biodiesel energy Tareen et al (2000), energy for agricultural uses Lima et al (2013), and transmission cables Bakke et al (2016), to name a few. However, none of these studies have uncertainty both in the price and in the cost processes and therefore cannot study the role of correlation in the choice of the firm.…”

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confidence: 99%

Choosing a Price and Cost Combination—The Role of Correlation

Bar-Ilan

Maoz

2021

JRFM

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Often, firms can choose from different combinations of price and cost processes. For example, they can choose between different production locations or technologies, between different products to produce, or between different locations for selling them. To study the choice of the optimal combination, we return to themodel that was developed by Dixit and Pindyck, where both output price and production cost are stochastic processes, and add a novel focus on how the correlation between these processes affects the firm’s decision. We find that, ceteris paribus, the firm prefers the combination with the lowest correlation between the processes, as it seeks a greater profitability variance which maximizes its value.

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Investment in mutually exclusive transmission projects under policy uncertainty

Cited by 7 publications

References 18 publications

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Environmental Benefit and Investment Value of Hydrogen-Based Wind-Energy Storage System

Choosing a Price and Cost Combination—The Role of Correlation

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