Profitability of wind energy: Short-term risk factors and possible improvements

Montes, Germán Martínez; Martín, Enrique Prados

doi:10.1016/j.rser.2006.03.009

Cited by 33 publications

(14 citation statements)

References 16 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Existing design standards such as IEC and API might provide some experience. Besides, much of the insurance for commercial wind energy projects, owned and developed by larger parent companies in the power sector, has been provided under the main property insurance package covering the parent companies' power assets [29]. The use of unspecialized parent company package did not provide adequate cover to the unique risk profile especially for offshore wind projects under the risks of tropical cyclones.…”

Section: Discussionmentioning

confidence: 99%

An economic assessment of tropical cyclone risk on offshore wind farms

Hong

Möller

2012

Renewable Energy

View full text Add to dashboard Cite

Frequent tropical cyclones pose great risks and obstacles to the development of offshore wind farms in the coastal regions of China and other areas in the Pacific, where development of wind energy is gaining momentum. This paper aims to identify and evaluate the risks of tropical cyclones on offshore wind farms within the Economic Exclusive Zone (EEZ) of China and help improve decision-making for planners and investors. The risks of tropical cyclone impact in this paper are defined by the statistical extreme wind climate and the expected economic losses of offshore wind farms. A probabilistic tropical cyclone event model is applied to evaluate 20-year, 30-year, 50-year and 100-year recurrence of extreme wind speeds by geographical location. Combining a damage model derived from empirical loss data and an investment cost model within a Geographical Information System (GIS), the expected annual losses of offshore wind farms from tropical cyclones are evaluated and shown on a spatially continuous risk map. Results are given in terms of annual economic risks and damage losses based on occurrence of an average recurrence interval. Implications for identifying locations for offshore wind farms and resource potential and costs are then discussed. The impact of tropical cyclones on offshore wind farms likes a double-edged sword, which might be advantageous for some regions in terms of increasing full-loaded hours of turbines, but also disadvantageous for others due to its destructive effects. However, specific design standards and insurance of turbines would help reduce the risks and economic losses of offshore wind farms in tropical cyclone-prone areas and expand exploitable locations for future offshore wind farms.

show abstract

Section: Discussionmentioning

confidence: 99%

An economic assessment of tropical cyclone risk on offshore wind farms

Hong

Möller

2012

Renewable Energy

View full text Add to dashboard Cite

show abstract

“…Our approach can be applied to any wind regime. We apply statistical simulation methods to close the gap in the scientific literature on wind energy production [14]. Neither the bootstrapping method to predict wind speeds nor the conditional value at risk approach have been applied for investment assessments in combination with wind site evaluations.…”

Section: Discussionmentioning

confidence: 99%

“…Kaldellis et al [13] conducted a sensitivity analysis in order to show the impact of different parameters on the economic viability and attractiveness of a wind energy plant. However, Montes and Martin [14] argue that statistical simulation methods should be used to account for and assess the economic risk resulting from the variability in wind speed. Some authors analyze the wind energy potential of a specific site by using either Monte Carlo simulations for predicting wind speeds or by using the wind speed measurement data directly if sufficient measurement data are available [15], [3], [16], [9], [17].…”

Section: Introductionmentioning

confidence: 99%

Economic Assessment of Wind Power Uncertainty

Gass

Strauss

Schmidt

et al. 2011

Linköping Electronic Conference Proceedings

View full text Add to dashboard Cite

Wind energy has been the fastest growing and most promising renewable energy source in terms of profitability in recent years. However, one major drawback of wind energy is the variability in production due to the stochastic nature of wind. The article presents statistical simulation methods to incorporate risks from stochastic wind speeds into profitability calculations. We apply the Measure-Correlate-Predict Method (MCP) within the variance ratio method to generate long-term wind velocity estimates for a potential wind energy site in Austria. The bootstrapping method is applied to generate wind velocities for the economic life-time of a wind turbine. The internal rate of return is used as profitability indicator. We use the Conditional Value at Risk approach (CVaR) to derive probability levels for a certain internal rate of returns, as the CVaR is a reliable risk measure even if return distributions are not normal. In contrast to other scientific publications, our methodology can be generally applied, because we do not rely on estimated distributions for wind speed predictions, but on measured wind speed distributions, which are usually readily available. In addition, the CVaR has not been applied as a measure of risk for wind site evaluation before and it does not rely on any specific function regarding the profitability distribution.

show abstract

“…The financial impact of the uncertainty of power production from renewable energy resources has also been studied in association with zonal real-time energy prices and Locational Marginal Prices (LMP) [13][14][15], as well as under related market structures [16].…”

Section: A Uncertainty Due To Power Outputmentioning

confidence: 99%

Integrated risk management for renewable energy investment over life cycle

Sun

Grijalva

2012

2012 IEEE Energy Conversion Congress and Exposition (ECCE)

View full text Add to dashboard Cite

The provision of a financial product for renewable energy requires that the return of the financial product be determined based on the portion of risk it holds. Accurately modeling the risk becomes essential in order to achieve higher penetration of renewable energy in markets. This paper combines the effect of the various types of risks, and shows that the overall risk of renewable energy is not the sum of the individual risks due to each driving factor. The applications of the proposed model are illustrated by two cases: the impact in energy markets and the distribution of profit to different types of risk. Energy efficiency, electricity prices and wind speed, which are associated with potential risks, are modeled as inputs.

show abstract

Profitability of wind energy: Short-term risk factors and possible improvements

Cited by 33 publications

References 16 publications

An economic assessment of tropical cyclone risk on offshore wind farms

An economic assessment of tropical cyclone risk on offshore wind farms

Economic Assessment of Wind Power Uncertainty

Integrated risk management for renewable energy investment over life cycle

Contact Info

Product

Resources

About