Wind Farm Evaluation Under Real Options Approach

The wind farm performance is often characterized by uncertainty since it depends on unstable condition of wind speed and, consequently, on unstable wind energy conversion. This aspect makes the wind projects valuation quite difficult. The Real Options Approach (ROA) represents an adequate methodology to assess wind energy projects. This work applies the ROA by considering a specific stochastic process that would fit for the wind speed modelling, and other typical characteristics of wind projects, such as their multistage nature. We model the wind turbine performance by including three possible scenarios: cut-in speed, rated output speed and cut-out speed. A numerical example is provided to implement our mathematical valuation approach.