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Conference Paper: Wind power investment in thermal system and emissions reduction

TitleWind power investment in thermal system and emissions reduction
Authors
KeywordsBinomial model
Emissions price
Real option
Wind power
Issue Date2010
PublisherIEEE
Citation
The IEEE Power and Energy Society (PES) General Meeting, Minneapolis, MN., 25-29 July 2010. In Proceedings of PES, 2010, p. 1-8 How to Cite?
AbstractThis paper presents an analytical model for wind power investment. Most generation planning problems are formulated in multiperiod mixed integer programming with cost minimization as objective. We try to resort to finance literature for models able to systematically characterize return and risk. Real option theory is chosen. A primitive function is defined for the fuel cost able to be saved as the revenue of a wind power project. Subsequently the real project is described as a contingent claim on the stochastic fuel prices. Theoretical valuation of the project is thus given by the solution of a partial differential equation derived by Ito lemma. This formulation avoids the ambiguity in analyzing wind power investment based on non-market-based tariffs, but focuses on the welfare to the system as a whole. Finally a hypothetical scenario of carbon emission price is included to demonstrate the incentive it could offer to renewable generation. ©2010 IEEE.
Persistent Identifierhttp://hdl.handle.net/10722/126100
ISSN
References

 

DC FieldValueLanguage
dc.contributor.authorCheng, HMKen_HK
dc.contributor.authorHou, Yen_HK
dc.contributor.authorWu, FFen_HK
dc.date.accessioned2010-10-31T12:09:48Z-
dc.date.available2010-10-31T12:09:48Z-
dc.date.issued2010en_HK
dc.identifier.citationThe IEEE Power and Energy Society (PES) General Meeting, Minneapolis, MN., 25-29 July 2010. In Proceedings of PES, 2010, p. 1-8en_HK
dc.identifier.issn1944-9925-
dc.identifier.urihttp://hdl.handle.net/10722/126100-
dc.description.abstractThis paper presents an analytical model for wind power investment. Most generation planning problems are formulated in multiperiod mixed integer programming with cost minimization as objective. We try to resort to finance literature for models able to systematically characterize return and risk. Real option theory is chosen. A primitive function is defined for the fuel cost able to be saved as the revenue of a wind power project. Subsequently the real project is described as a contingent claim on the stochastic fuel prices. Theoretical valuation of the project is thus given by the solution of a partial differential equation derived by Ito lemma. This formulation avoids the ambiguity in analyzing wind power investment based on non-market-based tariffs, but focuses on the welfare to the system as a whole. Finally a hypothetical scenario of carbon emission price is included to demonstrate the incentive it could offer to renewable generation. ©2010 IEEE.en_HK
dc.languageengen_HK
dc.publisherIEEE-
dc.relation.ispartofIEEE PES General Meeting, PES 2010en_HK
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectBinomial modelen_HK
dc.subjectEmissions priceen_HK
dc.subjectReal optionen_HK
dc.subjectWind poweren_HK
dc.titleWind power investment in thermal system and emissions reductionen_HK
dc.typeConference_Paperen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=1944-9925&volume=&spage=1&epage=8&date=2010&atitle=Wind+power+investment+in+thermal+system+and+emissions+reduction-
dc.identifier.emailHou, Y: yhhou@hku.hken_HK
dc.identifier.emailWu, FF: ffwu@eee.hku.hken_HK
dc.identifier.authorityHou, Y=rp00069en_HK
dc.identifier.authorityWu, FF=rp00194en_HK
dc.description.naturepublished_or_final_version-
dc.identifier.doi10.1109/PES.2010.5589659en_HK
dc.identifier.scopuseid_2-s2.0-78649532582en_HK
dc.identifier.hkuros172195en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-78649532582&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.spage1-
dc.description.otherThe IEEE Power and Energy Society (PES) General Meeting, Minneapolis, MN., 25-29 July 2010. In Proceedings of PES, 2010, p. 1-8-
dc.identifier.scopusauthoridCheng, HMK=7404285060en_HK
dc.identifier.scopusauthoridHou, Y=7402198555en_HK
dc.identifier.scopusauthoridWu, FF=7403465107en_HK

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