publication . Article . Other literature type . 2016

Investment and risk appraisal in energy storage Systems: A real options approach

Locatelli, Giorgio; Invernizzi, Diletta Colette; Mancini, Mauro;
Open Access
  • Published: 01 Jun 2016 Journal: Energy, volume 104, pages 114-131 (issn: 0360-5442, Copyright policy)
  • Publisher: Elsevier BV
Abstract
The increasing penetration of variable renewable energy is becoming a key challenge for the management of the electrical grid. Electrical Energy Storage Systems (ESS) are one of the most suitable solutions to increase the flexibility and resilience of the electrical system. This paper presents an innovative methodology for the appraisal of the investment in ESS. The methodology is based on the Real Option Analysis and it is able to properly consider investment risks and uncertainties as well as the options available for the investor. The paper assesses the value of the option to wait for a change in the market conditions before investing and re-evaluates the pro...
Subjects
ACM Computing Classification System: ComputerApplications_COMPUTERSINOTHERSYSTEMS
free text keywords: Incentive, Valuation (finance), Energy market, Profitability index, Economics, Operations management, Arbitrage, Environmental economics, Variable renewable energy, Capital budgeting, Waste management, Electrical grid

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