An Assessment of Wind Farm Construction Efficiency Using the Real Option Method
From a developer’s point of view the construction of a wind farm in Poland is an investment project assessed in terms of economic efficiency. This paper discusses the selection of methods to be used for the assessment of such investments: it proposes to consider wind farm construction as an option a...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Sciendo
2016-12-01
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| Series: | Folia Oeconomica Stetinensia |
| Subjects: | |
| Online Access: | https://doi.org/10.1515/foli-2016-0027 |
| _version_ | 1818670349568442368 |
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| author | Łukaszewski Tomasz Głoćko Wojciech |
| author_facet | Łukaszewski Tomasz Głoćko Wojciech |
| author_sort | Łukaszewski Tomasz |
| collection | DOAJ |
| description | From a developer’s point of view the construction of a wind farm in Poland is an investment project assessed in terms of economic efficiency. This paper discusses the selection of methods to be used for the assessment of such investments: it proposes to consider wind farm construction as an option and price it using models developed for the financial market. The purpose of the paper is to present a practical application of the option pricing method to the assessment of wind farm construction efficiency, in particular to compare the option and discount methods. Calculations are based with the example of an actual wind farm completed by one of the authors. The values of the project are different depending on the chosen method of estimation. The pricing carried out using the options method will lend legitimacy to the DCF result or suggest the verification of its correctness and review of the assumptions made. In both cases the application of the options method will have an advantageous impact on the investment decision. |
| first_indexed | 2024-12-17T07:06:42Z |
| format | Article |
| id | doaj.art-50e0aa125bbf4176af2a3fba54957dd5 |
| institution | Directory Open Access Journal |
| issn | 1898-0198 |
| language | English |
| last_indexed | 2024-12-17T07:06:42Z |
| publishDate | 2016-12-01 |
| publisher | Sciendo |
| record_format | Article |
| series | Folia Oeconomica Stetinensia |
| spelling | doaj.art-50e0aa125bbf4176af2a3fba54957dd52022-12-21T21:59:08ZengSciendoFolia Oeconomica Stetinensia1898-01982016-12-011628410210.1515/foli-2016-0027foli-2016-0027An Assessment of Wind Farm Construction Efficiency Using the Real Option MethodŁukaszewski Tomasz0Głoćko Wojciech1University of Szczecin, Faculty of Economics and Management, Institute of IT in Management, Mickiewicza 64, 71-101 Szczecin, PolandChairman of the Board, Epa Wind sp. z o.o, Wojska Polskiego 156, 71-324 Szczecin, PolandFrom a developer’s point of view the construction of a wind farm in Poland is an investment project assessed in terms of economic efficiency. This paper discusses the selection of methods to be used for the assessment of such investments: it proposes to consider wind farm construction as an option and price it using models developed for the financial market. The purpose of the paper is to present a practical application of the option pricing method to the assessment of wind farm construction efficiency, in particular to compare the option and discount methods. Calculations are based with the example of an actual wind farm completed by one of the authors. The values of the project are different depending on the chosen method of estimation. The pricing carried out using the options method will lend legitimacy to the DCF result or suggest the verification of its correctness and review of the assumptions made. In both cases the application of the options method will have an advantageous impact on the investment decision.https://doi.org/10.1515/foli-2016-0027real optionsefficiency assessmentwind farmsg13g31q42 |
| spellingShingle | Łukaszewski Tomasz Głoćko Wojciech An Assessment of Wind Farm Construction Efficiency Using the Real Option Method Folia Oeconomica Stetinensia real options efficiency assessment wind farms g13 g31 q42 |
| title | An Assessment of Wind Farm Construction Efficiency Using the Real Option Method |
| title_full | An Assessment of Wind Farm Construction Efficiency Using the Real Option Method |
| title_fullStr | An Assessment of Wind Farm Construction Efficiency Using the Real Option Method |
| title_full_unstemmed | An Assessment of Wind Farm Construction Efficiency Using the Real Option Method |
| title_short | An Assessment of Wind Farm Construction Efficiency Using the Real Option Method |
| title_sort | assessment of wind farm construction efficiency using the real option method |
| topic | real options efficiency assessment wind farms g13 g31 q42 |
| url | https://doi.org/10.1515/foli-2016-0027 |
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