Determining the Sustainability of a Community Micro Hydro Power System using Real Options Analysis

Isidro Antonio V. Marfori, Alvin B. Culaba, Aristotle T. Ubando, Ray Anthony Almonares, Wei Hsin Chen

研究成果: Conference article同行評審

摘要

Micro hydro power is a clean source of renewable energy that has been utilized for remote communities for electricity generation. The technology is mature and operates the same principle as large hydroelectric power plant but with much lower power capacity. Sustainability relies on the financial and other benefits brought about the micro hydro power plant during its operation. Traditional valuation method is often used to valuate micro hydro projects however it does not incorporate uncertainty factors, specifically unpredictable changes in weather. Real Options Analysis, on the other hand, uses both the Black-Scholes Model and Binomial Tree Method which incorporates uncertainty. The valuation obtained through real option analysis represents the net present value of the project with decision flexibility option for the investor. In this study, real options analysis is applied to a micro hydro power plant to identify its financial sustainability. Head and flow rate are obtained to calculate the capital investment, electrical sales, maintenance, and cost of operating nearby agricultural facilities. Traditional financial valuation method revealed a positive outcome making the project financially viable. However, real options analysis provided a contradicting result indicating the implementation of the project should be delayed.

原文English
文章編號012108
期刊IOP Conference Series: Earth and Environmental Science
268
發行號1
DOIs
出版狀態Published - 2019 7月 2
事件International Conference on Sustainable Energy and Green Technology 2018, SEGT 2018 - Kuala Lumpur, Malaysia
持續時間: 2018 12月 112018 12月 14

All Science Journal Classification (ASJC) codes

  • 一般環境科學
  • 一般地球與行星科學

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