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Financial appraisal of operational offshore wind energy projects

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  • Weaver, Tyson

Abstract

This paper investigates the commercial attractiveness of the nascent offshore wind energy industry from an asset owner's perspective. Two commercial scale operational projects are used as illustrative cases. Based upon historical empirical financial and performance data in conjunction with future spot market price scenarios, a discounted cash flow methodology has been applied to underpin the financial value over each life cycle of plant. The robustness of the results is strengthened by sensitizing key input parameters. The results suggest that project annualized returns range between 8% and 11% above prescribed costs of capital. A key finding is that the cost of capital can be more instrumental in achieving lower costs of energy than site selection itself.

Suggested Citation

  • Weaver, Tyson, 2012. "Financial appraisal of operational offshore wind energy projects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 5110-5120.
    • Handle: RePEc:eee:rensus:v:16:y:2012:i:7:p:5110-5120
    DOI: 10.1016/j.rser.2012.05.003
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    References listed on IDEAS

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    2. Steffen, Bjarne, 2020. "Estimating the cost of capital for renewable energy projects," Energy Economics, Elsevier, vol. 88(C).
    3. Trapani, Kim & Millar, Dean L. & Smith, Helen C.M., 2013. "Novel offshore application of photovoltaics in comparison to conventional marine renewable energy technologies," Renewable Energy, Elsevier, vol. 50(C), pages 879-888.
    4. Bosch, Jonathan & Staffell, Iain & Hawkes, Adam D., 2019. "Global levelised cost of electricity from offshore wind," Energy, Elsevier, vol. 189(C).
    5. Zhou, Shan & Yang, Pu, 2020. "Risk management in distributed wind energy implementing Analytic Hierarchy Process," Renewable Energy, Elsevier, vol. 150(C), pages 616-623.
    6. Ederer, Nikolaus, 2014. "The right size matters: Investigating the offshore wind turbine market equilibrium," Energy, Elsevier, vol. 68(C), pages 910-921.
    7. Lagaros, Nikos D. & Karlaftis, Matthew G. & Paida, Maria K., 2015. "Stochastic life-cycle cost analysis of wind parks," Reliability Engineering and System Safety, Elsevier, vol. 144(C), pages 117-127.

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