IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v290y2020i1d10.1007_s10479-018-2878-z.html
   My bibliography  Save this article

Sustainable operation-oriented investment risk evaluation and optimization for renewable energy project: a case study of wind power in China

Author

Listed:
  • Xu Lei

    (Xihua University)

  • Tang Shiyun

    (Xihua University)

  • Deng Yanfei

    (Southwest University for Nationalities)

  • Yuan Yuan

    (Sichuan Electric Power Design & Consulting Co., Ltd)

Abstract

Renewable energy is playing an increasingly important role in energy security and environmental protection. As China has a huge demand for renewable energy and also has abundant wind resources, it is vital that government, investors and operators work together to ensure the sustainable development of the wind energy industry. Even though China is already a leader in wind power generation with the largest installed wind power capacity in the world, it has continued to build new wind power facilities. However, due to industrial immaturity and the need for significant investment, wind power investors and operators are faced with uncertainty about the attendant risks. To achieve risk mitigation and sustainability, this paper proposes an investment risk evaluation and optimization process for Chinese wind power projects. The Monte Carlo method is first used to evaluate the investment risks, after which a multi-objective programming model is built for the optimization. A specific case in western China is examined to demonstrate the proposed methodology, with the evaluation results indicating that the project has high investment risk. Based on the case study, the key risk factors are identified and optimization suggestions given for China’s wind power projects. The proposed methodology and findings contribute to research on the planning, investment and sustainable operation of renewable energy power generation projects in other areas in China.

Suggested Citation

  • Xu Lei & Tang Shiyun & Deng Yanfei & Yuan Yuan, 2020. "Sustainable operation-oriented investment risk evaluation and optimization for renewable energy project: a case study of wind power in China," Annals of Operations Research, Springer, vol. 290(1), pages 223-241, July.
    • Handle: RePEc:spr:annopr:v:290:y:2020:i:1:d:10.1007_s10479-018-2878-z
    DOI: 10.1007/s10479-018-2878-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-018-2878-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-018-2878-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ming, Zeng & Kun, Zhang & Jun, Dong, 2013. "Overall review of China's wind power industry: Status quo, existing problems and perspective for future development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 379-386.
    2. Zhimin Huang & Yi-Ming Wei & Ke Wang & Hua Liao, 2017. "Energy economics and climate policy modeling," Annals of Operations Research, Springer, vol. 255(1), pages 1-7, August.
    3. Altannar Chinchuluun & Panos Pardalos, 2007. "A survey of recent developments in multiobjective optimization," Annals of Operations Research, Springer, vol. 154(1), pages 29-50, October.
    4. Chen, Jiandong & Cheng, Shulei & Song, Malin, 2017. "Decomposing inequality in energy-related CO2 emissions by source and source increment: The roles of production and residential consumption," Energy Policy, Elsevier, vol. 107(C), pages 698-710.
    5. Silva Herran, Diego & Dai, Hancheng & Fujimori, Shinichiro & Masui, Toshihiko, 2016. "Global assessment of onshore wind power resources considering the distance to urban areas," Energy Policy, Elsevier, vol. 91(C), pages 75-86.
    6. Zhao, Zhen-Yu & Chang, Rui-Dong & Chen, Yu-Long, 2016. "What hinder the further development of wind power in China?—A socio-technical barrier study," Energy Policy, Elsevier, vol. 88(C), pages 465-476.
    7. Falconett, Irina & Nagasaka, Ken, 2010. "Comparative analysis of support mechanisms for renewable energy technologies using probability distributions," Renewable Energy, Elsevier, vol. 35(6), pages 1135-1144.
    8. Pereira, Edinaldo José da Silva & Pinho, João Tavares & Galhardo, Marcos André Barros & Macêdo, Wilson Negrão, 2014. "Methodology of risk analysis by Monte Carlo Method applied to power generation with renewable energy," Renewable Energy, Elsevier, vol. 69(C), pages 347-355.
    9. Li, Cun-bin & Lu, Gong-shu & Wu, Si, 2013. "The investment risk analysis of wind power project in China," Renewable Energy, Elsevier, vol. 50(C), pages 481-487.
    10. Yang, Ming & Nguyen, François & De T'Serclaes, Philippine & Buchner, Barbara, 2010. "Wind farm investment risks under uncertain CDM benefit in China," Energy Policy, Elsevier, vol. 38(3), pages 1436-1447, March.
    11. Zhimin Huang & Yiming Wei & Ke Wang & Hua Liao (ed.), 2017. "Energy economics and climate policy modeling," CEEP-BIT Books, Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology, number b15, december.
    12. Tian-tian Feng & Yi-sheng Yang & Yu-heng Yang & Dan-dan Wang, 2017. "Application Status and Problem Investigation of Distributed Generation in China: The Case of Natural Gas, Solar and Wind Resources," Sustainability, MDPI, vol. 9(6), pages 1-19, June.
    13. Young-Jin Kim, 2017. "Monte Carlo vs. Fuzzy Monte Carlo Simulation for Uncertainty and Global Sensitivity Analysis," Sustainability, MDPI, vol. 9(4), pages 1-14, March.
    14. Caralis, George & Diakoulaki, Danae & Yang, Peijin & Gao, Zhiqiu & Zervos, Arthouros & Rados, Kostas, 2014. "Profitability of wind energy investments in China using a Monte Carlo approach for the treatment of uncertainties," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 224-236.
    15. Aquila, Giancarlo & Rotela Junior, Paulo & de Oliveira Pamplona, Edson & de Queiroz, Anderson Rodrigo, 2017. "Wind power feasibility analysis under uncertainty in the Brazilian electricity market," Energy Economics, Elsevier, vol. 65(C), pages 127-136.
    16. Dincer, Furkan, 2011. "The analysis on wind energy electricity generation status, potential and policies in the world," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 5135-5142.
    17. Sun, Shengpeng & Liu, Fengliang & Xue, Song & Zeng, Ming & Zeng, Fanxiao, 2015. "Review on wind power development in China: Current situation and improvement strategies to realize future development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 589-599.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Changzheng Gao & Xiuna Wang & Dongwei Li & Chao Han & Weiyang You & Yihang Zhao, 2023. "A Novel Hybrid Power-Grid Investment Optimization Model with Collaborative Consideration of Risk and Benefit," Energies, MDPI, vol. 16(20), pages 1-23, October.
    2. Shahnazi, Rouhollah & Alimohammadlou, Moslem, 2022. "Investigating risks in renewable energy in oil-producing countries through multi-criteria decision-making methods based on interval type-2 fuzzy sets: A case study of Iran," Renewable Energy, Elsevier, vol. 191(C), pages 1009-1027.
    3. Yana Duan & Yang Sun & Yu Zhang & Xiaoqi Fan & Qinghuan Dong & Sen Guo, 2021. "Risk Evaluation of Electric Power Grid Investment in China Employing a Hybrid Novel MCDM Method," Mathematics, MDPI, vol. 9(5), pages 1-22, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jin, Xin & Zhang, Zhaolong & Shi, Xiaoqiang & Ju, Wenbin, 2014. "A review on wind power industry and corresponding insurance market in China: Current status and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 1069-1082.
    2. Mo, Jian-Lei & Agnolucci, Paolo & Jiang, Mao-Rong & Fan, Ying, 2016. "The impact of Chinese carbon emission trading scheme (ETS) on low carbon energy (LCE) investment," Energy Policy, Elsevier, vol. 89(C), pages 271-283.
    3. de Doile, Gabriel Nasser Doyle & Rotella Junior, Paulo & Rocha, Luiz Célio Souza & Janda, Karel & Aquila, Giancarlo & Peruchi, Rogério Santana & Balestrassi, Pedro Paulo, 2022. "Feasibility of hybrid wind and photovoltaic distributed generation and battery energy storage systems under techno-economic regulation," Renewable Energy, Elsevier, vol. 195(C), pages 1310-1323.
    4. Cui, Qi & He, Ling & Han, Guoyi & Chen, Hao & Cao, Juanjuan, 2020. "Review on climate and water resource implications of reducing renewable power curtailment in China: A nexus perspective," Applied Energy, Elsevier, vol. 267(C).
    5. Chenhao Fang & Tieju Ma, 2021. "Technology adoption with carbon emission trading mechanism: modeling with heterogeneous agents and uncertain carbon price," Annals of Operations Research, Springer, vol. 300(2), pages 577-600, May.
    6. Liu, Chunyu & Zheng, Xinrui & Yang, Haibin & Tang, Waiching & Sang, Guochen & Cui, Hongzhi, 2023. "Techno-economic evaluation of energy storage systems for concentrated solar power plants using the Monte Carlo method," Applied Energy, Elsevier, vol. 352(C).
    7. Han, Yongming & Lou, Xiaoyi & Feng, Mingfei & Geng, Zhiqiang & Chen, Liangchao & Ping, Weiying & Lu, Gang, 2022. "Energy consumption analysis and saving of buildings based on static and dynamic input-output models," Energy, Elsevier, vol. 239(PC).
    8. Lam, J.C.K. & Woo, C.K. & Kahrl, F. & Yu, W.K., 2013. "What moves wind energy development in China? Show me the money!," Applied Energy, Elsevier, vol. 105(C), pages 423-429.
    9. Ioannou, Anastasia & Angus, Andrew & Brennan, Feargal, 2017. "Risk-based methods for sustainable energy system planning: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 602-615.
    10. Laura Laguna-Salvadó & Matthieu Lauras & Uche Okongwu & Tina Comes, 2019. "A multicriteria Master Planning DSS for a sustainable humanitarian supply chain," Annals of Operations Research, Springer, vol. 283(1), pages 1303-1343, December.
    11. Aquila, Giancarlo & Souza Rocha, Luiz Célio & Rotela Junior, Paulo & Saab Junior, Joseph Youssif & de Sá Brasil Lima, João & Balestrassi, Pedro Paulo, 2020. "Economic planning of wind farms from a NBI-RSM-DEA multiobjective programming," Renewable Energy, Elsevier, vol. 158(C), pages 628-641.
    12. Cunico, Maria Laura & Flores, Julio Rolando & Vecchietti, Aldo, 2017. "Investment in the energy sector: An optimization model that contemplates several uncertain parameters," Energy, Elsevier, vol. 138(C), pages 831-845.
    13. Zhao, Zhen-Yu & Li, Zhi-Wei & Xia, Bo, 2014. "The impact of the CDM (clean development mechanism) on the cost price of wind power electricity: A China study," Energy, Elsevier, vol. 69(C), pages 179-185.
    14. Liu, Shiyu & Bie, Zhaohong & Lin, Jiang & Wang, Xifan, 2018. "Curtailment of renewable energy in Northwest China and market-based solutions," Energy Policy, Elsevier, vol. 123(C), pages 494-502.
    15. Paulo Rotela Junior & Eugenio Fischetti & Victor G. Araújo & Rogério S. Peruchi & Giancarlo Aquila & Luiz Célio S. Rocha & Liviam S. Lacerda, 2019. "Wind Power Economic Feasibility under Uncertainty and the Application of ANN in Sensitivity Analysis," Energies, MDPI, vol. 12(12), pages 1-10, June.
    16. Grafström, Jonas, 2019. "Public policy failures related to China´s Wind Power Development," Ratio Working Papers 320, The Ratio Institute.
    17. Grafström, Jonas, 2020. "An Austrian economic perspective on failed Chinese wind power development," Ratio Working Papers 336, The Ratio Institute.
    18. Fan, Xiao-chao & Wang, Wei-qing, 2016. "Spatial patterns and influencing factors of China׳s wind turbine manufacturing industry: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 482-496.
    19. Caralis, George & Diakoulaki, Danae & Yang, Peijin & Gao, Zhiqiu & Zervos, Arthouros & Rados, Kostas, 2014. "Profitability of wind energy investments in China using a Monte Carlo approach for the treatment of uncertainties," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 224-236.
    20. Sommerfeldt, Nelson & Madani, Hatef, 2017. "Revisiting the techno-economic analysis process for building-mounted, grid-connected solar photovoltaic systems: Part one – Review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 1379-1393.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:290:y:2020:i:1:d:10.1007_s10479-018-2878-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.