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Optimal Structuring of Investments in Electricity Generation Projects in Colombia with Non-Conventional Energy Sources

Author

Listed:
  • Juan D. Saldarriaga-Loaiza

    (Research Group on Efficient Energy Management (GIMEL), Department of Electrical Engineering, Universidad de Antioquia (UdeA), Medellin 050010, Colombia)

  • Sergio D. Saldarriaga-Zuluaga

    (Departamento de Eléctrica, Facultad de Ingenieria, Institución Universitaria Pascual Bravo, Calle 73 No. 73A-226, Medellin 050036, Colombia)

  • Jesús M. López-Lezama

    (Research Group on Efficient Energy Management (GIMEL), Department of Electrical Engineering, Universidad de Antioquia (UdeA), Medellin 050010, Colombia)

  • Fernando Villada-Duque

    (Research Group on Efficient Energy Management (GIMEL), Department of Electrical Engineering, Universidad de Antioquia (UdeA), Medellin 050010, Colombia)

  • Nicolás Muñoz-Galeano

    (Research Group on Efficient Energy Management (GIMEL), Department of Electrical Engineering, Universidad de Antioquia (UdeA), Medellin 050010, Colombia)

Abstract

Taking full advantage of fiscal and economic incentives has become a complex process for investors, who must find the right portfolio or capital structure to obtain viable and competitive generation projects. In this context, this paper proposes a methodology for the optimal structuring of investments in non-conventional energy sources (NCRES) considering fiscal and economic incentives. Three methods were evaluated: (1) levelized cost of electricity (LCOE) combined with three metaheuristic techniques; (2) discounted cash flow (DCF) with Monte Carlo simulation and value at risk (VaR); and (3) real options with Black and Scholes. The proposed approach presents as the main financial indicator the generation cost (GC), as well as three other financial indicators, namely: net present value (NPV), value at risk (VaR) and net present value for real options (NPV R O ). The propose approach allows for defining different investment portfolios from where an investor can choose; each of which minimizes the GC. Furthermore, the methodology can be adapted to countries with different policies and fiscal incentives for the development of NCRES projects. The results show that for each metaheuristic, an optimal capital structure that minimizes GC is obtained; in this way, a GC of 0.032 (USD/kWh) is achieved for solar photovoltaic technology, with a reduction of 49.2%, when tax incentives are considered.

Suggested Citation

  • Juan D. Saldarriaga-Loaiza & Sergio D. Saldarriaga-Zuluaga & Jesús M. López-Lezama & Fernando Villada-Duque & Nicolás Muñoz-Galeano, 2022. "Optimal Structuring of Investments in Electricity Generation Projects in Colombia with Non-Conventional Energy Sources," Sustainability, MDPI, vol. 14(22), pages 1-21, November.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:15123-:d:973223
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    References listed on IDEAS

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