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Assessing the feasibility of cofiring wood pellets with coal for electricity generation: A real option analysis

Author

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  • Xian, Hui
  • Colson, Gregory
  • Mei, Bin
  • Wetzstein, E. Wetzstein

Abstract

Real options is employed for investigating the lack of incentives for U.S. coal-power plants to cofire wood pellets. Results indicate that despite a thriving U.S. wood-pellet industry to supply EU demand, the price differential between wood pellets and coal and the muted level of fuel volatility renders U.S. cofiring unsupportable.

Suggested Citation

  • Xian, Hui & Colson, Gregory & Mei, Bin & Wetzstein, E. Wetzstein, 2014. "Assessing the feasibility of cofiring wood pellets with coal for electricity generation: A real option analysis," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162484, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea14:162484
    DOI: 10.22004/ag.econ.162484
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    Cited by:

    1. Liu, Shen & Colson, Gregory & Wetzstein, Michael, 2018. "Biodiesel investment in a disruptive tax-credit policy environment," Energy Policy, Elsevier, vol. 123(C), pages 19-30.
    2. Casper Agaton, 2017. "Coal, Renewable, or Nuclear? A Real Options Approach to Energy Investments in the Philippines," International Journal of Sustainable Energy and Environmental Research, Conscientia Beam, vol. 6(2), pages 50-62.
    3. Mei, Bin & Wetzstein, Michael, 2017. "Burning wood pellets for US electricity generation? A regime switching analysis," Energy Economics, Elsevier, vol. 65(C), pages 434-441.
    4. Leonel J. R. Nunes & Margarida Casau & Marta Ferreira Dias, 2021. "Portuguese Wood Pellets Market: Organization, Production and Consumption Analysis," Resources, MDPI, vol. 10(12), pages 1-24, December.
    5. Mei, Bin, 2019. "Timberland investments in the United States: A review and prospects," Forest Policy and Economics, Elsevier, vol. 109(C).
    6. Caurla, Sylvain & Bertrand, Vincent & Delacote, Philippe & Le Cadre, Elodie, 2018. "Heat or power: How to increase the use of energy wood at the lowest cost?," Energy Economics, Elsevier, vol. 75(C), pages 85-103.
    7. Xian, Hui & Karali, Berna & Colson, Gregory & Wetzstein, Michael E., 2015. "Diesel or compressed natural gas? A real options evaluation of the U.S. natural gas boom on fuel choice for trucking fleets," Energy, Elsevier, vol. 90(P2), pages 1342-1348.
    8. Lenka Štofová & Petra Szaryszová & Bohuslava Mihalčová, 2021. "Testing the Bioeconomic Options of Transitioning to Solid Recovered Fuel: A Case Study of a Thermal Power Plant in Slovakia," Energies, MDPI, vol. 14(6), pages 1-20, March.
    9. Kozlova, Mariia, 2017. "Real option valuation in renewable energy literature: Research focus, trends and design," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 180-196.
    10. Weiland, Brandon & Sesmero, Juan Pablo & Preckel, Paul & Wetzstein, Michael E., "undated". "Can Wood Pellets Save Coal?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258250, Agricultural and Applied Economics Association.
    11. Tan, Zhizhou & Zeng, Xianhai & Lin, Boqiang, 2023. "How do multiple policy incentives influence investors’ decisions on biomass co-firing combined with carbon capture and storage retrofit projects for coal-fired power plants?," Energy, Elsevier, vol. 278(PB).
    12. Agaton, Casper, 2017. "Real Options Analysis of Renewable Energy Investment Scenarios in the Philippines," MPRA Paper 83478, University Library of Munich, Germany.
    13. Stutzman, Sarah & Weiland, Brandon & Preckel, Paul & Wetzstein, Michael, 2017. "Optimal replacement policies for an uncertain rejuvenated asset," International Journal of Production Economics, Elsevier, vol. 185(C), pages 21-33.
    14. Xian, Hui & Colson, Gregory & Karali, Berna & Wetzstein, Michael, 2017. "Do nonrenewable-energy prices affect renewable-energy volatility? The case of wood pellets," Journal of Forest Economics, Elsevier, vol. 28(C), pages 42-48.

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