IDEAS home Printed from https://ideas.repec.org/p/hhs/nhhfms/2016_002.html
   My bibliography  Save this paper

Weibull Wind Worth: Wait and Watch?

Author

Listed:

Abstract

This paper considers a decision problem in the context of the worth of a wind mill project with profitability dependent on the average wind speed. This is partly known and the issue is whether to go on with the project now or, with an additional cost, put up a test mill and observe, say for a year, and then decide. The problem is studied within a Bayesian framework and given a general analytic solution for a specific loss function of linear type, with the normal case as illustration. Explicit formulas are then derived in the case when the wind speed distribution is Weibull with known shape parameter, and the sensitivity with respect to the specification of this parameter is explored. Based on Norwegian wind speed data we then give a justification of the Weibull model. This also provides some insight to parameter stability. Finally, a complete numerical scheme for the Bayesian two-parameter Weibull model is given, illustrated with an implementation of pre-posterior Weibull analysis in R.

Suggested Citation

  • Lillestøl, Jostein, 2016. "Weibull Wind Worth: Wait and Watch?," Discussion Papers 2016/2, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2016_002
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/11250/2374985
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Weibull distribution; decision analysis; pre-posterior Bayesian analysis;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:hhs:nhhfms:2016_002. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Stein Fossen (email available below). General contact details of provider: https://edirc.repec.org/data/dfnhhno.html .

    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.