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  • Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options

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Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options

Research output: Contribution in Book/Report/Proceedings - With ISBN/ISSN › Conference contribution/Paper › peer-review

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Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options. / Dilellio, James; Butler, John C. ; Rizaev, Igor et al.
Proceedings of the Thirty-fourth (2024) International Ocean and Polar Engineering Conference. 2024. p. 656-663 196-2024-TPC-0536.

Research output: Contribution in Book/Report/Proceedings - With ISBN/ISSN › Conference contribution/Paper › peer-review

Harvard

Dilellio, J, Butler, JC, Rizaev, I, Sheng, W & Aggidis, G 2024, Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options. in Proceedings of the Thirty-fourth (2024) International Ocean and Polar Engineering Conference., 196-2024-TPC-0536, pp. 656-663.

APA

Dilellio, J., Butler, J. C., Rizaev, I., Sheng, W., & Aggidis, G. (2024). Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options. In Proceedings of the Thirty-fourth (2024) International Ocean and Polar Engineering Conference (pp. 656-663). Article 196-2024-TPC-0536

Vancouver

Dilellio J, Butler JC, Rizaev I, Sheng W, Aggidis G. Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options. In Proceedings of the Thirty-fourth (2024) International Ocean and Polar Engineering Conference. 2024. p. 656-663. 196-2024-TPC-0536

Author

Dilellio, James ; Butler, John C. ; Rizaev, Igor et al. / Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options. Proceedings of the Thirty-fourth (2024) International Ocean and Polar Engineering Conference. 2024. pp. 656-663

Bibtex

@inproceedings{147d4bd4c2eb4f7484f191c69cd6869f,
title = "Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options",
abstract = "Wave energy conversion (WEC) remains a viable option for renewableenergy production, but levelized cost of electricity (LCOE) estimatesremain higher than other energy alternatives. We conduct an investmentanalysis that includes the market value of electricity and show that anegative Net Present Value (NPV) project is the likely result. However,we also show that such a project may have sufficient option value for theexpected NPV to turn positive. This change in investment decision issupported by applying the theory of real options to model the uncertaintyof future electricity prices and a project{\textquoteright}s optimal decisions. Ouranalysis demonstrates that this investment is like a financial out-of-the moneycall option. The results of this research support governmentdecisions on the need for additional investment and/or incentives, or thepossibility of public-private partnerships. These financial modelssupport long-term planning and investment decisions for large scaledevelopment and deployment of in WEC systems in the coming years.",
keywords = "clean energy, real options, technology readiness levels, stochastic processes",
author = "James Dilellio and Butler, {John C.} and Igor Rizaev and Wanan Sheng and George Aggidis",
year = "2024",
month = jun,
day = "17",
language = "English",
pages = "656--663",
booktitle = "Proceedings of the Thirty-fourth (2024) International Ocean and Polar Engineering Conference",

}

RIS

TY - GEN

T1 - Evaluating the Long-Term Investment Opportunities of Wave Energy Conversion with Real Options

AU - Dilellio, James

AU - Butler, John C.

AU - Rizaev, Igor

AU - Sheng, Wanan

AU - Aggidis, George

PY - 2024/6/17

Y1 - 2024/6/17

N2 - Wave energy conversion (WEC) remains a viable option for renewableenergy production, but levelized cost of electricity (LCOE) estimatesremain higher than other energy alternatives. We conduct an investmentanalysis that includes the market value of electricity and show that anegative Net Present Value (NPV) project is the likely result. However,we also show that such a project may have sufficient option value for theexpected NPV to turn positive. This change in investment decision issupported by applying the theory of real options to model the uncertaintyof future electricity prices and a project’s optimal decisions. Ouranalysis demonstrates that this investment is like a financial out-of-the moneycall option. The results of this research support governmentdecisions on the need for additional investment and/or incentives, or thepossibility of public-private partnerships. These financial modelssupport long-term planning and investment decisions for large scaledevelopment and deployment of in WEC systems in the coming years.

AB - Wave energy conversion (WEC) remains a viable option for renewableenergy production, but levelized cost of electricity (LCOE) estimatesremain higher than other energy alternatives. We conduct an investmentanalysis that includes the market value of electricity and show that anegative Net Present Value (NPV) project is the likely result. However,we also show that such a project may have sufficient option value for theexpected NPV to turn positive. This change in investment decision issupported by applying the theory of real options to model the uncertaintyof future electricity prices and a project’s optimal decisions. Ouranalysis demonstrates that this investment is like a financial out-of-the moneycall option. The results of this research support governmentdecisions on the need for additional investment and/or incentives, or thepossibility of public-private partnerships. These financial modelssupport long-term planning and investment decisions for large scaledevelopment and deployment of in WEC systems in the coming years.

KW - clean energy

KW - real options

KW - technology readiness levels

KW - stochastic processes

M3 - Conference contribution/Paper

SP - 656

EP - 663

BT - Proceedings of the Thirty-fourth (2024) International Ocean and Polar Engineering Conference

ER -