Wind energy investments facing uncertainties in the Brazilian electricity spot market: A real options approach

This study proposes a Real Options approach to investigate the economic feasibility of a wind power plant investment with the option of abandoning along the project life cycle. This novel approach considers uncertainties representation concerning electricity sales revenue in the spot market, and the uncertainty represented by the settlements of energy trading differences. Our results show that when considering these uncertainties, the abandonment option adds 30.3% to the value of the project, and the chance of not abandoning it until the end of the useful life is equal to 70.9%.