A Risk Analysis of Small-Hydro Power (SHP) Plants Investments
The increase in electricity consumption has led to a sharp increase in energy demand which rose environmental and sustainability concerns. To address this issue, there has been an incentive to resource to renewable energy sources for electricity production. Departing from a real case study, the inv...
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doaj-917960913e854429b6450370062405bb2020-11-25T00:26:02ZengAalborg University PressInternational Journal of Sustainable Energy Planning and Management2246-29292246-29292014-06-01210.5278/ijsepm.2014.2.5A Risk Analysis of Small-Hydro Power (SHP) Plants InvestmentsJorge Cunha0Paula Ferreira1University of MinhoUniversity of MinhoThe increase in electricity consumption has led to a sharp increase in energy demand which rose environmental and sustainability concerns. To address this issue, there has been an incentive to resource to renewable energy sources for electricity production. Departing from a real case study, the investment appraisal of a SHP project under the present market conditions is described, followed by a sensitivity analysis in order to identify the main sources of risk. The main results obtained showed that in the context of a regulated tariff the project is worthwhile due to a positive NPV. However, if electricity had to be sold at market prices, the project becomes unprofitable. Theresults put also in evidence the vulnerability of the investment to an adverse change in interest rates. Future SHP plant investments should take into account the need to operate in a free market and to compete with technologies based on fossil fuels or large hydro.http://journals.aau.dk/index.php/sepm/article/view/263Renewable energySmall-hydropower plantsInvestment riskSensitivity analysis |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Jorge Cunha Paula Ferreira |
spellingShingle |
Jorge Cunha Paula Ferreira A Risk Analysis of Small-Hydro Power (SHP) Plants Investments International Journal of Sustainable Energy Planning and Management Renewable energy Small-hydropower plants Investment risk Sensitivity analysis |
author_facet |
Jorge Cunha Paula Ferreira |
author_sort |
Jorge Cunha |
title |
A Risk Analysis of Small-Hydro Power (SHP) Plants Investments |
title_short |
A Risk Analysis of Small-Hydro Power (SHP) Plants Investments |
title_full |
A Risk Analysis of Small-Hydro Power (SHP) Plants Investments |
title_fullStr |
A Risk Analysis of Small-Hydro Power (SHP) Plants Investments |
title_full_unstemmed |
A Risk Analysis of Small-Hydro Power (SHP) Plants Investments |
title_sort |
risk analysis of small-hydro power (shp) plants investments |
publisher |
Aalborg University Press |
series |
International Journal of Sustainable Energy Planning and Management |
issn |
2246-2929 2246-2929 |
publishDate |
2014-06-01 |
description |
The increase in electricity consumption has led to a sharp increase in energy demand which rose environmental and sustainability concerns. To address this issue, there has been an incentive to resource to renewable energy sources for electricity production. Departing from a real case study, the investment appraisal of a SHP project under the present market conditions is described, followed by a sensitivity analysis in order to identify the main sources of risk. The main results obtained showed that in the context of a regulated tariff the project is worthwhile due to a positive NPV. However, if electricity had to be sold at market prices, the project becomes unprofitable. Theresults put also in evidence the vulnerability of the investment to an adverse change in interest rates. Future SHP plant investments should take into account the need to operate in a free market and to compete with technologies based on fossil fuels or large hydro. |
topic |
Renewable energy Small-hydropower plants Investment risk Sensitivity analysis |
url |
http://journals.aau.dk/index.php/sepm/article/view/263 |
work_keys_str_mv |
AT jorgecunha ariskanalysisofsmallhydropowershpplantsinvestments AT paulaferreira ariskanalysisofsmallhydropowershpplantsinvestments AT jorgecunha riskanalysisofsmallhydropowershpplantsinvestments AT paulaferreira riskanalysisofsmallhydropowershpplantsinvestments |
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1716171848913256448 |