Volume 7, Issue 5, October 2018, Page: 59-65
Real Options: An Evaluation Tool for a Photovoltaic System for Self-consumption
Joana Fialho, Center for Studies in Education, Technologies and Health, Polytechnic Institute of Viseu, Viseu, Portugal
Pedro Pinto, Center for Studies in Education, Technologies and Health, Polytechnic Institute of Viseu, Viseu, Portugal
Ana Lúcia Gomes, Center for Studies in Education, Technologies and Health, Polytechnic Institute of Viseu, Viseu, Portugal
Received: Oct. 17, 2018;       Accepted: Nov. 1, 2018;       Published: Dec. 14, 2018
DOI: 10.11648/j.ijepe.20180705.12      View  58      Downloads  24
The use of renewable sources to produce energy is good for the planet and has economic value, that is, investing in the produce of green energy can be economically viable. This paper aims to conduct an evaluation, using real options tools, of a photovoltaic (PV) system, for self-consumption, at the Campus of Polytechnic Institute of Viseu, Portugal. A PV system produces electricity from sun and its investment can be viable, particularly in sunny countries like Portugal. This viability comes from the rapid recovery of the investment, since the energy produced is no longer bought to the electrical network. The utilization of real options, in this study, namely the decision trees, allows integrating uncertainty sources and operational flexibility. In this work, we considered the price of electricity tariff and the value of the initial investment as uncertain values. The operational flexibility is integrated by considering the options “invest”, “defer” and “not invest” in the PV system, for self-consumption. The results suggest that the Polytechnic Institute of Viseu should invest in a PV system, for self-consumption. The use of solar energy, especially in countries with high sun expose, such as Portugal, is economically viable.
Real Options, Decision Trees, Photovoltaic System, Self-consumption, Energetic Sustainability
To cite this article
Joana Fialho, Pedro Pinto, Ana Lúcia Gomes, Real Options: An Evaluation Tool for a Photovoltaic System for Self-consumption, International Journal of Energy and Power Engineering. Vol. 7, No. 5, 2018, pp. 59-65. doi: 10.11648/j.ijepe.20180705.12
Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
J. A. Monteiro, Master Thesis: Produção Fotovoltaica: Legislação, tarifas, tecnologia necessária e viabilidade económica para a produção numa perspetiva de chave na mão. Faculdade de Engenharia da Universidade do Porto, 2014.
G. E. Mathews and E. H. Mathews, "Household photovoltaics — A worthwhile investment?" 2016 International Conference on the Domestic Use of Energy (DUE), Cape Town, 2016, pp. 1-7. doi: 10.1109/DUE.2016.7466716.
K. T. Yeo and F. Qiu, “The value of management flexibility - a real option approach to investment evaluation.” International Journal of Project Management vol. 21, pp. 243-250, 2003.
M. Mancini, R. Sala, D. Tedesco and A. Travaglini, "A real options investment model for the evaluation of wind and photovoltaic plants," 2016 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM), Bali, 2016, pp. 1101-1105. doi: 10.1109/IEEM.2016.7798048.
J. D. Pereira, Master Thesis: Instalações Solares Fotovoltaicas para Autoconsumo: Análise e Perspetivas de Aplicação. Porto: Faculdade de Engenharia da Universidade do Porto, 2016.
Decree-Law no. 153/2014, Diário da República n.º 202/2014, Série I de 2014-10-20.
F. Pinto, Ordem Engenheiros, 2015. Obtained from http://www.ordemengenheiros.pt/fotos/dossier_artigo/20151120_filipepinto_7615808675660254a2675c.pdf
H. Barros, Análise de Projectos de Investimentos. Lisboa, Sílabo (5th edition), 2014.
A. Dixit and R. Pindyck, Investment under uncertainty. New Jersey, Princeton University Press, 1993.
G. Blanco and F. Olsina, “Real Option Valuation of FACTS Investments Based on the Least Square Monte Carlo Method”, IEEE Trans. on Power Systems, vol. 26, no. 3, pp. 1389-1398, August 2011.
L. P. Santiago and T. G. Bifano, “Management of R&D projects under uncertainty: a multidimensional approach to managerial flexibility.”, IEEE Trans. on Eng. Man., vol. 52, no. 2, pp. 269-280, 2005.
S. C. Myers, “Finance theory and finance strategy.” Interfaces, vol. 14, no. 1, pp. 126-137, 1984.
G. Cortazar, M. Gravet and J. Urzua, “The valuation of multidimensional American real options using the LSM simulation method.” Computers & Operations Research, vol. 35, pp. 113-129, 2008.
M. Brach and D. Paxson, “A gene to Drug Venture: Poisson Options Analysis.” R&D Management vol. 31, no. 2, pp. 203-214, 2001.
O. Lint and E. Pennings, “An option approach to the new product development process: a case study at Philips Electronics.” R&D Management, vol. 31, no. 2, pp. 163-172, 2001.
E. Schwartz and C. Zozaya-Gorostiza, “Investment Under Uncertainty in Information Technology: Acquisition and Development Projects.” Management Science vol. 49, no. 1, pp. 57-70, 2003.
J. Lee and D. Paxson, “Valuation of R&D real American sequential exchange options.” R&D Management, vol. 21, no. 2, pp. 191-201, 2001.
J. Fialho, PhD Thesis: Avaliação de Projetos de Investigação e Desenvolvimento na Área das Telecomunicações, Faculdade de Economia da Universidade de Coimbra, 2013.
A. Gomes, A. P. Pinto and J. Fialho, “Avaliação Económica de um Sistema de Produção Fotovoltaico para Autoconsumo”, Fronteiras: Journal of Social, Technological and Environmental Science, v. 6, n. 3, pp. 83-98, 2017.
REN - Redes Energéticas Nacionais, Síntese anual 2011 - 2015 - REN. Obtido de REN - Redes Energéticas Nacionais, 2015. Obtained from http://www.mercado.ren.pt/PT/Electr/InfoMercado/PressReleases/BibInfAnual/MercadoEletricidadeSinteseAnual2011_2015.pdf
ERSE - Entidade Reguladora dos Serviços Energéticos, 2016, Obtained from http://www.erse.pt/pt/glossario/Paginas/glossario.aspx?folder=baeaae46-4f3f-401d-91ff-668518dd41e8
E. Franco, N. Monteiro and L. Machado. Autoconsumo fotovoltaico - exemplo de dimensionamento e estudo económico. Renováveis Magazine, 2015. Obtained from http://www.renovaveismagazine.pt/?p=10050
ERSE - Entidade Reguladora dos Serviços Energéticos, Parâmetros de Regulação para o Período 2015-2017. Lisboa: Entidade Reguladora dos Serviços Energéticos, 2014.
Portal da Eneriga, 2017. Obtained from https://www.portal-energia.com/preco-paineis-solares-fotovoltaicos-baixo/
ERSE - Entidade Reguladora dos Serviços Energéticos, 2018, Obtained from http://www.erse.pt/pt/electricidade/tarifaseprecos/2018/Paginas/default.aspx
Browse journals by subject