Real options and wind energy in Spain

: a comparison between onshore and offshore projects

Abstract

This dissertation performed an extensive research about valuation in the wind energy sector. A real options approach was taken in order to understand the optimal timing of investment in both onshore and floating offshore wind energy. This study also focused on the case of Spain, a leading country in onshore wind that is lagging behind in offshore wind. While the Spanish coast does not attract investment for bottom-fixed offshore projects, there is a suggestion that the floating offshore wind technology can be the solution. In order to develop a dynamic and flexible model, a stochastic approach was taken in order to compute the evolution of the uncertain variables. Moreover, a Monte Carlo simulation was performed, with 5000 paths being taken, together with 11 decision periods (in years). The results obtained showed the large economic value of waiting to invest in these technologies, due to high cost reductions over the simulated period. More specifically, floating offshore wind projects show huge growth prospects, having the capacity to possibly overcome onshore wind in value in the future. Finally, the study shows that even onshore wind projects still need time to maximize investment value, meaning investing today may not be optimal (in a scenario where no subsidies apply).

Date of Award	28 Jun 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Guillermo Ramirez (Supervisor)