The applicability of computer simulation using Monte Carlo techniques in windfarm profitability analysis

• Published in: Renewable & sustainable energy reviews Vol. 15; no. 9; pp. 4746 - 4755
• Main Authors: Montes, German Martinez, Martin, Enrique Prados, Bayo, Javier Alegre, Garcia, Javier Ordoñez
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01.12.2011; Elsevier
• Series: Renewable and Sustainable Energy Reviews
• Subjects: Applied sciences; Computer simulation; Electric power generation; Energy; Exact sciences and technology; Financing; funding; Mathematical analysis; Mathematical models; Monte Carlo method; Monte Carlo methods; Monte Carlo techniques; Net present value distributions; Nuclear polyhedrosis virus; Profitability; Project risk; Renewable energy; Renewable energy Wind power Project risk Simulation applications Net present value distributions Monte Carlo techniques; risk factors; risk management; Sampling; Simulation applications; uncertainty; Wind power; Spain; Net present value distributions; Simulation applications; Renewable energy; Wind power; Project risk; Monte Carlo techniques
• ISSN: 1364-0321; 1879-0690
• DOI: 10.1016/j.rser.2011.07.078

Obtaining external financing for windfarms may be hindered over the next few years by the high degree of uncertainty that is inherent in these types of project. Therefore, promoters must carefully plan and analyse their projects and attempt to optimise the profitability/risk factor of each investment. The objective of this paper is to demonstrate that Monte Carlo sampling represents an excellent approach to economic risk management in windfarm projects, as it provides a practical method of calculating the distribution of the NPV via the various random input variables. To this end, we defined a windfarm model, which has also allowed us to identify the basic parameters of current projects of this nature in Spain. We analysed the profitability of these projects using Monte Carlo techniques.