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Economic impact of anticipations or delays in the completion of power generation projects in the Brazilian energy market

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  • Carvalho, Diego B.
  • Pinto, Bárbara L.
  • Guardia, Eduardo C.
  • Marangon Lima, José W.

Abstract

Despite some advantages, renewable sources pose certain financial risks for investors in the industry. These risks are mainly associated with the oscillation of energy production, the prices and rules of the energy market, and the possibility of delays and anticipations at the conclusion of works. In order to mitigate the likelihood of low power production, distinct sorts of power sources have been combined into one integrated system so that you may take advantage of source complementarity and network asset sharing. This work studies the financial risk associated with the anticipation or delay in the completion of projects in the Brazilian energy market considering the insertion of photovoltaic sources in an integrated wind-solar power plant. To evaluate the project feasibility, Net Present Value is used as deterministic method and Monte Carlo Simulation is performed as stochastic valuation model through some historical data obtained. The economic risk assessment showed that delayed works significantly increase the probability of a failed business regardless of the proportion of the sources in the integrated system. Projects finished earlier, in contrast, increase the chances of a profitable business, although this increase is less significant in systems with lower installed photovoltaic source and more relevant to systems with a higher proportion of integrated solar source.

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  • Carvalho, Diego B. & Pinto, Bárbara L. & Guardia, Eduardo C. & Marangon Lima, José W., 2020. "Economic impact of anticipations or delays in the completion of power generation projects in the Brazilian energy market," Renewable Energy, Elsevier, vol. 147(P1), pages 1312-1320.
    • Handle: RePEc:eee:renene:v:147:y:2020:i:p1:p:1312-1320
    DOI: 10.1016/j.renene.2019.09.074
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    3. Diniz, Bruno Andrade & Szklo, Alexandre & Tolmasquim, Maurício T. & Schaeffer, Roberto, 2023. "Delays in the construction of power plants from electricity auctions in Brazil," Energy Policy, Elsevier, vol. 175(C).
    4. de Doile, Gabriel Nasser Doyle & Rotella Junior, Paulo & Rocha, Luiz Célio Souza & Janda, Karel & Aquila, Giancarlo & Peruchi, Rogério Santana & Balestrassi, Pedro Paulo, 2022. "Feasibility of hybrid wind and photovoltaic distributed generation and battery energy storage systems under techno-economic regulation," Renewable Energy, Elsevier, vol. 195(C), pages 1310-1323.
    5. Antonio C. C. Perrelli & Eduardo A. Sodré & André V. R. N. Silva & Caarem D. S. Studzinski & Vinícius F. Silva & Dalton F. G. Filho & Armando T. Neto & Alex A. B. Santos, 2024. "Optimizing Price Markup: The Impact of Power Purchase Agreements and Energy Production Uncertainty on the Economic Performance of Onshore and Offshore Wind Farms," International Journal of Energy Economics and Policy, Econjournals, vol. 14(5), pages 211-219, September.

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