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A stochastic economic viability analysis of residential wind power generation in Brazil

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  • Rocha, Luiz Célio Souza
  • Aquila, Giancarlo
  • Rotela Junior, Paulo
  • Paiva, Anderson Paulo de
  • Pamplona, Edson de Oliveira
  • Balestrassi, Pedro Paulo

Abstract

This study evaluates the stochastic economic viability of residential wind power generation in Brazil. Three scenarios representing different regions from Brazil were considered: high, low, and intermediate wind speed. For each scenario, 10,000 simulations were conducted using the Monte Carlo Simulation (MCS)11MCS: Monte Carlo Simulation; NPV: Net Present Value; ANEEL: National Agency of Electrical Energy; IEA: International Energy Agency; RES: Renewable Energy Sources; AEP: Annual Energy Production; WACC: Weighted Average Cost of Capital; CAPM: Capital Asset Pricing Model; CAS: Constant Amortization System. method to obtain possible Net Present Values (NPV) for a project. The sensitivity analysis revealed that wind speed and investment are essential for the viability of this type of project. For the evaluated scenarios, the results show that the investment in residential wind power generation has a low feasibility probability. The high, low, and intermediate wind speed scenarios produce feasibility results of 22.04%, 1.51%, and 15.06%, respectively. This result infers that it is essential to subsidize this technology and decrease the uncertainty of price fluctuations in order to leverage the residential wind power generation. The National Agency of Electrical Energy's (ANEEL) initiative to encourage installation of residential microgenerators is the first step to disseminate and consolidate clean energy generation technologies. Additional policies must be adopted in order to reduce the risk assumed by investors in residential wind power generation in Brazil.

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  • Rocha, Luiz Célio Souza & Aquila, Giancarlo & Rotela Junior, Paulo & Paiva, Anderson Paulo de & Pamplona, Edson de Oliveira & Balestrassi, Pedro Paulo, 2018. "A stochastic economic viability analysis of residential wind power generation in Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 412-419.
    • Handle: RePEc:eee:rensus:v:90:y:2018:i:c:p:412-419
    DOI: 10.1016/j.rser.2018.03.078
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