IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v245y2016i1d10.1007_s10479-015-1836-2.html
   My bibliography  Save this article

Photovoltaic power plants: a multicriteria approach to investment decisions and a case study in western Spain

Author

Listed:
  • Ana Garcia-Bernabeu

    (Universitat Politècnica de València)

  • Antonio Benito

    (Universitat Politècnica de València)

  • Mila Bravo

    (Universitat Politècnica de València)

  • David Pla-Santamaria

    (Universitat Politècnica de València)

Abstract

This paper proposes a compromise programming (CP) model to help investors decide whether to construct photovoltaic power plants with government financial support. For this purpose, we simulate an agreement between the government, who pursues political prices (guaranteed prices) as low as possible, and the project sponsor who wants returns (stochastic cash flows) as high as possible. The sponsor’s decision depends on the positive or negative result of this simulation, the resulting simulated price being compared to the effective guaranteed price established by the country legislation for photovoltaic energy. To undertake the simulation, the CP model articulates variables such as ranges of guaranteed prices, technical characteristics of the plant, expected energy to be generated over the investment life, investment cost, cash flow probabilities, and others. To determine the CP metric, risk aversion is assumed. As an actual application, a case study on photovoltaic power investment in Extremadura, western Spain, is developed in detail.

Suggested Citation

  • Ana Garcia-Bernabeu & Antonio Benito & Mila Bravo & David Pla-Santamaria, 2016. "Photovoltaic power plants: a multicriteria approach to investment decisions and a case study in western Spain," Annals of Operations Research, Springer, vol. 245(1), pages 163-175, October.
    • Handle: RePEc:spr:annopr:v:245:y:2016:i:1:d:10.1007_s10479-015-1836-2
    DOI: 10.1007/s10479-015-1836-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-015-1836-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-015-1836-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mills, S.J. & Taylor, Melissa, 1994. "Project finance for renewable energy," Renewable Energy, Elsevier, vol. 5(1), pages 700-708.
    2. Casares, F.J. & Lopez-Luque, R. & Posadillo, R. & Varo-Martinez, M., 2014. "Mathematical approach to the characterization of daily energy balance in autonomous photovoltaic solar systems," Energy, Elsevier, vol. 72(C), pages 393-404.
    3. Aouni, Belaid & Kettani, Ossama, 2001. "Goal programming model: A glorious history and a promising future," European Journal of Operational Research, Elsevier, vol. 133(2), pages 225-231, January.
    4. Aaron K. Chatterji & David I. Levine & Michael W. Toffel, 2009. "How Well Do Social Ratings Actually Measure Corporate Social Responsibility?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 125-169, March.
    5. Ballestero, Enrique & Pla-Santamaria, David, 2004. "Selecting portfolios for mutual funds," Omega, Elsevier, vol. 32(5), pages 385-394, October.
    6. Abdolreza Yazdani-Chamzini & Mohammad Majid Fouladgar & Edmundas Kazimieras Zavadskas & S. Hamzeh Haji Moini, 2013. "Selecting the optimal renewable energy using multi criteria decision making," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 14(5), pages 957-978, November.
    7. G. Mavrotas & D. Diakoulaki & P. Capros, 2003. "Combined MCDA–IP Approach for Project Selection in the Electricity Market," Annals of Operations Research, Springer, vol. 120(1), pages 159-170, April.
    8. Enrique Ballestero & David Pla-Santamaria, 2005. "Grading the performance of market indicators with utility benchmarks selected from Footsie: a 2000 case study," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2147-2160.
    9. Sebastian Sitarz, 2013. "Compromise programming with Tchebycheff norm for discrete stochastic orders," Annals of Operations Research, Springer, vol. 211(1), pages 433-446, December.
    10. D. Pla-Santamaria & M. Bravo, 2013. "Portfolio optimization based on downside risk: a mean-semivariance efficient frontier from Dow Jones blue chips," Annals of Operations Research, Springer, vol. 205(1), pages 189-201, May.
    11. Zhao, Ruirui & Shi, Guang & Chen, Hongyu & Ren, Anfu & Finlow, David, 2011. "Present status and prospects of photovoltaic market in China," Energy Policy, Elsevier, vol. 39(4), pages 2204-2207, April.
    12. Carlos Bastian-Pinto & Luiz Brandão & Mariana Lemos Alves, 2010. "Valuing the switching flexibility of the ethanol-gas flex fuel car," Annals of Operations Research, Springer, vol. 176(1), pages 333-348, April.
    13. E Ballestero, 2000. "Project finance: a multi-criteria approach to arbitration," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(2), pages 183-197, February.
    14. Thomas Koellner & Olaf Weber & Marcus Fenchel & Roland Scholz, 2005. "Principles for sustainability rating of investment funds," Business Strategy and the Environment, Wiley Blackwell, vol. 14(1), pages 54-70, January.
    15. Ballestero, Enrique, 1997. "Selecting the CP metric: A risk aversion approach," European Journal of Operational Research, Elsevier, vol. 97(3), pages 593-596, March.
    16. Ulf Schrader, 2006. "Ignorant advice – customer advisory service for ethical investment funds," Business Strategy and the Environment, Wiley Blackwell, vol. 15(3), pages 200-214, May.
    17. Branker, K. & Pathak, M.J.M. & Pearce, J.M., 2011. "A review of solar photovoltaic levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4470-4482.
    18. van de Kaa, Geerten & Rezaei, Jafar & Kamp, Linda & de Winter, Allard, 2014. "Photovoltaic technology selection: A fuzzy MCDM approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 32(C), pages 662-670.
    19. Ballestero, Enrique, 2007. "Compromise programming: A utility-based linear-quadratic composite metric from the trade-off between achievement and balanced (non-corner) solutions," European Journal of Operational Research, Elsevier, vol. 182(3), pages 1369-1382, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Javier León & F. Javier Martín-Campo & M. Teresa Ortuño & Begoña Vitoriano & Luis Miguel Carrasco & Luis Narvarte, 2020. "A methodology for designing electrification programs for remote areas," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(4), pages 1265-1290, December.
    2. Yunna Wu & Jianli Zhou & Yong Hu & Lingwenying Li & Xiaokun Sun, 2018. "A TODIM-Based Investment Decision Framework for Commercial Distributed PV Projects under the Energy Performance Contracting (EPC) Business Model: A Case in East-Central China," Energies, MDPI, vol. 11(5), pages 1-27, May.
    3. Francisco Salas-Molina & Juan A. Rodriguez-Aguilar & Pablo Díaz-García, 2018. "Selecting cash management models from a multiobjective perspective," Annals of Operations Research, Springer, vol. 261(1), pages 275-288, February.
    4. Hanif Malekpoor & Nishikant Mishra & Sameer Kumar, 2022. "A novel TOPSIS–CBR goal programming approach to sustainable healthcare treatment," Annals of Operations Research, Springer, vol. 312(2), pages 1403-1425, May.
    5. Hongtao Ren & Wenji Zhou & Marek Makowski & Shaohui Zhang & Yadong Yu & Tieju Ma, 2023. "A multi-criteria decision support model for adopting energy efficiency technologies in the iron and steel industry," Annals of Operations Research, Springer, vol. 325(2), pages 1111-1132, June.
    6. B. Domenech & L. Ferrer-Martí & R. Pastor, 2022. "Multicriteria analysis of renewable-based electrification projects in developing countries," Annals of Operations Research, Springer, vol. 312(2), pages 1375-1401, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ballestero, Enrique & Bravo, Mila & Pérez-Gladish, Blanca & Arenas-Parra, Mar & Plà-Santamaria, David, 2012. "Socially Responsible Investment: A multicriteria approach to portfolio selection combining ethical and financial objectives," European Journal of Operational Research, Elsevier, vol. 216(2), pages 487-494.
    2. Emma Avetisyan & Kai Hockerts, 2017. "Consolidation of the ESG Rating Industry as an Enactment of Institutional Retrogression," Post-Print hal-01695693, HAL.
    3. Francisco Salas-Molina & Juan A. Rodríguez-Aguilar & David Pla-Santamaria, 2019. "Characterizing compromise solutions for investors with uncertain risk preferences," Operational Research, Springer, vol. 19(3), pages 661-677, September.
    4. Francisco Salas-Molina & David Pla-Santamaria & Juan A. Rodriguez-Aguilar, 2018. "A multi-objective approach to the cash management problem," Annals of Operations Research, Springer, vol. 267(1), pages 515-529, August.
    5. Francisco Salas-Molina & Juan Antonio Rodr'iguez Aguilar & Filippo Bistaffa, 2020. "Shared value economics: an axiomatic approach," Papers 2006.00581, arXiv.org.
    6. Mardani, Abbas & Zavadskas, Edmundas Kazimieras & Khalifah, Zainab & Zakuan, Norhayati & Jusoh, Ahmad & Nor, Khalil Md & Khoshnoudi, Masoumeh, 2017. "A review of multi-criteria decision-making applications to solve energy management problems: Two decades from 1995 to 2015," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 216-256.
    7. Jonathan Luffarelli & Amrou Awaysheh, 2018. "The Impact of Indirect Corporate Social Performance Signals on Firm Value: Evidence from an Event Study," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(3), pages 295-310, May.
    8. Felipe Arias Fogliano de Souza Cunha & Erick Meira de Oliveira & Renato J. Orsato & Marcelo Cabus Klotzle & Fernando Luiz Cyrino Oliveira & Rodrigo Goyannes Gusmão Caiado, 2020. "Can sustainable investments outperform traditional benchmarks? Evidence from global stock markets," Business Strategy and the Environment, Wiley Blackwell, vol. 29(2), pages 682-697, February.
    9. Jamal, Taskin & Urmee, Tania & Shafiullah, G.M., 2020. "Planning of off-grid power supply systems in remote areas using multi-criteria decision analysis," Energy, Elsevier, vol. 201(C).
    10. Zografidou, Eleni & Petridis, Konstantinos & Petridis, Nikolaos E. & Arabatzis, Garyfallos, 2017. "A financial approach to renewable energy production in Greece using goal programming," Renewable Energy, Elsevier, vol. 108(C), pages 37-51.
    11. Yuan, Jiahai & Sun, Shenghui & Zhang, Wenhua & Xiong, Minpeng, 2014. "The economy of distributed PV in China," Energy, Elsevier, vol. 78(C), pages 939-949.
    12. D. Pla-Santamaria & M. Bravo, 2013. "Portfolio optimization based on downside risk: a mean-semivariance efficient frontier from Dow Jones blue chips," Annals of Operations Research, Springer, vol. 205(1), pages 189-201, May.
    13. Bertolini, Marina & D'Alpaos, Chiara & Moretto, Michele, 2018. "Do Smart Grids boost investments in domestic PV plants? Evidence from the Italian electricity market," Energy, Elsevier, vol. 149(C), pages 890-902.
    14. Cinzia Colapinto & Raja Jayaraman & Simone Marsiglio, 2017. "Multi-criteria decision analysis with goal programming in engineering, management and social sciences: a state-of-the art review," Annals of Operations Research, Springer, vol. 251(1), pages 7-40, April.
    15. Abbas Mardani & Ahmad Jusoh & Edmundas Kazimieras Zavadskas & Fausto Cavallaro & Zainab Khalifah, 2015. "Sustainable and Renewable Energy: An Overview of the Application of Multiple Criteria Decision Making Techniques and Approaches," Sustainability, MDPI, vol. 7(10), pages 1-38, October.
    16. Emma Avetisyan & Kai Hockerts, 2017. "The Consolidation of the ESG Rating Industry as an Enactment of Institutional Retrogression," Business Strategy and the Environment, Wiley Blackwell, vol. 26(3), pages 316-330, March.
    17. Plain, N. & Hingray, B. & Mathy, S., 2019. "Accounting for low solar resource days to size 100% solar microgrids power systems in Africa," Renewable Energy, Elsevier, vol. 131(C), pages 448-458.
    18. Gary F. Peters & Andrea M. Romi & Juan Manuel Sanchez, 2019. "The Influence of Corporate Sustainability Officers on Performance," Journal of Business Ethics, Springer, vol. 159(4), pages 1065-1087, November.
    19. Panos Xidonas & Haris Doukas & George Mavrotas & Olena Pechak, 2016. "Environmental corporate responsibility for investments evaluation: an alternative multi-objective programming model," Annals of Operations Research, Springer, vol. 247(2), pages 395-413, December.
    20. Arnaud de La Tour & Matthieu Glachant & Yann Ménière, 2013. "What cost for photovoltaic modules in 2020? Lessons from experience curve models," Working Papers hal-00805668, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:245:y:2016:i:1:d:10.1007_s10479-015-1836-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.