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Assessing the feasibility of cofiring wood pellets with coal for electricity generation: A real option analysis

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  • Xian, Hui
  • Colson, Gregory
  • Mei, Bin
  • Wetzstein, E. Wetzstein

Abstract

Real options is employed for investigating the lack of incentives for U.S. coal-power plants to cofire wood pellets. Results indicate that despite a thriving U.S. wood-pellet industry to supply EU demand, the price differential between wood pellets and coal and the muted level of fuel volatility renders U.S. cofiring unsupportable.

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  • Xian, Hui & Colson, Gregory & Mei, Bin & Wetzstein, E. Wetzstein, 2014. "Assessing the feasibility of cofiring wood pellets with coal for electricity generation: A real option analysis," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162484, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea14:162484
    DOI: 10.22004/ag.econ.162484
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    Cited by:

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    2. Mei, Bin & Wetzstein, Michael, 2017. "Burning wood pellets for US electricity generation? A regime switching analysis," Energy Economics, Elsevier, vol. 65(C), pages 434-441.
    3. Mei, Bin, 2019. "Timberland investments in the United States: A review and prospects," Forest Policy and Economics, Elsevier, vol. 109(C).
    4. Xian, Hui & Karali, Berna & Colson, Gregory & Wetzstein, Michael E., 2015. "Diesel or compressed natural gas? A real options evaluation of the U.S. natural gas boom on fuel choice for trucking fleets," Energy, Elsevier, vol. 90(P2), pages 1342-1348.
    5. Weiland, Brandon & Sesmero, Juan Pablo & Preckel, Paul & Wetzstein, Michael E., 2017. "Can Wood Pellets Save Coal?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258250, Agricultural and Applied Economics Association.
    6. Xian, Hui & Colson, Gregory & Karali, Berna & Wetzstein, Michael, 2017. "Do nonrenewable-energy prices affect renewable-energy volatility? The case of wood pellets," Journal of Forest Economics, Elsevier, vol. 28(C), pages 42-48.
    7. Tan, Zhizhou & Zeng, Xianhai & Lin, Boqiang, 2023. "How do multiple policy incentives influence investors’ decisions on biomass co-firing combined with carbon capture and storage retrofit projects for coal-fired power plants?," Energy, Elsevier, vol. 278(PB).
    8. Caurla, Sylvain & Bertrand, Vincent & Delacote, Philippe & Le Cadre, Elodie, 2018. "Heat or power: How to increase the use of energy wood at the lowest cost?," Energy Economics, Elsevier, vol. 75(C), pages 85-103.
    9. Agaton, Casper, 2017. "Real Options Analysis of Renewable Energy Investment Scenarios in the Philippines," MPRA Paper 83478, University Library of Munich, Germany.
    10. Stutzman, Sarah & Weiland, Brandon & Preckel, Paul & Wetzstein, Michael, 2017. "Optimal replacement policies for an uncertain rejuvenated asset," International Journal of Production Economics, Elsevier, vol. 185(C), pages 21-33.
    11. Liu, Shen & Colson, Gregory & Wetzstein, Michael, 2018. "Biodiesel investment in a disruptive tax-credit policy environment," Energy Policy, Elsevier, vol. 123(C), pages 19-30.
    12. Leonel J. R. Nunes & Margarida Casau & Marta Ferreira Dias, 2021. "Portuguese Wood Pellets Market: Organization, Production and Consumption Analysis," Resources, MDPI, vol. 10(12), pages 1-24, December.
    13. Lenka Štofová & Petra Szaryszová & Bohuslava Mihalčová, 2021. "Testing the Bioeconomic Options of Transitioning to Solid Recovered Fuel: A Case Study of a Thermal Power Plant in Slovakia," Energies, MDPI, vol. 14(6), pages 1-20, March.
    14. Kozlova, Mariia, 2017. "Real option valuation in renewable energy literature: Research focus, trends and design," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 180-196.

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