Renewable energy sources project appraisal under uncertainty: the case of wind energy exploitation within a changing energy market environment

There are four elements, which contribute to the oncoming increase of electricity demand: climate changes. the expected growth rates of EU Member State economies, changes in the consumption patterns and the introduction of new technologies. The ne;A deregulated Electricity Market is expected to respond to this challenge and the energy supply will be adequate and cost effective within this new environment which offers promising opportunities for power producers both existing and newcomers. In this paper a framework for the appraisal of power projects under uncertainty within a competitive market environment is identified. focusing on the electricity from Renewable Energy Sources. To this end the wind energy-to-electricity production in Greece will serve as a case study. The subject matter is centred on the following areas: the uncertainties within the new deregulated energy market; the evaluation methods including an analysis of the introduced uncertainties after deregulation and a new approach to project evaluation using the real options, as well as comparison of the valuation methodologies within the new environment drawing from the case for Greece. (C) 2002 Elsevier Science Ltd. All rights reserved.