Journal of Korean Society of Industrial and Systems Engineering (산업경영시스템학회지)

Society of Korea Industrial and System Engineering (한국산업경영시스템학회)
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The Economic Value Analysis of the Potential Wind Farm Site Using the Black-Scholes Model

블랙 숄즈 모델을 이용한 잠재적 풍력발전 위치의 경제적 가치분석

  • Jaehun, Sim (Department of Industrial and Systems Engineering, Changwon National University)
  • 심재훈 (창원대학교 산업시스템공학과)
  • Received : 2022.09.15
  • Accepted : 2022.10.24
  • Published : 2022.12.31
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Abstract

To mitigate the environmental impacts of the energy sector, the government of South Korea has made a continuous effort to facilitate the development and commercialization of renewable energy. As a result, the efficiency of renewable energy plants is not a consideration in the potential site selection process. To contribute to the overall sustainability of this increasingly important sector, this study utilizes the Black-Scholes model to evaluate the economic value of potential sites for off-site wind farms, while analyzing the environmental mitigation of these potential sites in terms of carbon emission reduction. In order to incorporate the importance of flexibility and uncertainty factors in the evaluation process, this study has developed a site evaluation model focused on system dynamics and real option approaches that compares the expected revenue and expected cost during the life cycle of off-site wind farm sites. Using sensitivity analysis, this study further investigates two uncertainty factors (namely, investment cost and wind energy production) on the economic value and carbon emission reduction of potential wind farm locations.

Keywords

Acknowledgement

This research was supported by Changwon National University in 2021~2022.

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