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

Society of Korea Industrial and System Engineering (한국산업경영시스템학회)
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The Economic Evaluation of the Renewable Energy Projects using the Geske Model

게스케(Geske) 모델을 이용한 신재생에너지사업의 경제성 분석

  • 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

As the environmental impacts of fossil fuel energy sources increase, the South Korean government has tried to change non-environmental-friendly enery sources to environmental-friendly energy sources in order to mitigate environmental effects, which lead to global warming and air pollution. With both a limited budget and limited time, it is essential to accurately evaluate the economic and environmental effects of renewable energy projects for the efficient and effective operation of renewable energy plants. Although the traditional economic evaluation methods are not ideal for evaluating the economic impacts of renewable energy projects, they can still be used for this purpose. Renewable energy projects involve many risks due to various uncertainties. For this reason, this study utilizes a real option method, the Geske compound model, to evaluate the renewable energy projects on Jeju Island in terms of economic and environmental values. This study has developed an economic evaluation model based on the Geske compound model to investigate the influences of flexibility and uncertainty factors on the evaluation process. This study further conducts a sensitivity analysis to examine how two uncertainty factors (namely, investment cost and wind energy production) influence the economic and environmental value of renewable energy projects.

Keywords

Acknowledgement

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

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