A real options approach to valuation of photovoltaic power investments on rooftops of residential areas in Turkey

Download

Bartu Or Master Thesis Final.pdf

Date

2023-1-24

Author

Or, Bartu

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

257
views

263
downloads

Diminishing non-renewable energy resources, increasing energy prices, and the outgrowth of carbon footprints have made investments in renewable energy resources indispensable. Power generation through renewable solar energy can be made through state-of-art photovoltaic (PV) systems. Although PV systems on residential rooftops offer great solar energy potential, initial costs are considerably high, and there exist such uncertainties as fluctuating PV panel prices, changing meteorological conditions affecting power-generation-processes, and governmental demeanors, related to energy market regulations, prices, and fees. The economic feasibility of such investments is generally determined using Net Present Value (NPV). Considering the high initial costs, uncertain, yet increasing annual costs, and high inflation rates, it is apparent that NPV assessment would not favor the investment under the now-or-never enforcement of the method. In this study, the Real Options Valuation (ROV) with Least Square Monte Carlo Simulation (LSMC) method is proposed for evaluating the residential PV investment decisions in Turkey. Respectively, a PV investment on a household roof in Kocaeli, Turkey, is assessed using both methods; “NPV” and “ROV with LSMC having a seven-year deferral option.” Consequently, it is demonstrated that while the NPV method results in an infeasible investment, the ROV with LSMC method supports the investment by giving the investor realizable cost-effective options; since it also considers the deferral of the investment in time - by utilizing stochastic simulations, the discounted cash flow method, linear regression, and backward dynamic programming - and thus evaluates the effects of future uncertainties on the potential future opportunities in residential PV investment. Based on the findings, the probable government incentives easing and promoting solar energy generation in Turkey are investigated.

Subject Keywords

Residential photovoltaic investments, Turkey, Real options valuation (ROV), Least square Monte Carlo simulation (LSMC), Government incentives

URI

https://hdl.handle.net/11511/102008

Collections

Graduate School of Natural and Applied Sciences, Thesis

Suggestions

OpenMETU
Core

Assessment of renewable energy based micro-grids for small communities Sadati, S.M. Sajed; Taylan, Onur; Sustainable Environment and Energy Systems (2016-7) Deploying renewable energy systems to supply electricity faces many challenges related to cost and variability of the renewable resources. One possible solution to these challenges is to hybridize renewable energy systems with conventional power systems and include energy storage systems. In this study, the feasibility analysis of two cases for electricity generation systems as (i) photovoltaic (PV)-battery-pumped hydro system (PHS) and (ii) PV-wind-battery are presented as a Renewable Energy Micro-Gr...
A Study on new Turkish ground snow load map and snow damage prevention recommendations for solar power plants Temel, Özlem; Türer, Ahmet; Department of Civil Engineering (2020) Renewable energy sources have become an environment friendly alternative to fossil fuels. As a renewable source, solar energy becomes widespread under favor of decreasing costs in Photovoltaic (PV) cell production. Similar to the growth trend in the world, total production capacity of installed Solar Power Plants (SPP) have recently reached over 5 GW in Turkey. In a typical SPP, PV modules are mounted on steel supporting structures with a site-specific inclination angle. In the last years, damage of many PV...
A multiobjective approach to energy environment planning problem Arikan, Y; Kilic, C (1996-05-16) The energy planning problem has gained a new dimension in view of the effects of energy production and consumption on environmental decline and ecological damage. The problem was usually formulated in total cost minimization form and the environmental effects of energy activities were not taken into account. It has been well understood now that decisions concerning energy supply cannot be based on a single objective, since energy policies have multiple consequences which cannot and should not be ignored. Th...
A new economic feasibility approach for solar chimney power plant design Okoye, Chiemeka Onyeka; Solyali, Oguz; Taylan, Onur (2016-10-15) Solar chimney power plants have been accepted as one of the promising technologies for solar energy utilization. The objective of this study is to propose an effective approach to simultaneously determine the optimal dimensions of the solar chimney power plant and the economic feasibility of the proposed plant. For this purpose, a two-stage economic feasibility approach is proposed based on a new nonlinear programming model. In the first stage, the proposed optimization model which determines the optimal pl...
Overcoming problems in Turkey's renewable energy policy: How can EU contribute? Sirin, Selahattin Murat; Ege, Aylin (2012-09-01) Fossil fuels cover most of the energy demand in the world, and this creates significant social, economic and environmental problems. Many countries have taken measures to increase the share of renewable energy sources (RES), especially in electricity generation, and the review of literature shows that the success of a country in RES diffusion depends on a comprehensive renewable energy policy which combines political commitment with stable and long-term support measures that stimulate technological innovati...

Citation Formats

B. Or, “A real options approach to valuation of photovoltaic power investments on rooftops of residential areas in Turkey,” M.S. - Master of Science, Middle East Technical University, 2023.