Cash flow at risk of offshore wind plants

Research output: Chapter in Book/Report/Conference proceedingConference contribution book

2 Citations (Scopus)

Abstract

Offshore wind power plants might be seen as high risk investments. Their risk depends on technical and financial elements. When some corporations decide to invest in a plant, they decide to take all above-mentioned risks. The question 'Given a specific investor, a specific plant, etc., how big are the investment risks?' has not a clear answer. In fact, the impact of the previous risk factors on cash flows is not completely quantified, mainly because all the risks are related, but the dependency structure is difficult to be modelled. Hence, it is important to have a measure of the impact of the risks into the cash flows. Due to the lack of knowledge in this quantification, we have decided to investigate it more in the detail. The paper aims to measure the variability of cash flows and how effective are the strategies for locking electricity prices, ship freight rates, or both in the reduction of this variability. We adopt the Monte Carlo approach for simulating all the possible cash flows and for measuring all the uncertainties. The output shows that seasonal and uncertain cash flows. The strategies, for reducing the probability of negative cash flows, work only with locked electricity prices.

LanguageEnglish
Title of host publication2017 6th International Conference on Clean Electrical Power
Subtitle of host publicationRenewable Energy Resources Impact, ICCEP 2017
Place of PublicationPiscataway, NJ
PublisherIEEE
Pages84-93
Number of pages10
ISBN (Electronic)9781509046829
DOIs
Publication statusPublished - 18 Aug 2017
Event6th International Conference on Clean Electrical Power, ICCEP 2017 - Santa Margherita Ligure, Italy
Duration: 27 Jun 201729 Jun 2017

Conference

Conference6th International Conference on Clean Electrical Power, ICCEP 2017
CountryItaly
CitySanta Margherita Ligure
Period27/06/1729/06/17

Fingerprint

Electricity
Wind power
Power plants
Ships
Industry
Uncertainty

Keywords

  • cash flow at risk
  • offshore wind energy

Cite this

Vaienti, C., Ioannou, A., & Brennan, F. (2017). Cash flow at risk of offshore wind plants. In 2017 6th International Conference on Clean Electrical Power: Renewable Energy Resources Impact, ICCEP 2017 (pp. 84-93). [8004797] Piscataway, NJ: IEEE. https://doi.org/10.1109/ICCEP.2017.8004797
Vaienti, Claudio ; Ioannou, Anastasia ; Brennan, Feargal. / Cash flow at risk of offshore wind plants. 2017 6th International Conference on Clean Electrical Power: Renewable Energy Resources Impact, ICCEP 2017. Piscataway, NJ : IEEE, 2017. pp. 84-93
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Vaienti, C, Ioannou, A & Brennan, F 2017, Cash flow at risk of offshore wind plants. in 2017 6th International Conference on Clean Electrical Power: Renewable Energy Resources Impact, ICCEP 2017., 8004797, IEEE, Piscataway, NJ, pp. 84-93, 6th International Conference on Clean Electrical Power, ICCEP 2017, Santa Margherita Ligure, Italy, 27/06/17. https://doi.org/10.1109/ICCEP.2017.8004797

Cash flow at risk of offshore wind plants. / Vaienti, Claudio; Ioannou, Anastasia; Brennan, Feargal.

2017 6th International Conference on Clean Electrical Power: Renewable Energy Resources Impact, ICCEP 2017. Piscataway, NJ : IEEE, 2017. p. 84-93 8004797.

Research output: Chapter in Book/Report/Conference proceedingConference contribution book

TY - GEN

T1 - Cash flow at risk of offshore wind plants

AU - Vaienti, Claudio

AU - Ioannou, Anastasia

AU - Brennan, Feargal

N1 - © 2017 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other uses, in any current or future media, including reprinting/republishing this material for advertising or promotional purposes, creating new collective works, for resale or redistribution to servers or lists, or reuse of any copyrighted component of this work in other works.

PY - 2017/8/18

Y1 - 2017/8/18

N2 - Offshore wind power plants might be seen as high risk investments. Their risk depends on technical and financial elements. When some corporations decide to invest in a plant, they decide to take all above-mentioned risks. The question 'Given a specific investor, a specific plant, etc., how big are the investment risks?' has not a clear answer. In fact, the impact of the previous risk factors on cash flows is not completely quantified, mainly because all the risks are related, but the dependency structure is difficult to be modelled. Hence, it is important to have a measure of the impact of the risks into the cash flows. Due to the lack of knowledge in this quantification, we have decided to investigate it more in the detail. The paper aims to measure the variability of cash flows and how effective are the strategies for locking electricity prices, ship freight rates, or both in the reduction of this variability. We adopt the Monte Carlo approach for simulating all the possible cash flows and for measuring all the uncertainties. The output shows that seasonal and uncertain cash flows. The strategies, for reducing the probability of negative cash flows, work only with locked electricity prices.

AB - Offshore wind power plants might be seen as high risk investments. Their risk depends on technical and financial elements. When some corporations decide to invest in a plant, they decide to take all above-mentioned risks. The question 'Given a specific investor, a specific plant, etc., how big are the investment risks?' has not a clear answer. In fact, the impact of the previous risk factors on cash flows is not completely quantified, mainly because all the risks are related, but the dependency structure is difficult to be modelled. Hence, it is important to have a measure of the impact of the risks into the cash flows. Due to the lack of knowledge in this quantification, we have decided to investigate it more in the detail. The paper aims to measure the variability of cash flows and how effective are the strategies for locking electricity prices, ship freight rates, or both in the reduction of this variability. We adopt the Monte Carlo approach for simulating all the possible cash flows and for measuring all the uncertainties. The output shows that seasonal and uncertain cash flows. The strategies, for reducing the probability of negative cash flows, work only with locked electricity prices.

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KW - offshore wind energy

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Vaienti C, Ioannou A, Brennan F. Cash flow at risk of offshore wind plants. In 2017 6th International Conference on Clean Electrical Power: Renewable Energy Resources Impact, ICCEP 2017. Piscataway, NJ: IEEE. 2017. p. 84-93. 8004797 https://doi.org/10.1109/ICCEP.2017.8004797