Generation Asset Valuation
http://www.erasmusenergy.com/articles/114/1/Generation-Asset-Valuation/Page1.html
Les Clewlow
By Les Clewlow
Published on 12/10/2007
Keywords:
Published in: Energy risk
Publication year: 2005
Co-author 1: Chris Strickland
Co-author 2: Oleg Zakharov
Co-author 3: Geoff Carroll
In this latest article of our series on practical applications of Monte Carlo simulation we focus on the valuation issues associated with a physical asset, namely a merchant power plant. Typically these assets are valued on a simple net present value basis with respect to a static forward, or forecast, curve. The analysis that will be employed here takes into account both the stochastic nature of the fuel and output prices and also the physical constraints associated with operating the plant. This methodology is often termed “real options theory” and is an increasingly popular tool for valuing physical assets.
Published in: Energy risk
Publication year: 2005
Co-author 1: Chris Strickland
Co-author 2: Oleg Zakharov
Co-author 3: Geoff Carroll
In this latest article of our series on practical applications of Monte Carlo simulation we focus on the valuation issues associated with a physical asset, namely a merchant power plant. Typically these assets are valued on a simple net present value basis with respect to a static forward, or forecast, curve. The analysis that will be employed here takes into account both the stochastic nature of the fuel and output prices and also the physical constraints associated with operating the plant. This methodology is often termed “real options theory” and is an increasingly popular tool for valuing physical assets.
Generation Asset Valuation
In this latest article of our series on practical applications of Monte Carlo simulation we focus on the valuation issues associated with a physical asset, namely a merchant power plant. Typically these assets are valued on a simple net present value basis with respect to a static forward, or forecast, curve. The analysis that will be employed here takes into account both the stochastic nature of the fuel and output prices and also the physical constraints associated with operating the plant. This methodology is often termed “real options theory” and is an increasingly popular tool for valuing physical assets.