Valuation of operational flexibility: A case study of Bonneville power administration

Yong Chen; Nathan Gibson; Arpan Biswas; An Li; Hamid Bashiri; Erfaneh Sharifi; Claudio Fuentes; Christopher Hoyle; Arturo S. Leon; Christopher J. Skypeck

doi:10.1016/j.eneco.2021.105251

Valuation of operational flexibility: A case study of Bonneville power administration

Yong Chen, Nathan Gibson, Arpan Biswas, An Li, Hamid Bashiri, Erfaneh Sharifi, Claudio Fuentes, Christopher Hoyle, Arturo S. Leon, Christopher J. Skypeck

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

Abstract

Real options theory is applied to quantify the value of operational flexibility intrinsic to the hydropower generation capacity from the perspective of US federal power marketing administrations. The option value in this model arises from the tension between the increase in current sales revenue and the increase in the exposure of future power shortages. Using Bonneville Power Administration as an example, we apply the proposed valuation framework, analyze the optimal management policy for Bonneville Power Administration and investigate the potential impacts of Wind Vision 2050.

Original language	English
Article number	105251
Journal	Energy Economics
Volume	98
DOIs	https://doi.org/10.1016/j.eneco.2021.105251
State	Published - Jun 2021
Externally published	Yes

Funding

The research is funded by Bonneville Power Administration , United States of America through cooperative agreement # TIP342 .

Funders	Funder number
Bonneville Power Administration	TIP342

Keywords

Balancing authorities
Flexibility
Hydropower
Power market administration
Real option

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.eneco.2021.105251

Cite this

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title = "Valuation of operational flexibility: A case study of Bonneville power administration",

abstract = "Real options theory is applied to quantify the value of operational flexibility intrinsic to the hydropower generation capacity from the perspective of US federal power marketing administrations. The option value in this model arises from the tension between the increase in current sales revenue and the increase in the exposure of future power shortages. Using Bonneville Power Administration as an example, we apply the proposed valuation framework, analyze the optimal management policy for Bonneville Power Administration and investigate the potential impacts of Wind Vision 2050.",

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T2 - A case study of Bonneville power administration

AU - Chen, Yong

AU - Gibson, Nathan

AU - Biswas, Arpan

AU - Li, An

AU - Bashiri, Hamid

AU - Sharifi, Erfaneh

AU - Fuentes, Claudio

AU - Hoyle, Christopher

AU - Leon, Arturo S.

AU - Skypeck, Christopher J.

PY - 2021/6

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N2 - Real options theory is applied to quantify the value of operational flexibility intrinsic to the hydropower generation capacity from the perspective of US federal power marketing administrations. The option value in this model arises from the tension between the increase in current sales revenue and the increase in the exposure of future power shortages. Using Bonneville Power Administration as an example, we apply the proposed valuation framework, analyze the optimal management policy for Bonneville Power Administration and investigate the potential impacts of Wind Vision 2050.

AB - Real options theory is applied to quantify the value of operational flexibility intrinsic to the hydropower generation capacity from the perspective of US federal power marketing administrations. The option value in this model arises from the tension between the increase in current sales revenue and the increase in the exposure of future power shortages. Using Bonneville Power Administration as an example, we apply the proposed valuation framework, analyze the optimal management policy for Bonneville Power Administration and investigate the potential impacts of Wind Vision 2050.

KW - Balancing authorities

KW - Flexibility

KW - Hydropower

KW - Power market administration

KW - Real option

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VL - 98

JO - Energy Economics

JF - Energy Economics

M1 - 105251

ER -

Valuation of operational flexibility: A case study of Bonneville power administration

Abstract

Funding

Keywords

UN SDGs

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