Wind Resources, Inc.

17 Pages Posted: 11 Sep 2007

See all articles by Robert C. Higgins

Robert C. Higgins

University of Washington - Department of Finance and Business Economics

Robert H. Keeley

affiliation not provided to SSRN

Date Written: August 18, 2007

Abstract

In 2005, the CEO of Wind Resources, Inc. needed to value the redevelopment rights on an easement to a promising wind farm site. A consultant's discounted cash flow analysis valued the easement at $13 million, but the CEO wondered if the ability to defer development for as long as three years in the presence of volatile natural gas prices might support a higher price. He was also concerned that the consultant had not properly handled redevelopment risk in his analysis. The case provides background information on the economics of the wind farm industry and on the structuring of alternative energy investments to take advantage of liberal tax incentives.

Keywords: Real options, valuation, leverage, alternative energy

Suggested Citation

Higgins, Robert C. and Keeley, Robert H., Wind Resources, Inc. (August 18, 2007). Available at SSRN: https://ssrn.com/abstract=1010228 or http://dx.doi.org/10.2139/ssrn.1010228

Robert C. Higgins (Contact Author)

University of Washington - Department of Finance and Business Economics ( email )

Box 353200
306 Mackenzie Hall
Seattle, WA 98195
United States
206-543-4379 (Phone)
206-528-0340 (Fax)

Robert H. Keeley

affiliation not provided to SSRN ( email )

No Address Available

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