Economic Feasibility of Kite-Based Wind Energy Powerships with CAES or Hydrogen Storage
FCN Working Paper No. 16/2012
38 Pages Posted: 21 Mar 2013
Date Written: December 1, 2012
The rise in the usage of sustainable energy conversion technologies has been remarkable. However, the growth of these technologies poses several problems, mainly concerning the net integration of intermittent energy sources, like wind and solar power, by means of advanced storage systems and the land consumption the use of these energy sources implies. Furthermore, the economic viability of these solutions is in question, as they are to date still often heavily supported by financial subsidies. The Powership concept attempts to tackle these shortcomings by harvesting wind energy offshore using an alternative infrastructural approach which features a special-purpose ship towed by a high-flying kite. The ship’s resulting kinetic energy is partially converted by a water repeller and can either be used to compress and store air in steel tubes (Alternative 1) or to drive a generator which in turn delivers electrical energy to produce hydrogen (Alternative 2). In this study, the economic feasibility of each of the two alternatives is investigated and compared with the other using real options analysis, including both R&D and market risks as stochastic variables driving the option’s value. In order to determine the strategic value of managerial flexibility in the face of uncertainty, assumptions concerning the change of the economic environment are made and motivated.
Keywords: Wind power, kite, CAES, hydrogen, real options analysis, Monte Carlo simulation
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