The Korean Journal of Economic Studies
Study on the Optimal Investment Management of Fuel Cell Power Generator Considering Stochastic Process of Input and Output
Youngsik Nam (Korea University) and Heechan Kang (Incheon National University)Year 2017Vol. 65No. 3
To deal with the climate change caused by global warming, the efforts to reduce greenhouse gases have been continued in the world. In Korea, Renewable Portfolio Standard has been implemented in the way for the large-scale power plants to expand the use of renewable energy. This study analyzes an economic feasibility of an investment on a fuel cell power plant which is widely used as a distributed resource. Specifically, this study constructs a real option model, where a stochastic process of electricity price and liquefied natural gas price are explicitly considered. For the empirical analysis, we collect the data on POSCO ENERGY, which is a representative fuel cell power company in Korea. The paper also provides a sensitivity analysis on the discount rate and the weight of Renewable Energy Certificate. The result shows that, when the uncertainty associated with the operation of fuel cell power plant is considered, the investment on power generator has an economic feasibility under the conditional circumstance.