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.