Evaluation and Optimization of Feed-in Tariffs under Uncertainty

doi:10.13190/j.jbupt.2017.04.007

JOURNAL OF BEIJING UNIVERSITY OF POSTS AND TELECOM ›› 2017, Vol. 40 ›› Issue (4): 41-47.doi: 10.13190/j.jbupt.2017.04.007

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Evaluation and Optimization of Feed-in Tariffs under Uncertainty

LI Li, ZHANG Xin

School of Management, Tianjin Normal University, Tianjin 300387, China

Received:2017-02-13 Online:2017-08-28 Published:2017-07-10

Abstract

Abstract: Based on the strategic behaviors of investor, this article presents a policy evaluation model in which a specific Feed-in tariff (FIT) level can be evaluated and optimized. The influence of uncertain generation from RES on the optimal investment time and sizing (capacity choice) of investor was evaluated by using the proposed model. Also, from the view of a policy maker, the optimal tariff level was determined in the way of minimizing the total burden on ratepayers to achieve RES goals. By dint of the current tariff of offshore wind in China, empirical studies through the least squares Monte Carlo method and the real option theory assess and optimize the current level of FIT. It is revealed that the current tariff level of 0.137 USD/kWh for offshore wind in China would not be enough to offset the risk premium resulting from the output uncertainty. Improving the tariff level to 0.146 USD/kWh could take effect to stimulate investment.

Key words: feed-in tariff, offshore wind investment, real option, uncertainty

CLC Number:

F224.5

LI Li, ZHANG Xin. Evaluation and Optimization of Feed-in Tariffs under Uncertainty[J]. JOURNAL OF BEIJING UNIVERSITY OF POSTS AND TELECOM, 2017, 40(4): 41-47.

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Evaluation and Optimization of Feed-in Tariffs under Uncertainty

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