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Lion Hirth - One of the best experts on this subject based on the ideXlab platform.
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The Market Value of Wind and Solar Power: An Analytical Approach
SSRN Electronic Journal, 2016Co-Authors: Lion Hirth, Alexander RadebachAbstract:Several studies have shown that the revenues of wind and solar power generators on spot Markets (“Market Value”) decline with increasing deployment. This “Value drop” is often discussed quantitatively but infrequently analytically, a gap that this paper aims to fill. We derive a formal expression of the Market Value as a function of the penetration rate. At low deployment, the Market Value is driven by the covariance over time between winds or sunshine and electricity consumption. In countries where power demand peaks at noon during summer, the Value of solar power is initially high; the equivalent is true for wind power in those regions where stormy winters coincide with periods of high demand for heating. As deployment increases, however, we show that the Market Value declines linearly with the penetration rate in energy terms (Market share). The slope of the decline is determined by the relative variance of wind or sun: the more the output is concentrated in a few hours of the year, the steeper the drop in Value. It is in this sense that variability (intermittency) “causes” the Value drop. A drop in Market Value is also a feature of a power generation technology that operates constantly, but the drop is smaller in size.
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Market Value of solar power is photovoltaics cost competitive
Iet Renewable Power Generation, 2015Co-Authors: Lion HirthAbstract:This paper reviews the economics of solar power as a source of grid-connected electricity generation. It is widely acknowledged that costs of solar power have declined, but there is disagreement how its economic Value should be calculated. `Grid parity', comparing generation costs to the retail price, is an often used yet flawed metric for economic assessment, as it ignores grid fees, levies, and taxes. It also fails to account for the fact that electricity is more valuable at some points in time and at some locations than that at others. A better yardstick than the retail price is solar power's `Market Value'. This paper explains why, and provides empirical estimates of the solar Market Value from a literature review, German spot Market analysis, and the numerical electricity Market model EMMA. At low penetration rates (<;2-5%) solar power's Market Value turns out to be higher than the average wholesale electricity price - mainly, because the sun tends to shine when electricity demand is high. With increasing penetration, the Market Value declines - the solar premium turns into a solar penalty. In Germany, the Value of solar power has fallen from 133% of the average electricity price to 98% as solar penetration increased from zero to 4.7%. This Value drop is steeper than wind power's Value drop, because solar generation is more concentrated in time. As a consequence, large-scale solar deployment without subsidies will be more difficult to accomplish than many observers have anticipated.
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the Market Value of variable renewables the effect of solar and wind power variability on their relative price
Energy Economics, 2013Co-Authors: Lion HirthAbstract:This paper provides a comprehensive discussion of the Market Value of variable renewable energy (VRE). The inherent variability of wind speeds and solar radiation affects the price that VRE generators receive on the Market (Market Value). During wind and sunny times the additional electricity supply reduces the prices. Because the drop is larger with more installed capacity, the Market Value of VRE falls with higher penetration rate. This study aims to develop a better understanding how the Market Value with penetration, and how policies and prices affect the Market Value. Quantitative evidence is derived from a review of published studies, regression analysis of Market data, and the calibrated model of the European electricity Market EMMA. We find the Value of wind power to fall from 110 percent of the average power price to 50-80 percent as wind penetration increases from zero to 30 percent of total electricity consumption. For solar power, similarly low Values levels are reached already at 15 percent penetration. Hence, competitive large-scale renewables deployment will be more difficult to accomplish than many anticipate.• The variability of solar and wind power affects their Market Value.• The Market Value of variable renewables falls with higher penetration rates.• We quantify the reduction with Market data, numerical modeling, and a lit review.• At 30% penetration, wind power is worth only 50-80% of a constant power source.
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The Market Value of variable renewables. The effect of solar wind power variability on their relative price
Energy Economics, 2013Co-Authors: Lion HirthAbstract:This paper provides a comprehensive discussion of the Market Value of variable renewable energy (VRE). The inherent variability of wind speeds and solar radiation affects the price that VRE generators receive on the Market (Market Value). During windy and sunny times the additional electricity supply reduces the prices. Because the drop is larger with more installed capacity, the Market Value of VRE falls with higher penetration rate. This study aims to develop a better understanding on how the Market Value with penetration, and how policies and prices affect the Market Value. Quantitative evidence is derived from a review of published studies, regression analysis of Market data, and the calibrated model of the European electricity Market EMMA. We find the Value of wind power to fall from 110% of the average power price to 50-80% as wind penetration increases from zero to 30% of total electricity consumption. For solar power, similarly low Value levels are reached already at 15% penetration. Hence, competitive large-scale renewable deployment will be more difficult to accomplish than as many anticipate. © 2013 Elsevier B.V.
Mark A Cohen - One of the best experts on this subject based on the ideXlab platform.
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does the Market Value environmental performance
The Review of Economics and Statistics, 2001Co-Authors: Shameek Konar, Mark A CohenAbstract:Previous studies that attempt to relate environmental to financial performance have often led to conflicting results due to small samples and subjective environmental performance criteria. We report on a study that relates the Market Value of firms in the S&P 500 to objective measures of their environmental performance. After controlling for variables traditionally thought to explain firm-level financial performance, we find that bad environmental performance is negatively correlated with the intangible asset Value of firms. The average "intangible liability" for firms in our sample is $380 million - approximately 9% of the replacement Value of tangible assets. We conclude that legally emitted toxic chemicals have a significant effect on the intangible asset Value of publicly traded companies. A 10% reduction in emissions of toxic chemicals results in a $34 million increase in Market Value. The magnitude of these effects varies across industries, with larger losses accruing to the traditionally polluting industries. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Shameek Konar - One of the best experts on this subject based on the ideXlab platform.
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does the Market Value environmental performance
The Review of Economics and Statistics, 2001Co-Authors: Shameek Konar, Mark A CohenAbstract:Previous studies that attempt to relate environmental to financial performance have often led to conflicting results due to small samples and subjective environmental performance criteria. We report on a study that relates the Market Value of firms in the S&P 500 to objective measures of their environmental performance. After controlling for variables traditionally thought to explain firm-level financial performance, we find that bad environmental performance is negatively correlated with the intangible asset Value of firms. The average "intangible liability" for firms in our sample is $380 million - approximately 9% of the replacement Value of tangible assets. We conclude that legally emitted toxic chemicals have a significant effect on the intangible asset Value of publicly traded companies. A 10% reduction in emissions of toxic chemicals results in a $34 million increase in Market Value. The magnitude of these effects varies across industries, with larger losses accruing to the traditionally polluting industries. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Joanna Żarnik-Żuławska - One of the best experts on this subject based on the ideXlab platform.
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Measurement of Human Capital and Market Value of Listed Companies
Journal of Positive Management, 2017Co-Authors: Joanna Żarnik-ŻuławskaAbstract:1.IntroductionMany companies recognize that the gap between the Market Value and the book Value becomes more significant. The Market Value exceeds the book Value, and the Value of the capital invested in the company exceeds the costs of assets replacement. Only 20 years ago global companies had their Market Value at a level similar to the Value of their countable assets, which corresponded to the Tobin's Q indicator of around 1 (Jarugowa and Fijalkowska, 2002). Currently in the leading companies, such as Microsoft, the Tobin's Q indicator is around 2, which means that 100% of the company's Market Value is made of uncountable assets that include, among others, the intellectual capital and related to the human capital [1]. Hence, the intellectual capital constitutes a significant element of the company's Market Value, and due to this its position should be calculated and presented as an indicator of the total Value of a company. Information arising from the intellectual capital measurement can encourage investors to future investment and play a crucial role in forming the Market Value of a company.The author attempted to indicate the connection between the increasing Market Value of the largest companies and a need for measuring the intellectual and human capital. At the same time pointed out that there are still difficulties associated with the measurement of human capital. Regardless of these difficulties, more and more companies measure of human capital. Results of own research confirmed this and showed of measurement range in Polish listed companies. In order to obtain the data used indirect survey. Survey conducted in 50 Polish listed companies in the period September 2015-February 2016. The rest of the paper shows specific examples of using information regarding human capital to predict and create the company's Market Value.2.A gap between the Market Value and the book Value of companies as a stimulus for the intellectual capital measurementTwo indicators are most often used to estimate the company's intellectual capital: indicator of relations between the Market Value and the book Value MV/ BV and Tobin's Q indicator. Both of them give opportunity to estimate the intellectual capital of any company, to track changes in its Value or to compare its Value to the Value of any other company. D. Appenzeller observed that those indicators have significant limitations for example the company's Market Value depends on many factors such as: financial condition, intellectual capital or a situation on the Market. Thus, in bull Market period, when share prices are rising, a high level of both indicators can be expected, and it does not have to be an evidence for high level of intellectual capital. While in a bear Market periods, the company's Market Value - and as a result its intellectual capital - will be reduced (Appenzeller, 2009). Table 1 shows the Market Value and the assets Value of the largest global companies in 2016. The discrepancy between the Market Value and book Value is also noted by the Polish companies, e.g. LPP (5.4), CCC (7.8), PKN Orlen (1.5) [2]. Table 2 shows the Market Value and book Value of the largest companies listed on Warsaw Stock Exchange.Despite a wide range of literature, there is still lack one definition of the intellectual capital term. According to L. Edvinsson the intellectual capital is a difference between the Market Value and the book Value of an organization, in other words it is a sum of hidden assets, not included in the company's balance sheet (Edvinsson and Sullivan, 1996). The concept of L. Edvinsson shows two basic elements of the intellectual capital, that is human capital and structural capital. The human capital includes the knowledge, skills, experience, attitude (e.g. dedication, ability to learn, will to share the knowledge and ideas, etc.). The structural capital is an ability to support the employees' efficiency by the organisation. It includes the tools and systems assisting the transfer of knowledge (organizational capital) and relations with clients (client capital) (Mouritsen and Larsen, 2001). …
Marcelo Saguan - One of the best experts on this subject based on the ideXlab platform.
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On the Market Value of wind power
2009 6th International Conference on the European Energy Market, 2009Co-Authors: Carlo Obersteiner, Marcelo SaguanAbstract:In leading European wind power countries wind power generation affects wholesale power prices already today. First investigations indicate that the respective wind power - price relation lowers the Market Value of wind power relative to the baseload price with increasing penetration. The aim of this paper is to identify parameters that determine this effect based on simulations for the Central European Power Market (CEPM). We model wind power - price interactions and investigate the sensitivity of the Market Value on a number of wind power and system related parameters. The Market Value of wind power is sensitive to changes in wind share and variability, wind-demand correlation and the supply characteristics. Results further indicate that for expected wind capacities in 2020 the Market Value in the CEPM is significantly lower than the baseload price. The Market Value reducing effect varies among countries and is comparably low for wind power portfolios whose generation is weakly correlated with the overall wind power generation in the respective power Market. Hence with rising wind shares it will become increasingly important to take this effect into account when assessing the economics of wind power projects. Future trends in the CEPM that may positively influence the Market Value are increasing electricity demand, fuel and CO 2 prices, a better geographic distribution of onshore wind within the CEPM and an increasing utilization of offshore wind.
