The financial risks from wind turbine failures: a value at risk approach

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dc.contributor.authorMikindani, Dorcasen
dc.contributor.authorO’Brien, Johnen
dc.contributor.authorLeahy, Paulen
dc.contributor.authorDeeney, Peteren
dc.contributor.funderIrish Research Councilen
dc.date.accessioned2024-12-18T12:39:18Z
dc.date.available2024-12-18T12:39:18Z
dc.date.issued2024-07-21en
dc.description.abstractThis paper models the financial risk associated with the cost of turbine failures over the lifetime of a wind farm. These failures cause significant variation in realized profit on wind generation projects. A model of the fault generating process is presented and industry data is used to parameterize the model. The model is then used to measure the financial risk associated with the wind project. Risks are measured using the financial metrics Value at Risk (VaR) and Conditional VaR (CVaR) metrics. The study shows that the 95% lifetime VaR of a turbine is equivalent to 52% of the initial capital expenditure. However, as the number of turbines in a farm increases, this risk diminishes. These findings have significant implications for small-scale projects, particularly community projects.en
dc.description.sponsorshipIrish Research Council (Pathway Award: IRC * 21/PATH-A/9348)en
dc.description.statusPeer revieweden
dc.description.versionPublished Versionen
dc.format.mimetypeapplication/pdfen
dc.identifier.citationMikindani, D., O’Brien, J., Leahy, P. and Deeney, P. (2024) 'The financial risks from wind turbine failures: a value at risk approach', Applied Economics. https://doi.org/10.1080/00036846.2024.2380542en
dc.identifier.doihttps://doi.org/10.1080/00036846.2024.2380542en
dc.identifier.eissn1466-4283en
dc.identifier.issn0003-6846en
dc.identifier.journaltitleApplied Economicsen
dc.identifier.urihttps://hdl.handle.net/10468/16735
dc.language.isoenen
dc.publisherTaylor & Francisen
dc.relation.ispartofApplied Economicsen
dc.rights© 2024, the Authors. Published by Informa UK Limited, trading as Taylor & Francis Group.This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or builtupon in any way.en
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/en
dc.subjectRisk analysisen
dc.subjectWind energyen
dc.subjectTurbine failuresen
dc.subjectDiversificationen
dc.titleThe financial risks from wind turbine failures: a value at risk approachen
dc.typeArticle (peer-reviewed)en
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