Using Mean-Reverting Prices and Real Options to Analyze District Heating and Combined Heat and Power in a Northern Minnesota City

Smale, Andrew D.
2014-07
Thumbnail Image

View/Download File

Smale_umn_0130M_15172.pdf (3.08 MB)

Persistent link to this item

https://hdl.handle.net/11299/165584
Statistics
View Statistics

Journal Title

Journal ISSN

Volume Title

Title

Using Mean-Reverting Prices and Real Options to Analyze District Heating and Combined Heat and Power in a Northern Minnesota City

Authors

Published Date

2014-07

Publisher

Type

Thesis or Dissertation

Abstract

This paper examines alternative investment strategies for a biomass-powered District Heating (DH) system for a small city in Northern Minnesota, including Combined Heat & Power (CHP) as a method of producing both heat and electricity. Stochastic, mean-reverting commodity prices and Real Options analysis techniques are also incorporated into a financial examination of the project. The analysis finds that, given certain tax incentives, a DH+CHP project could be attractive for a profit-seeking investor. The analysis also reveals that upfront investment risk could be lowered by using an incremental Real Options approach.

Keywords

Description

University of Minnesota M.S. July 2014. Major: Applied Economics. Advisor: William Lazarus. 1 computer file (PDF); viii, 132 pages, appendices p. 108-132.

Related to

Replaces

License

Collections

Master's Theses (Plan A and Professional Engineering Design Projects)

Series/Report Number

Funding information

Isbn identifier

Doi identifier

Previously Published Citation

Other identifiers

Suggested citation

Smale, Andrew D.. (2014). Using Mean-Reverting Prices and Real Options to Analyze District Heating and Combined Heat and Power in a Northern Minnesota City. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/165584.

Content distributed via the University Digital Conservancy may be subject to additional license and use restrictions applied by the depositor. By using these files, users agree to the Terms of Use. Materials in the UDC may contain content that is disturbing and/or harmful. For more information, please see our statement on harmful content in digital repositories.