Should a Lower Discount Rate Be Used for Evaluating a Tolling Agreement than Used for a Renewable Energy Contract?

Chi-Keung WOO, Brian Horii, Michele Chait, Ira Horowitz

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

Should a lower discount rate be used for evaluating a tolling agreement than used for a renewable energy contract? The California Energy Commission seems to think so. An analysis suggests that a risk-adjusted discount rate is inappropriate. A correct approach should quantify the effect of risk on a contract's financial performance, thereby providing useful information for decision-making.

Original languageEnglish
Pages (from-to)35-40
Number of pages6
JournalElectricity Journal
Volume21
Issue number9
DOIs
Publication statusPublished - Nov 2008

Scopus Subject Areas

  • Business and International Management
  • Energy (miscellaneous)
  • Management of Technology and Innovation
  • Law

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