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 journalJournal articlepeer-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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