A decision-making model for the analysis of offshore wind farm projects under climate uncertainties: A case study of South Korea

Wind power supplies clean energy, but it is vulnerable to climate change. As the impacts of climate change increase, economic assessment methods of wind power projects are required to capture climate uncertainties. The study proposes a decision-making model to analyze the economic feasibility of offshore wind farm projects considering the impacts of climate change using real options analysis (ROA). The model can consider project volatility using the wind speed projected from climate scenarios that affect wind power production. A case study of an offshore wind farm in South Korea was conducted to confirm the validity of the proposed model. The case study proved that the managerial flexibility provided by the proposed real options effectively reduces risks and increases the long-term profitability of offshore wind farm projects.