Masterclass: Valuing generation assets using Monte Carlo simulation
In the previous article of this Masterclass series we provided an overview of the difficulties associated with valuing a generation asset and described a number of different techniques for valuing generation assets as real options. In addition, we also applied one of the techniques, analytic spark-spreads, to value an asset, demonstrating that it was difficult to incorporate all the operational constrains that were needed to describe the asset. In particular, the incorporation of start-up costs
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