Analysis
Real Options Analysis for Ørsted Offshore Wind Expansion
Overview
What this challenge is about.
Construct a base-case DCF for a 1.1 GW US offshore wind project using public assumptions on capex/MW, capacity factor, and PPA pricing. Then layer a real options framework: model PPA prices and capex as correlated stochastic processes, and value (i) the option to defer FID by up to 24 months, (ii) the option to abandon after permitting, and (iii) the option to expand via a phase-2 tranche. Use either Monte Carlo with Longstaff-Schwartz or a multi-period binomial tree. Deliver a recommendation to Ørsted's investment committee on optimal staging, including the trigger PPA price for FID and the value lost if the firm precommits.
The Brief
What you'll do, and what you'll demonstrate.
How much value does optionality add to Ørsted's US offshore wind investment, and what staging policy maximizes shareholder value?
Earning criteria — what you'll demonstrate
- Apply real options theory to capital-intensive infrastructure investment
- Compare and contrast NPV and ROV decision frameworks under uncertainty
- Implement Longstaff-Schwartz or lattice methods for American-style project options
- Translate quantitative optionality into board-level investment policy
Program Fit
Where this fits in your program.
Sharpens the same skills your degree expects you to demonstrate.
Skills
Skills you'll demonstrate.
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Careers
Roles this prepares you for.
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