This study presents a real options-based framework for investment in land and water solar power projects in the idle areas of agricultural dams. The following four-step framework was verified through a case study conducted in South Korea: (1) select the location and size of the project; (2) define uncertainties in the project data (construction cost, O&M cost, sunshine hours, and mechanical efficiency) and market data (inflation, discount rate, risk-free interest rate, and electricity selling price); (3) estimate cash flow and project volatility to calculate the option value using a binomial tree model; and (4) make decisions regarding project investment. A case study was conducted for the Naju Agricultural Dam (NAD) project, which has a net present value of −6.67 million USD, but will have a profit of 38.17 million USD after an abandonment option is applied using the proposed framework. Our contributions provide a framework for evaluating the economic feasibility of installing solar projects in idle areas of agricultural dams and for improving the profitability of solar projects using the abandonment option. The proposed framework can assist investors in planning solar projects in idle areas of agricultural dams.

This paper presents an economic feasibility analysis for constructing a 100 MW floating solar power plant in Korea aimed at utilizing idle water spaces to mitigate geographical limitations for large-scale renewable energy projects. Employing both Discounted Cash Flow (DCF) analysis and Real Options Analysis (ROA), the study evaluates the economic viability and strategic flexibility of the project under future market uncertainties. The DCF method reveals an NPV of 11,863,000 USD and a B/C ratio of 1.1, indicating baseline feasibility. However, the ROA demonstrates the value of adaptive strategies, with real option values showing that plant expansion (to 200 MW) is economically advantageous under favorable conditions. This approach supports strategic decision-making aligned with Korea’s renewable energy targets. The study emphasizes the importance of incorporating market uncertainties into feasibility assessments and proposes detailed strategies for expanding renewable energy generation.

This study evaluates the economic feasibility of offshore wind farm development on idle coastal areas in Korea, focusing on the Wando Geumil Offshore Wind Farm (GOWF) as a representative case. Offshore wind farms are increasingly recognized as key contributors to achieving carbon neutrality, and Korea’s coastal idle zones offer strategic potential for large-scale deployment with minimal land-use conflict. To address market uncertainty—particularly the sensitivity of revenues to the Renewable Portfolio Standard (RPS) and Renewable Energy Certificate (REC) weight—this research applies both the Discounted Cash Flow (DCF) method and Real Options Analysis (ROA), incorporating expansion and contraction scenarios. Using eleven years of historical System Marginal Price (SMP) and REC data, we estimate price volatility via a Geometric Brownian Motion (GBM) model (σ = 23.04%). The DCF results indicate a negative Net Present Value (NPV) of −313.7 million USD, suggesting baseline infeasibility. In contrast, ROA adds strategic value, with the expansion option yielding 69.6 million USD and the contraction option 2.1 million USD in additional project value. These findings demonstrate that integrating policy-driven revenue uncertainty into ROA substantially alters investment recommendations, offering practical guidance for optimizing offshore wind farm deployment on Korea’s idle coastal sites.

This paper presents an economic feasibility analysis for constructing a 100 MW floating solar power plant in Korea, aimed at utilizing idle water spaces to mitigate geographical limitations for large-scale renewable energy projects. Employing both Discounted Cash Flow (DCF) analysis and Real Options Analysis (ROA), the study evaluates the economic viability and strategic flexibility of the project under future market uncertainties. The DCF method reveals an NPV of 11,863 thousand USD and a B/C ratio of 1.1, indicating baseline feasibility. However, the ROA demonstrates the value of adaptive strategies, with real option values showing that plant expansion (to 200 MW) is economically advantageous under favorable conditions. This approach supports strategic decision-making aligned with Korea’s renewable energy targets. The study emphasizes the importance of incorporating market uncertainties into feasibility assessments and proposes detailed strategies for expanding renewable energy generation.