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Power Plant Sales: Valuing Optionality

Market risks and volatilities are driving asset values higher.

Fortnightly Magazine - May 2006

50 percent capacity factor or less since 2002 or 2003. Will existing combined-cycle plants run as intermediate generators, or will coal plants knock them out completely?”

The answer affects not only the value of assets in the secondary market, but also the business case for new power projects. “Power companies are grappling with this issue,” Silverman says. “The value of an asset depends on your vision of the future.”