Economic feasibility analysis of a Jeju onshore wind power project using a stochastic methodology

Jeju Island introduced the CFI 2030 (Carbon Free Island 2030) policy in 2013, actively promoting the expansion of renewable energy such as solar and wind power. The primary objective is to achieve energy independence by establishing a clean energy system. This study analyzes the economic feasibility of the Jeju onshore wind farm expansion project, which is being promoted as part of CFI 2030 policy, from a national economic perspective. Utilizing the deterministic analysis method, we calculated B/C, NPV, and IRR values to assess the economic feasibility of the project. Simultaneously, we examined the sensitivity of key factors influencing economic feasibility, including discount rates, benefits, and costs. Recognizing the inherent uncertainties associated with renewable energy projects, we performed a stochastic analysis through the application of Monte Carlo simulation, obtaining essential information for informed project implementation decisions. Deterministic analysis confirmed that the proposed project was economically feasible. Sensitivity analysis indicates that economic feasibility can be maintained unless costs increase by more than 10.55% or SMP values decrease by more than 9.15%. Stochastic analysis results using Monte Carlo simulation revealed slightly lower values compared to deterministic analysis; however, the ranges and trends were similar. The methodology and results of this study can be used for policy decisions and to conduct further research on implementation of the project.