MARKET-BASED VALUATION OF ECOSYSTEM SERVICES FOR COMPETITIVE LARGE-SCALE SOLAR POWER GENERATION
MICHAEL LEPECH, DAVID FREYBERG, JOHN WEYANT, AND STEFAN REICHELSTEIN
CIVIL AND ENVIRONMENTAL ENGINEERING; MANAGEMENT SCIENCE AND ENGINEERING; GRADUATE SCHOOL OF BUSINESS
New solar power plants are difficult to finance in part because they often compete in a market against old power plants burning fossil fuels. New solar plants have much higher depreciation expenses, resulting in an investment disadvantage due to accounting. The researchers will develop a new accounting method to more appropriately value the preservation, use and enhancement of the natural ecosystems owned by large solar generating facilities.
A rigorous, market-based valuation of ecosystem services for competitive large-scale solar power generation could counter the depreciation disadvantage and lead to lower capital costs.
“Ultimately, we see this operationalizing the lofty goals of sustainable development through traditional corporate accounting and finance practices,” said Civil and Environmental Engineering’s Michael Lepech, who is joined in this project by departmental colleague David Freyberg; John Weyant, (Management Science and Engineering); and Stefan Reichelstein, (Graduate School of Business).