New build and Probability: Difference between pages

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''Sustainability - renewables - electricity - power purchase agreements.''
The study of chance providing an objective measure of uncertainty.


In this context, a new build asset is an asset for green electricity generation that has not yet been built.


Contrasted with an Existing asset.
Probabilities range between 1 (=100%) and 0 (=0%).


A probability of 100% means that an event is considered certain to occur.


In simple terms, striking a power purchase agreement (PPA) in relation to a new build asset is likely to:
A probability of 0% means that an event is considered certain not to occur.
*Be more expensive, because set up and installation costs will not yet have been covered, but
*Considered more "green", because new green capacity is added to the power network.
*Be longer term than an existing asset PPA, and
*Provide greater scope for a buyer to secure prices for a correspondingly longer time period.




In this context, new build assets are sometimes known as New-to-earth assets.
For example, flipping an unbiased coin, the probability of getting a head is often modelled as 50%.




== See also ==
This simple model of a coin flip assumes that the only two possibilities are a head or a tail.  Applying such simple models to financial situations, and treating financial outcomes as simple coin flips, may lead to errors resulting from:
* [[Additionality]]
* [[Asset finance]]
* [[Corporate finance]]
* [[Distribution]]
* [[Existing asset]]
* [[Gas purchase agreement]]
* [[Green]]
* [[Infrastructure]]
* [[Integrated water and power plant]]
* [[Offtaker]]
* [[Plant]]
* [[Power purchase agreement]]
* [[Project finance]]
* [[Recourse]]
* [[REGO]]
* [[Renewables]]
* [[Sleeving]]
* [[Solar CSP]]
* [[Solar PV]]
* [[Sustainability]]
* [[Transmission]]
* [[Transmission and distribution]]
* [[Virtual PPA]]


#The coin landing on its edge 'more often than it's supposed to'.
#The underlying assumption of an unbiased coin not being a valid one. This kind of assumption is usually much too simple.


==External link==
[https://assets.crowncommercial.gov.uk/wp-content/uploads/Power-Purchase-Agreements-PPA-An-Introduction-to-PPAs.pdf Introduction to Power Purchase Agreements - UK Crown Commercial Service]


[[Category:Accounting,_tax_and_regulation]]
== See also ==
[[Category:The_business_context]]
* [[Black swan]]
* [[Conditional probability]]
* [[Confidence interval]]
* [[Frequency distribution]]
* [[Mutually exclusive]]
* [[Poisson distribution]]

Revision as of 15:19, 8 June 2016

The study of chance providing an objective measure of uncertainty.


Probabilities range between 1 (=100%) and 0 (=0%).

A probability of 100% means that an event is considered certain to occur.

A probability of 0% means that an event is considered certain not to occur.


For example, flipping an unbiased coin, the probability of getting a head is often modelled as 50%.


This simple model of a coin flip assumes that the only two possibilities are a head or a tail. Applying such simple models to financial situations, and treating financial outcomes as simple coin flips, may lead to errors resulting from:

  1. The coin landing on its edge 'more often than it's supposed to'.
  2. The underlying assumption of an unbiased coin not being a valid one. This kind of assumption is usually much too simple.


See also

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