Assignment:
Questions
1. As a value-maximizing aluminum company, should Hydro invest in wind power in light of the Utsira pilot project? Why or why not?
2. Larger-scale turbines increase the electricity more than proportionately to increase in costs. A 1 megawatt turbine costs $2.6 million, with the remaining equipment costs unchanged. for a total required investment of $4.1 minion to power approximately 760 households. Electricity revenue over 15 years vises to $7.2 million in discounted present value. What conversion factor allows coin recovery of this larger-scale turbine?
3. If the net present value of the Utsira project is negative, vet Hydro goes ahead and funds the investment anyway, %chat ethical obligations does Hydro have to its shareholders? Discuss the role of corporate social responsibility and of back-up plans to address the possible full costing of coal, as in the European Union where carbon per-mits for a ton of coal have at times increased coal resource costs by 25 percent.
4. On what basis could shareholder value possibly rise if Hydro invests in negative NPV wind power projects?
5. Electric power generation is responsible for 43 percent of all enemy consumption in the United States. Coal provides the preponderant fuel OS percent). with nuclear power (19 percent) and natural gas (30 percent) providing most of the rest. Renewable energy provides only 12 percent. Recently, T. Boone Pickens proposed converting the trucking fleet in the United States to liquefied natural gas (LNG) and using wind power to replace the missing LNG in electric power production. What infrastructure issues do you see that must be resolved before the Pickens plan could be adopted?