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Mathematical Problems in Engineering
Volume 2013, Article ID 128309, 9 pages
Research Article

Evaluating Energy Sector Investments: Calculating Volatility

1Institute of Production Engineering and Management, Federal University of Itajuba, Avenida Bps 1303, Itajuba, MG 37500-903, Brazil
2Institute of Electrical Engineering, Federal University of Itajuba, Itajuba, MG, Brazil

Received 2 April 2013; Revised 11 October 2013; Accepted 14 October 2013

Academic Editor: Chien-Yu Lu

Copyright © 2013 Edson de Oliveira Pamplona et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


A major task in assessing risks of investment projects is defining the approach to calculating the project’s volatility. Looking at assorted estimation techniques, this paper calculates their volatilities. The techniques originate from authors in the area and involve project-specific variables of uncertainty. These techniques are applied to a case of electricity distribution through real options. Results are then compared. The difference between the calculated volatilities was low, leaving, in the case of the project evaluated here, the decision unchanged. The paper’s contribution consists of providing a detailed presentation of calculating volatility by the methods cited and by comparing the results obtained by its application.