James DiLellio Explores Financial Viability of Wave Energy in Econometrics

 In a pioneering study on renewable energy investments, Pepperdine Graziadio faculty member James DiLellio introduces a novel financial approach to evaluating wave energy conversion (WEC) technology. His research, published in Econometrics, examines the economic feasibility of harnessing wave energy through a real options framework.

Wave energy holds immense promise, yet high costs and competition with offshore wind have hindered large-scale adoption. DiLellio’s study shows that traditional valuation methods, such as net present value (NPV), often underestimate WEC’s potential. Instead, he applies real options analysis, which accounts for market uncertainties and strategic investment decisions over time.

His findings show that while traditional methods predict losses, using real options analysis reveals that two of the three sites could become profitable if electricity prices increase.

DiLellio’s work underscores the importance of flexible, data-driven investment strategies in advancing renewable energy. As global efforts to cut CO2 emissions intensify, his research provides a roadmap for integrating wave energy into the future of sustainable power.

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