The fertiliser market, heavily reliant on imports in Brazil, faces significant challenges due to supply chain disruptions and price volatility from geopolitical conflicts and the COVID-19 pandemic. To address these challenges, initiatives leveraging green hydrogen as the feedstock for ammonia and urea aim to mitigate reliance on costly natural gas in nitrogen fertiliser production. This study extends these efforts to the renewable energy sector, particularly wind energy projects in Brazil's Northeast region, where surplus energy can bolster domestic fertiliser production. Employing Real Options Analysis (ROA) and Monte Carlo Simulation (MCS), the study evaluates the economic viability of switching between energy and fertiliser production. Initial findings suggest significant value in this flexibility, notably when prices of outputs are not strongly correlated. These insights have practical implications for regions like Pecém and Aratú, where port infrastructure can facilitate the commercialisation of nitrogenous fertilisers, aligning with Brazil's economic agenda of optimising surplus energy to meet domestic agricultural needs.
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