An Investment Decision-Making Research Based on Mothballing Option

Abstract

Developing Straw power in China has an important significance to improving the energy structure, ensuring energy security and achieving sustainable economic and social development. In accordance with the operating characteristics of power projects, this paper is intended to construct a straw power investment value model and a threshold value model based on mothballing option, and measure investment threshold value in the current stage of our straw power programme and its sensitivity to the influence of the investment costs, variable costs, fixed costs, government subsidies and demand. Case analysis will show that improving the government subsidies is the important approach to resolving the shortage of sustainability in the current straw power industry.