{"title":"Optimal investment decision for photovoltaic projects in China: a real options method","authors":"Xing Zhu, Baoyu Liao","doi":"10.1007/s10878-023-01096-5","DOIUrl":null,"url":null,"abstract":"<p>In an uncertain environment, it is important to investigate whether to postpone, abandon or immediately invest in photovoltaic (PV) projects. This paper applies a real options model to explore the optimal investment decision for investors and the government’s optimal incentive strategy in China’s distributed PV market. The uncertainties of feed-in tariffs (FIT) and investment costs are included in this study as critical factors affecting the options value of PV projects. Multiple scenarios are designed from different dimensions, including various subsidy durations, different resource areas, and distinct regulatory policies. The results show that not only the current FIT and investment cost affect the investment choice, but also the potential change trend of FIT and investment cost affect the investor’s preference. The results also reveal that appropriate FIT regulation can effectively induce investors who abandon investment to choose to delay investment, and significantly shorten the delay time. These conclusions can provide valuable insights for investors to optimize investment decisions.</p>","PeriodicalId":50231,"journal":{"name":"Journal of Combinatorial Optimization","volume":null,"pages":null},"PeriodicalIF":0.9000,"publicationDate":"2023-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Combinatorial Optimization","FirstCategoryId":"100","ListUrlMain":"https://doi.org/10.1007/s10878-023-01096-5","RegionNum":4,"RegionCategory":"数学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"COMPUTER SCIENCE, INTERDISCIPLINARY APPLICATIONS","Score":null,"Total":0}
引用次数: 0
Abstract
In an uncertain environment, it is important to investigate whether to postpone, abandon or immediately invest in photovoltaic (PV) projects. This paper applies a real options model to explore the optimal investment decision for investors and the government’s optimal incentive strategy in China’s distributed PV market. The uncertainties of feed-in tariffs (FIT) and investment costs are included in this study as critical factors affecting the options value of PV projects. Multiple scenarios are designed from different dimensions, including various subsidy durations, different resource areas, and distinct regulatory policies. The results show that not only the current FIT and investment cost affect the investment choice, but also the potential change trend of FIT and investment cost affect the investor’s preference. The results also reveal that appropriate FIT regulation can effectively induce investors who abandon investment to choose to delay investment, and significantly shorten the delay time. These conclusions can provide valuable insights for investors to optimize investment decisions.
期刊介绍:
The objective of Journal of Combinatorial Optimization is to advance and promote the theory and applications of combinatorial optimization, which is an area of research at the intersection of applied mathematics, computer science, and operations research and which overlaps with many other areas such as computation complexity, computational biology, VLSI design, communication networks, and management science. It includes complexity analysis and algorithm design for combinatorial optimization problems, numerical experiments and problem discovery with applications in science and engineering.
The Journal of Combinatorial Optimization publishes refereed papers dealing with all theoretical, computational and applied aspects of combinatorial optimization. It also publishes reviews of appropriate books and special issues of journals.