A simulation based real options approach for the investment evaluation of nuclear power

Authors:
Lei Zhu
Affiliations:
Center for Energy & Environmental Policy Research, Institute of Policy and Management, Chinese Academy of Sciences, Beijing 100190, China
Venue:
Computers and Industrial Engineering
Year:
2012

Citing 3
Cited 0

Valuing risky projects: option pricing theory and decision analysis

Management Science
Valuing Oil Properties: Integrating Option Pricing and Decision Analysis Approaches

Operations Research
Options in the Real World: Lessons Learned in Evaluating Oil and Gas Investments

Operations Research

Quantified Score

Hi-index	0.00

Visualization

Abstract

The investment of nuclear power has several uncertainties. This paper establishes a nuclear power investment evaluation model by employing real options theory with Monte Carlo method to evaluate the value of nuclear power plant from the perspective of power generation enterprises. Several technical and economic uncertainty factors (investment cost, generating cost, electricity prices and nuclear accident) have been taken into account in the model and the model is solved by Least Squares Monte-Carlo (LSM) method. As an application, the model is used to evaluate Sanmen nuclear power plant in Zhejiang province, China. The impacts of three electricity price mechanisms and nuclear power investment cost reduction are investigated and discussed.