co firing coal with wood pellets for u s electricity generation a real options analysis abstract in contrast to eu u s electric utilities are not employing the bioenergy technology of co firing wood pellets with coal this difference in employment patterns is explored within a real options analysis roa for possible u s utilization of wood pellets considering fuel price series from 2009 to 2014 for analysis these series are divided into two sub periods based on different market conditions infancy 2009 2011 and substitution 2012 2014 roa indicates co firing wood pellets with coal is feasible considering adoption during wood pellets infancy under low discount rates and long power plant lifespans a portfolio effect of employing multiple fuels underlies this result however co firing is not currently economically feasible the different adoption decisions are likely a consequence of recent cheap and abundant u s natural gas for co fired wood pellets to be feasible government incentives and or a market increase in natural gas prices appear necessary

burning wood pellets for us electricity generation a regime switching analysis abstract applying a regime switching model under the theoretic framework of real options we inspect the optimal timing boundaries for coal and coal mixed wood pellets as two alternative fuels for a power plant in georgia united states results indicate that cofiring wood pellets with coal is generally not a commercially viable option however lower level with wood pellets

emissions trading and technology deployment in an energy systems bottom up model with technology learning abstract an important criterion in the analysis of climate policy instruments is their ability to stimulate the technological change necessary to enable the long term shift towards a low carbon global energy system in this paper some effects of emissions trading on technology deployment when technology learning is endogenized are examined with a multi regional bottom up energy systems optimization markal model of the global energy system in this framework due to the action of spillovers of learning imposing emission constraints on a given region may affect the technology choice and emissions profiles of other unconstrained regions the effects depend on the geographical scale of the learning process but also on the presence of emissions trading the regions that join the trade system and their timing for doing so incorporating endogenous technology learning and allowing for spillovers across regions appears as an important mechanism for capturing the possibility of induced technological change due to environmental constraints in bottom up models

optimizing the level of renewable electric r d expenditures using real options analysis abstract one of the primary objectives of the united states federal non hydro renewable electric r d program is to promote the development of technologies that have the potential to provide consumers with stable and secure energy supplies in order to quantify the benefits provided by continued federal renewable electric r d this paper uses real option pricing techniques to estimate the value of renewable electric technologies in the face of uncertain fossil fuel prices within the real options analysis framework the current value of expected future supply from renewable electric technologies net of federal r d expenditures is estimated to be 30 6 billion of this value 86 can be attributed to past federal r d efforts and 14 can be attributed to future federal r d efforts assuming continued federal r d funding at 300 million yr in addition real options analysis shows that the value of renewable electric technologies increases as current and future r d funding levels increase this indicates that the current level of federal renewable electric r d funding is sub optimal

competition in global markets a case study of american and japanese competition in the british market the results of a three year study of the objectives strategies and organisation of american subsidiaries are presented their operations are compared against a matched sample of competitive british and japanese subsidiaries american subsidiaries were found to be less ambitious more orientated towards delivering short term profit performance and less adapted to local market conditions than their japanese competitors over the five year period only one in three u s subsidiaries exhibited successful profit and market performance against more than three out of four japanese subsidiaries

evaluating natural resource investments notwithstanding impressive advances in the theory of finance over the past 2 decades practical procedures for capital budgeting have evolved only slowly the standard technique which has remained unchanged in essentials since it was originally proposed see dean 1951 bierman and smidt 1960 derives from a simple adaptation of the fisher 1907 model of valuation under certainty under this technique expected cash flows from an investment project are discounted at a rate deemed appropriate to their risk and the resulting present value is compared with the cost of the project this standard textbook technique reflects modern theoretical developments only insofar as estimates of the discount rate may be obtained from crude application of single period asset pricing theory but see brennan 1973 bogue and roll 1974 turnbull 1977 constantinides 1978 the inadequacy of this approach to capital budgeting is widely acknowledged although not widely discussed its obvious deficiency is its the evaluation of mining and other natural resource projects is made particularly difficult by the high degree of uncertainty attaching to output prices it is shown that the techniques of continuous time arbitrage and stochastic control theory may be used not only to value such projects but also to determine the optimal policies for developing managing and abandoning them the approach may be adapted to a wide variety of contexts outside the natural resource sector where uncertainty about future project revenues is a paramount concern

developing technological capabilities in agro industry ghana s experience with fresh pineapple exports abstract this article examines the emergence and trajectory of a new agro industry in ghana the pineapple export industry using the technological capabilities approach it explains the limited expansion of the industry and its declining competitiveness in the face of new competition by looking at how ghanaian exporters developed technological capabilities initially and the incentives and disincentives to building on those capabilities the article argues that at the heart of the industry s crisis was an inability to further develop technological capabilities the crisis had systemic features that have broader implications for developing new agro industries in ghana as well as other african countries

energy consumption and gdp causality relationship in g 7 countries and emerging markets abstract the causality relationship between energy consumption and income is a well studied topic in energy economics this paper studies the time series properties of energy consumption and gdp and reexamines the causality relationship between the two series in the top 10 emerging markets excluding china due to lack of data and g 7 countries we discover bi directional causality in argentina causality running from gdp to energy consumption in italy and korea and from energy consumption to gdp in turkey france germany and japan hence energy conservation may harm economic growth in the last four countries

investment opportunity in china s overseas oil project an empirical analysis based on real option approach abstract china s overseas oil investments uphold national energy security located in the complex international economic and political environment the benefits of overseas oil projects are affected by various uncertainties oil companies call for a set of evaluation method dealing with these uncertainties especially when encountering low oil price conditions it is much more crucial to answer when to optimally invest rather than whether to invest this paper analyzes the investment opportunity of an oil project in the development and production phase considering uncertainty irreversibility and management flexibility the decision making process combines discounted cash flow dcf method and the trinomial tree model of real option approach roa for practical purposes tools of hurdle price cumulative probability and decision tree are adopted in addition results of the case project show the economic feasibility at present and optimal start up timing at the end of 2016 besides the lower cost parameters generally make it easier to meet the opportunity the scenario analysis suggests the higher risk contributes to an earlier start up furthermore the issues of method applicability investment signals and decision lag effects are discussed

the role of past performance in export ventures a short term reactive approach this paper employs organizational learning theory to examine the short term effect of past export performance and internal management and external market forces on marketing strategy adaptation and current export performance results from a survey of over 500 export managers indicate that current period performance improvement in terms of performance achievement export intensity and performance satisfaction in the current year is influenced by the firm s commitment to exporting further the authors found that while performance satisfaction feeds performance improvement in the following year both the previous year s export intensity and export performance achievement produce a negative impact on current period performance improvement more importantly the level of development in the export market facilitates marketing strategy adaptation in the short term as does export intensity in the previous year however satisfaction with previous year performance negatively influences the degree of distribution adaptation implications for international business researchers and practitioners are also discussed

renewable energy policy evaluation using real option model the case of taiwan abstract this study presents a policy benefit evaluation model that integrates cost efficiency curve information on renewable power generation technologies into real options analysis roa methods the proposed model evaluates quantitatively the policy value provided by developing renewable energy re in the face of uncertain fossil fuel prices and re policy related factors the economic intuition underlying the policy making process is elucidated while empirical analysis illustrates the option value embedded in the current development policy in taiwan for wind power in addition to revealing the benefits that re development provides when considering real options analytical results indicate that roa is a highly effective means of quantifying how policy planning uncertainty including managerial flexibility influences re development in addition to assessing the policy value of current re development policy this study also compares policy values in terms of internalized external costs and varying feed in tariff fit simulation results demonstrate that the re development policy with internalized co2 emission costs is appropriate policy planning from sustainability point of view furthermore relationship between varying fit and policy values can be shown quantitatively and appropriate fit level could be determined accordingly

valuation of projects for power generation with renewable energy a comparative study based on real regulatory options abstract this comparative study evaluates an investment project on renewable energy based on wind power we have conducted the study in three european union countries denmark finland and portugal we have modelled the main uncertainties that affect this kind of project such as the cost and production of electric power investment costs and consumer price index for each of these countries we have analysed the mechanisms of public support for wind energy we have identified the real options included in the regulatory frameworks of these three countries and assessed how they affect the expanded net present value of the project to this end we have used two different methods of option valuation the monte carlo method and the binomial method we have proved that the obtained results using both methods are quite similar finally we have evaluated the public incentives for wind energy offered in each of these three countries and concluded that in economic terms finland is the country with the strongest support for this kind of energy followed by denmark and in the last place portugal

nationality and subsidiary ownership patterns in multinational corporations this paper examines the notion that the multinational s nationality influences its foreign subsidiary ownership decisions it identifies theoretically meaningful constructs to represent nationality and examines under carefully controlled conditions their influence on subsidiary ownership preferences in american and european multinationals the paper concludes that there are indeed significant differences in ownership preferences among various nationalities that can be explained using cultural as well as economic variables but that these differences may become weaker in larger multinationals

compound real options valuation of renewable energy projects the case of a wind farm in serbia abstract renewable energy sources have become a very important issue due to environmental and sustainability concerns in addition most renewable energy electricity generation res e projects are characterized by considerable uncertainty and sequential decision making these projects net present value npv is very often close to zero which renders them a good candidate for the application of real options valuation methodology of investment project appraisal this paper examines the real options valuation of a potential onshore wind farm project in serbia the binomial tree model spans a 15 year period consisting of a 2 year investment period and a 13 year operating period the first 12 years of which are protected by feed in tariffs according to local renewable energy regulations the authors examine a multi phased compound nested path dependent real option consisting of mutually exclusive options a sequential option to invest as well as expand repower contract and abandon options volatility which is calculated by means of a monte carlo simulation according to the logarithmic present value returns approach shows predominant sensitivity to the capacity factor simulated with the rescaled weibull s probability distribution the final binomial tree results show that the proposed sequence of options increases project value by transforming higher risk and lower return in the initial discounted cash flow model to lower risk and higher return in the ro model this paper contributes to the existing literature in at least two ways it presents in depth analysis of the real option application to the res e project and provides decision makers with sophisticated tool for improving strategic thinking capital budgeting and decision making processes

technological learning and renewable energy costs implications for us renewable energy policy abstract this paper analyzes the relationship between current renewable energy technology costs and cumulative production research development and demonstration expenditures and other institutional influences combining the theoretical framework of learning by doing and developments in learning by searching with the fields of organizational learning and institutional economics offers a complete methodological framework to examine the underlying capital cost trajectory when developing electricity cost estimates used in energy policy planning models sensitivities of the learning rates for global wind and solar photovoltaic technologies to changes in the model parameters are tested the implications of the results indicate that institutional policy instruments play an important role for these technologies to achieve cost reductions and further market adoption

investment timing and optimal capacity choice for small hydropower projects this paper presents a method for assessing small hydropower projects that are subject to uncertain electricity prices we present a real options based method with continuous scaling and we find that there is a unique price limit for initiating the project if the current electricity price is below this limit it is never optimal to invest but above this limit investment is made according to the function for optimal size the connection between the real option and the physical properties of a small hydropower plant is dealt with using a spreadsheet model that performs a technical simulation of the production in a plant based on all the important choices for such a plant the main results of the spreadsheet are simulated production size and the investment costs which are in turn used for finding the value of the real option and the price limit the method is illustrated on three different norwegian small hydropower projects

a real option model for renewable energy policy evaluation with application to solar pv power generation in china abstract this study proposes a policy evaluation model from the perspective of government and investors the proposed model which integrates american option method and two factor learning curve method can be used to evaluate the unit decision value and save path rate for renewable energy development and examine the existence of balance point of interest several uncertain factors including non renewable energy cost carbon price renewable energy cost and price subsidy are all considered in this model the model has been applied to evaluate the solar photovoltaic pv power generation in china our empirical results show that real option analysis roa is more effective than net present value analysis npv when handling uncertainty under current level of subsidy the government would suffer loss and the investors could benefit so that it is difficult to achieve the balance of interest during the planning period with the reduction of subsidy rate they can achieve the balance of interest

creating and maintaining global connections agro business and the precarious making of fresh cut markets abstract this article reconstructs the evolution of a multinational fruit processing company from ghana starting from the perspective that firms more generally aim at achieving stability in intra and extra organisational relations the article explores the practical means organisational forms resources technologies strategies and routines through which the case study company achieved relational stability in global markets but also shows how this was eroded in changing market environments extending out from this case study the article also addresses the questions why some agro business firms in africa have developed more sophisticated high value market connections while others have not and whether foreign direct investments can serve as catalysts for agro industrialisation

limits of state strength toward an institutionalist view of economic development nomic development attempted to explain why growth did not occur occurred slowly or occurred in a distorted dependent form the impressive economic performances of the east asian newly industrialized countries nics have changed this many noneconomists as well as some economists are now focusing on the political bases of development rather than underdevelopment there are differences among these analysts some distance themselves from neoclassical economics by emphasizing the importance of getting the prices wrong others acknowledge the utility of market conforming policies but common to recent studies of nics is the belief that growthpromoting economic policies require certain types of domestic political institutions analysts have emphasized the utility of strong states in this regard 2 through an analysis of efforts to promote local auto manufacturing in southeast as well as east asia this article argues for an institutionalist approach to development that goes beyond statism the resolution of collective action problems is central to statist writings development requires that private returns to individual activities be brought in line with the broader needs of national development 3 two factors are presumed to obstruct such harmonization in developing

a real options model for renewable energy investment with application to solar photovoltaic power generation in china this paper proposes a real options model for evaluating renewable energy investment by considering uncertain factors such as co2 price non renewable energy cost investment cost and market price of electricity a phase out mechanism is built into the model to reflect the long term changes of subsidy policy we apply the proposed model to empirically evaluate the investment value and optimal timing for solar photovoltaic power generation in china our empirical results show that the current investment environment in china may not be able to attract immediate investment while the development of carbon market helps advance the optimal investment time a sensitivity analysis is conducted to investigate the dynamics of investment value and optimal timing under the changes of unit generating capacity subsidy level market price of electricity co2 price and investment cost it is found that the high investment cost and the volatility of electricity and co2 prices are not conducive to attract immediate investment instead increasing the level of subsidy promoting technological progress and maintaining the stability of market are useful to stimulate investment

endogenising emission taxes a general equilibrium type optimisation model applied for turkey this paper presents a modelling attempt to endogenise the level and timing of environmental taxes within an optimisation framework first a base model of energy economy environmental interactions is extended to allow for exogenous tax analysis two types of environmental taxes one on the sulphur content of fuels and the other on the level of emissions are exogenously included in the model as alternative instruments to mitigate pollution next the base model is modified to endogenise pollution abatement this has been achieved by incorporating a preference rate depending on an index of emissions into the utility function finally the emission index and emission tax are taken as substitutes and modelled within a ces form to endogenise the emission tax results for all cases obtained with turkish data are discussed it is found that a tax on so2 emissions is more effective in reducing so2 emissions than a tax applied on the sulphur content of fuels it is also found that a gradually increasing tax is more effective in reducing emissions than a constant tax

the impact of strategy on conflict a cross national comparative study of u s and japanese firms an empirical test of 290 u s and 653 japanese managers using the miles and snow typology provides a cross national examination of strategy s impact on conflict results substantially support the study s predictions and indicate that firms should 1 monitor their conflict handling mechanisms 2 emphasize integrative approaches and 3 appropriately use formalization for conflict handling despite a convergence of management practices globally findings indicate that considerable differences still exist between u s and japanese firms

application of real options valuation for analysing the impact of public r d financing on renewable energy projects a company s perspective abstract this paper contrasts the financial benefit of grants given to research and development projects with the reduction in managerial flexibility they impose which implies a loss in the value of the project to quantify this loss of value real options analysis has been adopted as the most suitable framework to assess and quantify managerial flexibility this idea is illustrated by the case of a research and development project in renewable energy specifically concentrated solar power our results show that the value added by the grants is less than the nominal incentives received as a result of the loss of flexibility for managers they cannot apply certain options such as deferral nor can they abandon the project therefore a break even grant is proposed that equals the financial incentive with the loss of managerial flexibility under this break even point the grant should be rejected this paper will create awareness for both policy makers and private companies regarding a more accurate assessment of grants to research and development funding as well as provide insights to improve grant schemes without increasing the amount of public funds

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

how citizens participate in macroeconomic policy international experience and implications for poverty reduction summary many developing and transitioning countries have difficulty sticking to sound macroeconomic policy international donors are pushing recipient countries to forge a public consensus on macroeconomic policy as a means to enhance sustainability and impacts on the poor finance and budget officials central bank staff and economic policymakers however often assume that citizens cannot understand or contribute to macroeconomic policy yet the poor often do not trust the government to make the right decisions for them how can citizen participation help bridge this gap based on a review of international experience the paper explores this question and identifies how development administrators can employ civic participation in macroeconomic policy the discussion highlights where citizens have the greatest options for participation and notes the impacts participation can have on fostering policies and outcomes that target poverty reduction 2003 elsevier science ltd all rights reserved

learning adjustment and economic development transforming firms the state and associations in chile abstract this article views learning processes as key to successful economic adjustment it discusses results of research conducted in chile focused on the agroindustry and footwear sectors it identifies specific problems that large and small firms face to upgrade production and stresses the limits of focusing exclusively on market reforms for achieving growth the article discusses how institutions reshape to facilitate learning and improve performance in chile particularly the relations between firms the reorientation of trade associations and the state s role as facilitator of collective learning processes

applying real options analysis to assess cleaner energy development strategies abstract the energy industry accounts for the largest portion of co 2 emissions is facing the issue of compliance with the national clean energy policy the methodology for evaluating the energy mix policy is crucial because of the characteristics of lead time embedded with the power generation facilities investment and the uncertainty of future electricity demand in this paper a modified binomial model based on sequential compound options which may account for the lead time and uncertainty as a whole is established and a numerical example on evaluating the optional strategies and the strategic value of the cleaner energy policy is also presented it is found that the optimal decision at some nodes in the binomial tree is path dependent which is different from the standard sequential compound option model with lead time or time lag concept the proposed modified binomial sequential compound real options model can be generalized and extensively applied to solve the general decision problems that deal with the long lead time of many government policies as well as capital intensive investments

a real options evaluation model for the diffusion prospects of new renewable power generation technologies this study presents a policy planning model that integrates learning curve information on renewable power generation technologies into a dynamic programming formulation featuring real options analysis the model recursively evaluates a set of investment alternatives on a year by year basis thereby taking into account that the flexibility to delay an irreversible investment expenditure can profoundly affect the diffusion prospects of renewable power generation technologies price uncertainty is introduced through stochastic processes for the average wholesale price of electricity and for input fuel prices demand for electricity is assumed to be increasingly price sensitive as the electricity market deregulation proceeds reflecting new options of consumers to react to electricity price changes such as time of use pricing unbundled electricity services and choice of supplier the empirical analysis is based on data for the turkish electricity supply industry apart from general implications for policy making it provides some interesting insights about the impact of uncertainty and technical change on the diffusion of various emerging renewable energy technologies

collective efficiency growth path for small scale industry this study is concerned with the growth of small local industry in developing countries and explores one particular route for understanding and fostering such growth it focuses on the clustering of firms and the competitive advantage which they derive from local external economies and joint action captured in the concept of collective efficiency following a conceptual discussion the article explores the economic and institutional conditions which enhance or hinder collective efficiency this includes a case study which suggests that responding to opportunity and crisis requires shifting from mere reliance on external economies to joint action and from ascribed to earned trust

electricity market reform failures uk norway alberta and california an analysis of electricity market reforms already taken place in the uk norway alberta canada and california usa leads to our overall conclusion that the introduction of a competitive generation market of itself has failed to deliver reliable service at low and stable prices the market reform failures are attributed to market power abuse by few dominant sellers especially at times of transmission congestion poor market design that invites strategic bidding by suppliers the lack of customer response to price spikes capacity shortage caused by demand growth not matched by new capacity and thin trading of forward and futures contracts that are critical for price discovery and risk management the paper then explains why an electricity market reform can easily fail to deliver the promised gains of better service at lower and more stable prices the policy implication is that an electric market reform can be extremely risky and may lead to a disastrous outcome thus it is imprudent to implement such a reform in countries with limited sites for newgeneration and no indigenous fuels e g israel and hong kong these countries should therefore consider introducing performance based regulation that can immediately benefit electricity consumers in terms of lower prices more stable prices improved reliability more choices while encouraging the electric sector to pursue efficient operation and investment r 2003 elsevier science ltd all rights reserved

factories or warehouses a welsh perspective on japanese transplant manufacturing munday m morris j and wilkinson b 1995 factories or warehouses a welsh perspective on japanese transplant manufacturing reg studies 29 1 17 critics of japanese direct manufacturing investment have argued that the japanese transplant manufacturing sector tms represents an attempt to circumvent trade barriers rather than a genuine globalization of japanese capital and that host regions will find themselves with warehouses or low value added final assembly plants rather than fully integrated manufacturing operations which will contribute significantly to the development of the local economy this paper presents a detailed study of the economic impact of japanese manufacturing in wales a region within the uk which has one of the highest concentrations of japanese manufacturing investment in europe it finds that there are some problems with japanese investment but although japanese companies do appear to operate their businesses in different ways to other inward investors many of these are be

electricity consumption and economic growth evidence from turkey abstract this study investigates the causal relationship between electricity consumption and real gdp in turkey during the period of 1950 2000 both of the series were found to be a stationary process around a structural break by the zivot and andrews test thus two different methodologies have been employed to test the granger non causality the dolado lutkepohl test using the vars in levels and the standard granger causality test using the detrended data both tests have yielded a strong evidence for unidirectional causality running from the electricity consumption to the income this implies that the supply of electricity is vitally important to meet the growing electricity consumption hence to sustain the economic growth in turkey

valuing investment decisions of renewable energy projects considering changing volatility abstract volatility is an important parameter when evaluating investments using the real options method for renewable energy investments the volatility of cash flow continuously changes because as new information and knowledge are gathered there is less foreseen variation this paper proposes an extended recombining trinomial tree model where the changing volatility is used to generate transition probabilities the changing volatility is generated using a consolidation process where multiple random variables including the market price of electricity carbon price and lending rate are integrated into a low dimension stochastic process a two factor learning curve is used to model the changes of investment cost we apply the proposed model to analyze solar photovoltaic pv power generation investment in china the results show volatility with changing feature compared with constant volatility changing volatility may advance investment decisions and change the project value complete grid parity policy in the solar pv industry is infeasible because the opportunity cost brought by the option of delaying cannot be offset the changing volatility may produce a lower and equally effective subsidy level compared with constant volatility a carbon emission trading scheme is helpful in advancing investments in renewable energy which is reflected in improvements in project value advancements in investment decisions and reductions in the required subsidy level

can the regulated market help foster a free market for wind energy in brazil abstract wind energy has been negotiated in brazil s regulated market through auctions organized by the government bilateral negotiations in the free market have been scarce in 2011 wind farms were allowed to bid in a minus 5 a 5 auctions for energy with first delivery date 5 years ahead this new design was expected to stimulate negotiations in the free market as the 20 year contract in the regulated market eases financing while the 5 year grace period grants wind farms the option to sell whatever energy is generated beforehand in the free market we modeled bidders price decision in a 5 auctions as real options and concluded that given the low prices averaging usd 50 mw h winners are tempted to defer investment expecting more favorable equipment and energy prices or a better knowledge of the wind site construction is likely to begin in 2 3 years with little time left for the free market bidders that consider the option of eventually abandoning the project are more price competitive increasing chances that some wind farms will never materialize therefore this attempt to foster the free market may not pay off and moreover it may have the unfavorable effect of turning brazil s energy expansion planning a more difficult task

enhancing the obsolescing bargain theory a longitudinal study of foreign ownership of u s and european multinationals this research attempts to enhance the obsolescing bargain theory for manufacturing companies by statistically testing the effects of nine explanatory variables on the static and dynamic manifestations of bargaining success with longitudinal firm level data in order to highlight those effects it develops a conceptual framework that provides a broader context in which the primary variables operate it demonstrates that the obsolescing bargain took effect in india over a fifteen year period following restrictive legislation unlike previous research this study measures the effect of benefits received by multinationals from the host government in exchange for equity dilution american companies are found to retain a smaller share of their foreign ownership over time than british and other european multinationals some explanatory variables that have previously been found to influence level of foreign ownership static bargaining success are found to be less important or have a different effect in explaining proportion of foreign ownership retained dynamic bargaining success

wind power generation an impact analysis of incentive strategies for cleaner energy provision in brazil brazil has adopted various strategies to encourage alternative renewable energy sources in pursuit of cleaner and sustainable energy production to this end strategies should support the reduction of the financial risk for potential investors in the renewable energy market therefore this study aims to analyze the impact of incentive strategies on the financial risk of wind power generation projects in brazil in different marketing environments from a quantitative approach using monte carlo simulation in three scenarios we evaluate the impact of funding from the national development bank and participation in the clean development mechanism in the financial returns of the investor in a regulated contracting environment and free contracting environment measured by the net present value we conduct a statistical analysis to find out if there were statistically significant differences in investor risk in each scenario the main results of the study are as follows the wind speed the selling price of energy and disbursement for the investment have the most significant impact on the financial return the project viability probability is greater than 85 in all scenarios regardless of the marketing environment the regulated market is less risky for the producer than the free market since there is a statistically significant difference in net present value variances for all scenarios in the regulated contracting environment funding is critical to reducing risk and carbon credit trading is not a suitable policy for providing financial security to renewable energy producers thus we conclude that in brazil the contracting of projects from auctions in the regulated contracting environment with the support of the national development bank has been important for neutralizing the producer s financial risks

real option valuation in renewable energy literature research focus trends and design abstract in light of intensive development of the renewable energy re sector a growing number of academic papers address the complexity of re investment planning and valuation to take account of the high risk profile and irreversibility of re investments researchers have resorted to sophisticated real options ro approaches that enable flexibility to be incorporated into project design in the face of an uncertain environment the variety of different frameworks and models adopted as well as a lack of aggregated analysis of the field suggest a need for a critical review of ro methodology and design in re assessment this study describes the research focus trends and design found in contemporary academic literature devoted to re valuation with a ro approach particular attention is given to ro in project and policy design the results give a comprehensive picture of existing research on the topic thus providing researchers with a solid foundation for further study and indications of directions for future development furthermore the findings provide policymakers and project planners with valuable insights into key aspects of re project and policy design

foreign direct investment in hungary resource acquisition and domestic competitive advantage this paper examines the impact of foreign direct investment on the marketing resources and capabilities of firms in hungary foreign direct investment into hungary has been substantial in recent years and is credited as a major factor in leading the transition towards a market led economy while the motives of foreign investors to invest and of governments to attract investment have been extensively addressed in the literature there has been little research on the reasons why individual host firms seek to attract investment this paper develops a theoretical explanation of host firm motives through the resource based theory of the firm proposing that host firms seek resources from their investors that can then be deployed to create competitive advantage over rivals in the domestic market a series of specific propositions are developed and tested empirically on a large sample of hungarian enterprises

valuation for renewable energy a comparative review abstract environmental cost benefit analysis is applied for the evaluation of renewable energy projects since some benefits and costs do not have monetary values economic valuation techniques are applied to estimate them this paper reviews the literature on the valuation evaluation of renewable energy resources and summarizes the methods used in them it discerns four main streams of valuation in renewable energy the first is economic welfare oriented and comprises stated and revealed preference methods the second is the financial option analysis with a financial background the third is emergy analysis which is mostly an ecological engineering based method with capable economic links and the fourth is again economic but not welfare based the paper discusses the main directions discerned in these studies and recognizes first that proper valuation takes place only in the first method while the other methods describe only evaluation procedures and second that there is a research gap that has yet to be filled in as compared to other areas of environmental resource and energy economics

emissions trading and investment decisions in the power sector a case study in finland abstract organizations which consider investment in or divestment of power production licences capacity within the european community are exposed to the impacts of the european union emission allowance trading scheme eu ets in this paper the consequences of the eu ets on investment decisions are explored in a country specific setting in finland first we review the general mechanisms through which the eu ets influences size timing and cashflows of an investment next we discuss the projected changes in finnish power producers investment environment and examine the financial impacts due to the eu ets on a case investment decision a hypothetical condensing power plant 250 mwe the standard discounted cash flow dcf analysis is extended to take into account the value of two real options the option to wait and the option to alter operating scale in a quantitative investment appraisal the impact of emissions trading not only depends on the expected level of allowance prices but also on their volatility and correlation with electricity and fuel prices the case study shows that the uncertainty regarding the allocation of emission allowances is critical in a quantitative investment appraisal of fossil fuel fired power plants

emergence of financial markets for electricity a european perspective abstract deregulation directed at european energy markets is proceeding although the speed often may seem slow real changes are coming in the development of physical and especially financial markets for electricity electricity deregulation started in individual countries notably the united kingdom and norway and the norwegian effort spread to the rest of the nordic region before the union s 1996 electricity directive started to have a real impact electricity deregulation is a complicated process involving breaking up of generation monopolies unbundling of generation and transmission consumer choice of suppliers through local distributors and eventually perhaps the establishment of a power pool where physical as well as financial contracts are traded the deregulation process now has gone far enough to reap some experiences the original uk deregulation model which focused mainly on breaking up the generation monopoly proved somewhat inefficient because it didn t offer real consumer choices and opened for inefficient gaming strategies among producers this experience has pushed the united kingdom in the direction of the nordic model norwegian deregulation is peculiar in the sense that new entry to generation is highly restricted on the other hand norway now with the entire nordic region has developed a quite advanced and quite well functioning electricity trading pool with widespread financial trading and good liquidity part of the success of the nordic model comes having a high quality spot price which can be used as a benchmark for the pricing of financial contracts another possible source of success is the high proportion of hydropower for which production volumes can be adjusted quickly and outages and price spikes thus avoided the swiss experience further underscores the importance of a spot price benchmark because the extensive swiss physical trade has allowed a growing volume of contract trade even in the absence of deregulation from these experiences we propose four factors we believe to be instrumental in creating healthy financial power markets the choice of pool model including spot adjustment and forward markets will make or break liquidity a price index is essential for ensuring transparency standardized simple derivative contracts make trading easier and more attractive finally the underlying physical system is important a hydro based system is easy to adjust while a thermal system will have problems with security of supply although the process is slow deregulation is likely to change the european electricity market in profound ways we see the effects mostly as beneficial deregulation will improve efficiency in generation will improve transparency for better consumer choices and allow the emergence of efficient financial trade in electricity if deregulation is all that s done the environmental effects may be adverse because lower prices encourage greater consumption and hence emissions coupled with a sensible environmental policy we believe deregulated markets can minimize the costs of environmental protection

modeling technology adoption as an irreversible investment under uncertainty the case of the turkish electricity supply industry this paper studies energy conversion technology adoption in the electricity supply sector from the perspective of irreversible investments under uncertainty and with a particular interest in environmental sustainability we develop a dynamic technology adoption model that is firmly rooted in economic theory and that takes important determinants of optimal investment in available technologies e g life cycle capital and operation cost explicitly into account uncertainty is introduced for the demand for peak load capacity unit generation costs and for the average electricity price we test the model empirically by applying it to data for the turkish power supply industry the model guided optimal investment schedule based on net present value considerations exhibits significant deviations from the actual investment outcome we find that the increased adoption of natural gas fired power generation technologies in turkey in recent years while contributing to environmental sustainability has had doubtful merits from an investor s perspective

choice of nuclear power investments under price uncertainty valuing modularity this work aims at examining how to compare two investment projects in the electricity market the first project is a flexible sequence of small nuclear power plants whereas the second is a nuclear power plant of large capacity we measure the option value generated by the modularity of the first project given the uncertain future competitive price of electricity using a realistic calibration of the model we show that the option value of modularity has a sizeable effect on the optimal dynamic strategy of the producer in particular in terms of the optimal timing of the decision to invest in the first module