Risk assessment of renewable energy investments: A modified failure mode and effect analysis based on prospect theory and intuitionistic fuzzy AHP

Esra Ilbahar, Cengiz Kahraman and Selcuk Cebi

Energy, 2022, vol. 239, issue PA

Abstract: Most countries intending to replace traditional energy sources with renewable energy sources have started to make major investments in this field. Since renewable energy is a sector requiring large amount of investment costs, evaluation of investment risks are extremely important to make the best investment decisions. However, as risk assessment is a process based on expert judgments, the indecisiveness and cognitive bias of the experts should be eliminated. Therefore, a modified Failure Mode and Effect Analysis (FMEA) based on the prospect theory and interval-valued intuitionistic fuzzy Analytic Hierarchy Process (AHP) is introduced to assess the risks in renewable energy investments for the first time. As a result of the proposed risk assessment approach, renewable energy investment risks are prioritized by effectively overcoming the indecisiveness and cognitive bias of experts.

Keywords: Risk assessment; Renewable energy; Investment risks; Fuzzy sets; Prospect theory (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:239:y:2022:i:pa:s0360544221021551

DOI: 10.1016/j.energy.2021.121907

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