Economics at your fingertips  

Real option valuation in renewable energy literature: Research focus, trends and design

Mariia Kozlova

Renewable and Sustainable Energy Reviews, 2017, vol. 80, issue C, 180-196

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.

Keywords: Real options; Renewable energy; Dynamic programming; Monte Carlo simulation; Binomial tree; Literature review (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.elsevier. ... 600126/bibliographic

Access Statistics for this article

Renewable and Sustainable Energy Reviews is currently edited by L. Kazmerski

More articles in Renewable and Sustainable Energy Reviews from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2018-06-02
Handle: RePEc:eee:rensus:v:80:y:2017:i:c:p:180-196