ESG-Driven Investment Decisions in Photovoltaic Projects

Ruolan Wei, Yunlong Ma (), Huina Bi and Qi Dong
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Ruolan Wei: Department of Business Administration, Kyungil University, Gyeongsan-si 38428, Republic of Korea
Yunlong Ma: Department of Business Administration, Kyungil University, Gyeongsan-si 38428, Republic of Korea
Huina Bi: Department of Humanities and Social Sciences, Hebei University of Environmental Engineering, Qinhuangdao 066102, China
Qi Dong: Department of Business Administration, Kyungil University, Gyeongsan-si 38428, Republic of Korea

Energies, 2024, vol. 17, issue 16, 1-20

Abstract: As global climate change intensifies and environmental awareness increases, investing in renewable energy has become a primary economic and social development priority. Photovoltaic (PV) projects, as a clean and sustainable energy technology, have garnered significant attention due to their notable environmental and economic benefits. However, traditional investment evaluation methods such as net present value (NPV) analysis fail to adequately capture the flexibility and future uncertainties inherent in PV project investments. This paper presents a case study analysis proposing a delay option model that incorporates environmental, social, and governance (ESG) factors, providing a more scientific and flexible investment decision framework for PV projects. The case study results indicate that considering ESG factors significantly enhances the investment value of PV projects. This model not only provides comprehensive support for PV project investment decisions but also underscores the importance of establishing stringent carbon trading markets and policy incentive mechanisms to promote the widespread adoption and sustainable development of renewable energy projects.

Keywords: photovoltaic power generation; real options; ESG (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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