Research on Investment Decision making for Flexibility Transformation of Thermal Power Units Based on Fuzzy Real Options

Runsheng Ma, Zhengwei Wang, Shengyun Ju, Wenjie Zhu, Zijin Jiao () and Jialin Wu
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Runsheng Ma: State Grid Qinghai Electric Power Research Institute
Zhengwei Wang: State Grid Qinghai Electric Power Research Institute
Shengyun Ju: State Grid Qinghai Electric Power Research Institute
Wenjie Zhu: North China Electric Power University (Baoding), Department of Economic Management
Zijin Jiao: North China Electric Power University (Baoding), Department of Economic Management
Jialin Wu: North China Electric Power University (Baoding), Department of Economic Management

A chapter in Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), 2025, pp 523-533 from Springer

Abstract: Abstract The flexibility transformation of thermal power units is of great significance in regulation, and thus it is crucial to study its economic evaluation. Traditional investment decision-making methods often neglect the uncertainty factors that are difficult to precisely quantify during the evaluation process. This paper puts forward a method based on trapezoidal fuzzy numbers and variable risk-free interest rates, and utilizes an improved B - S option pricing model to enhance its economic evaluation. By introducing trapezoidal fuzzy numbers to deal with uncertainty factors, the model’s capacity to handle uncertainty in investment decisions is theoretically enhanced. Through the experiment on the flexibility transformation of thermal power units, the results indicate that this method demonstrates remarkable superiority in terms of the accuracy and reliability of economic evaluation, with an improved performance compared to traditional methods, thereby providing a new perspective and approach for economic evaluation.

Keywords: coal-fired power unit upgrade; trapezoidal fuzzy numbers; B-S option pricing model; risk-free interest rate; economic evaluation; carbon peak and carbon neutrality (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-702-1_55

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DOI: 10.2991/978-94-6463-702-1_55

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