Loading...

A Real Option Model to Evaluate Investments in Combined Heat and Power (CHP)Projects

Abdi Nian, Farzad | 2015

720 Viewed
  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 48370 (09)
  4. University: Sharif University of Technology
  5. Department: Civil Engineering
  6. Advisor(s): Haj Kazem Kashani, Hamed
  7. Abstract:
  8. Cogeneration technologies such as Combined Heat and Power (CHP) have promising features for providing the electrical energy that various industries require while reducing the emissions and other environmental impacts of these industries. Investments in CHP systems require substantial implementation costs followed by a relatively long period of recovering the invested capital through savings in utilities bills. Appropriate timing of CHP system investments can reduce capital expenses and enhance returns on investments. An appropriate investment valuation method is needed to identify the appropriate time to implement a given CHP system and to find the values of properly scheduled investments. Real options analysis provides the ability to deal with investment timing under uncertainty. Existing real options models have several limitations when it comes to decision making about investments in CHP systems. In this research, some the theoretical limitations of current real options models are overcome. A new real options model to evaluate investment options for CHP systems under uncertainty is created. This model is tailored to the context of investment decision making for cogeneration technologies including CHP systems. The primary contribution of this research to the body of knowledge is the application of a method to estimate the volatility of CHP investments subject to uncertainty; and an investment valuation approach to identifying the best time to implement CHP systems and to determine the investment value. It is expected that this work will contribute to the state of practice by presenting a new valuation tool that help in making hard investment decisions and will therefore increase the likelihood of achieving global sustainability goals
  9. Keywords:
  10. Flexibility ; Real Option Method ; Combined Heat and Power (CHP)System ; Uncertainty Analysis ; Investment Evaluation

 Digital Object List

 Bookmark

No TOC