Research On Investment Decision Of Power Plant Project Of Company Y Based On Real Option Method

The “Fourteenth Five-Year Plan” is a tough period for deepening reforms and an important opportunity period for the power industry to accelerate its transformation and development.Structural reforms on the energy supply side are urgently needed.Natural gas distributed energy is an important measure for the current structural reforms on the energy supply side..The current investment decision-making method of power projects mainly follows the traditional investment decision-making method-the net present value method.Although the real option theory is gradually mature,there are still few cases of using the real option method to make investment decisions.Applying the real option method to the investment decision of Y company's power station project can provide a more scientific and accurate investment decision plan for Y company's investment decision-maker,and help to promote the application of real option method in power project investment decision.Compared with the net present value method,the real option method is more able to take into account the characteristics of the Y company 's power plant project investment in stages and the uncertainty of the investment environment.This article first analyzes the limitations of Company Y's current investment decision-making method.The real option method is more applicable to the investment decision of Company Y's power plant projects.Secondly,identify the type of real options included in the power plant project of Company Y as expansion options,select the Black-Scholes model that is suitable for expansion options under continuous time nodes,build the model and calculate the corresponding parameters.Finally,it was calculated that the value of the Y company's power station project based on the real option method was 18.6941 million yuan,which was much larger than the net present value of the project under the current investment decision method.After sensitivity analysis,investment decision makers should pay attention to changes in fuel prices,electricity sales prices and heating prices in uncertain factors in subsequent investment opportunities,appropriately refer to the current industry development for decision assistance,and make decisions based on the actual situation of the project and investment environment decision making.Finally,the proposal of applying real option method to Y company's power plant project investment decision is put forward: Y company's investment decision-maker will invest in the first-phase project in 2020 and start the second-phase project investment after a one-year waiting period.