Study On Decision Making Of Energy Projects Under Uncertainties

Energy is a special resource with strategic values and attributes.It is the core driving force of economic development,and the lifeblood of economic stability;it is also the key element in improving the living standards of the residents,and the foundation of modern life.Energy’s strategic values and attributes make energy projects and the related decision-making issues particularly concerned.Energy projects is featured with high risks,high investment and long payback period,and these features specialize the decisionmaking of energy projects: The inherent high risks of energy projects make that the energy projects become classic cases of decision-makings under uncertainty.Meanwhile,the high investment and long payback period make decision-makers become cautious.Therefore,methods that considers the impacts of uncertainties should be applied to improve the traditional methods.Although there are many studies on decision-making of energy projects under uncertainty,their research objects and highlights are totally different.Moreover,there is a lack of studies on the key decision-making issues which are selected based on the key points of energy projects management.Therefore,it is both of academic significance and practical value to conduct researches on the key decisionmaking issues of energy projects.Based on risk decision-making theory,non-deterministic decision-making theory,and the key points of energy projects management,four important decision-making issues-investment timing,bargaining strategy,bidding strategy and risk measurement,are selected as the research objects,and relevant analyses are carried out under uncertainty.Firstly,the current state and characteristics of the research objects are introduced,and key issues are raised.Secondly,the theoretical basis of this study is elucidated from the perspective of decision-making theory.Several methodologies,including the real option method,the bargaining theory,the auction theory and the probability model,are selected and reviewed.Then,these methodologies are applied to study the investment timing,bargaining strategy,bidding strategy and risk measurement of energy projects.In the study,the classical "modeling-measurement-analysis" paradigm is used to investigate the influence of electricity price marketization reform on the option value and investment timing of renewable energy projects in China,to study the optimal strategy of oil and gas companies in the bargaining and auction process,and to measure the risk value of oil and gas projects.Finally,the relevant results are summarized.The results indicate that: Firstly,electricity price marketization reform enhances the option value in the short term because the projects are additionally exposed to electricity price uncertainty after market reform.Although electricity price marketization reform makes owners postpone the execution of solar PV projects,the government can apply an appropriate support scheme to stimulate instantaneous investment.Secondly,there is a first-mover advantage in bargaining process.Therefore,in order to occupy a dominant position,oil and gas companies should initiate the negotiation with the resource countries.Thirdly,the auction of oil and gas projects belong to a common value auction,bidders should offer a lower bid with the help of other’s signal or the auction mechanism,aiming to avoid the winner’s curse.Fourthly,the probabilistic model can be used to simulate the net present value of oil and gas projects.The project’s risk can be measured by using the corresponding frequency histogram.