Investment Decision Analysis Of PROT Project Of Medium And Small Hydropower Station Based On Option Game

After decades of development, China’s hydropower has basically mastered mature technology, we have high-end devices and already master the process of construction of the hydropower project, and we also has built several large and giant hydropower station. In this process, the small hydropower stations also has a rapid development. However, the lack of strict supervision and scientific feasibility study, many small and medium hydropower projects have cause many problems in the operation process.In order to solve the more and more problems of small and medium hydropower project, In this paper, we propose to solve these problems through PROT project financing model, PROT project financing model is problematic hydroelectric project for public auction sale, Project will be transferred to various conditions better private investors, investment funds and resources for its hydropower equipment modification and upgrade management to improve operational status of the project, to ensure that small and medium hydropower projects can be out of the woods, to regain greater social and economic benefits. Investment decisions play a key role for the development of an enterprise, especially with the increasingly fierce competition in the field of hydropower, investment decisions is becoming increasingly important. Therefore, hydropower investment enterprises attach great importance to the investment decision analysis of hydropower projects. In order to better consider and analyze the impact of uncertainties and competitive factors for investment decisions, this paper attempts to use option game theory to build the concession period option game model to study the investment decisions of small and medium hydropower projects, to further improve pricing methods and evaluation system of PROT project,and help the project participants to assess the value and risk of the project more accurately, thereby to improve the means and methods of investment decisions.This paper is divided into six chapters, the first chapter, first introduces the research background and significance of this paper, then elaborated the research status related to this paper at home and abroad, last this paper introduces the study contents, methods and frameworks. The second chapter is a review of the paper with the relevant theories, including real options, the basic theory and knowledge of game options, and introduced the development of small and medium hydropower project financing, then the analysis of traditional investment decision-making and the method of analysis of uncertainty. The third chapter discusses the definition PROT project financing mode, the scope and operation of the process, then describes the use of small hydropower project financing mode PROT project advantages. Next is the core of this paper, the fourth chapter analyzes the small and medium-PROT hydropower project in the Real Option Characteristics to give the project the presence of American option, and then use the Monte Carlo simulation method to estimate the value of the project real option at this stage, in the later stages of the project PROT provide a reference for the government or project owner. The fifth chapter introduces the real option method is insufficient investment in small and medium-PROT decision Hydropower Station, and then analyzes the existing Game and Options Game feature, select the concession period as decision variables, then after the concession period has been determined, analyze the decision-making behavior between governments and private investors, while analyze the influence of the value of government guarantees to the concession period, then establish a flexible decision-making model of the concession period and government guarantees value, and finally the use of numerical simulation to verify the feasibility of the model. Conclusion provides a reference for the government and private investor decisions.