Study On The Decision Model Of PV Plant Investment Project

For a long time, the traditional financial analysis methods such as the net present value (NPV) method has been the main analytical tool used for corporate investment decisions taken. But regarding PV plan investment, it has the characters of a long-time investment, the irreversibility and higher uncertainty. The traditional investment decision-making ignores the option value of the photovoltaic power generation investment. It hasn’t been aware that the uncertainties of PV power generation investment will also contribute to the value of the investment opportunities. As a result, for this kind of high input, high risk of photovoltaic power generation projects, it often leads to the underestimation of the true value of the photovoltaic power generation investment projects, leads to wrong decisions.This paper proposed and applies the real options for investment decision-making model of PV power generation investment, in order to decrease the deficiencies of the traditional method of investment decisions. It has important practical significance for scientific evaluation of SZS large grid-connected PV power generation project and making reasonable investment decisions. This paper first gave the overview of the real options theory and research literature in detail, and compared NPV and real options with traditional methods. Based on photovoltaic power generation projects uncertainty analysis, it summed up the project’s own uncertainty characteristics, identified and analyzed the option value from the project development process. It also proposed a decision-making frame for the photovoltaic power generation investment based on real option model, gave the real options pricing for the project delays, expansion and so on. Finally this paper applied this real option frame in evaluation of SZS large grid-connected PV power generation project. The evaluation result is reasonable and it showed that this real option frame is more applicable than the traditional method in PV power generation projects.