Research On The Investment Value Evaluation Of Waste Incineration Power Generation CCER Project Based On Real Option Theory

At present, as the national carbon emissions trading will be launched, China voluntary emission reduction mechanisms(China Certified Emission Reduction, CCER), ushering in the new opportunities for development. As one of the environmental protection industry which is strongly supported by the country, municipal solid waste incineration power generation also ushering in the new business model-solid waste incineration power generation of CCER project. Under the new business model, how to ensure the scientific and rationality of investment value evaluation to make the right investment decisions, becoming the key to capture market opportunities, keep competitive and sustainable development. Compared to the traditional waste incineration power generation project, it can bring the benefits of carbon emission reductions if CCER project was recorded by National Development and Reform Commission.But, as a result of China’s carbon trading market is still at the initial stage, the fluctuation of future CCER trading price will bring uncertainty to the project revenue. The traditional project investment evaluation methods can not put uncertainty of waste incineration power generation CCER project into project value assessment, so can’t evaluate the real value of the project. Based on the discounted cash flow method and real options method, the paper bring the uncertainty into the evaluation of garbage incineration power generation CCER project, constructed the evaluation model for this kind of project investment which is based on real options, providing the scientific method for enterprises and project investors making the right decision.So, the thesis carried out the following three points, focused on building investment valuation model for waste incineration power generation CCER project.First, analyzing the current development and option characters of waste incineration power generation CCER projects.Due to the existence of uncertainty, the traditional valuation methods have deficiencies in valuation of such projects, we select the combination of discounted cash flow method and real option evaluation method in order to introduce uncertainty into the evaluation of the value of the project, then building a value assessment model to make comprehensive assessment of real investment valuation of the project.Second, on the basis of the evaluation method,we select B- S pricing model by comparing three kinds of option pricing method, and analyze the new commercial mode of municipal solid waste incineration power generation CCER projects for model design. Model introduces μ about the expected probability that project can get record, based on the fixed expected volatility of CCER emission reduction price included in the fixed period, we calculated option premiums of the CCER project. Combing with the NPV of project which was based on discounted cash flow method, it is concluded that expansion NPV of waste incineration power generation CCER projects, then build the value assessment model and the calculation method of model parameters were determined.Third, carried out the deduction and verification of the model.Taking a solid waste incineration power generation CCER project as an example,which was public on the Chinese voluntary emissions trading platform,make the calculation of the process model. Verified the feasibility, rationality of validation method and procedure. Through bringing the data into the model, we calculated true investment value of the project, then made the project investment decision advice.