Investment Strategy Analysis Of Geothermal Power Generation Project-Based On Real Option Method

Developing geothermal resources for power generation is a feasible solution to alleviate the contradiction between energy development and environmental protection.However,the development of geothermal power generation industry in China lags far behind the leading level of developed countries due to the insufficient understanding of geothermal power generation projects and the lack of industry incentive policies.In order to promote the development of China's geothermal power industry,in this study,a compound option model based on deferred option and abandoned option is established to study the optimal investment strategy of hydrothermal geothermal power generation projects,which enriches the investment decision theory of geothermal power generation to a certain extent.In the evaluation of investment value of geothermal power projects,the market uncertainty,output uncertainty,technological uncertainty and policy uncertainty are considered in this study.And the optimal investment value,optimal investment time and the optimal abandonment time of geothermal power projects are also analyzed in this study.Based on the results of the study,suggestions are provided for the relevant policy formulation of geothermal power generation industry.It is found that the compound option method based on deferred option and abandoned option proposed in this paper further explores the value of managerial flexibility of investors during the decision-making period and operation period of geothermal projects,so it can reflect the investment value of the projects more accurately,and has better applicability for geothermal power projects with greater operational and maintenance uncertainties compared with the traditional NPV method and the single deferred option method.In addition,this paper also studies the impact of electricity market reform,subsidy for geothermal power generation and the level of electricity price on the optimal investment strategy of geothermal power generation projects.Based on the research results,suggestions are provided for the corresponding industrial policy formulation.