Research On Investment Opportunity Decision Of Hydropower Project Based On Real Options

Under the background of the country's vigorous promotion of clean energy development,hydropower projects have been continuously developed and promoted because of their renewable,pollution-free and less affected by fossil fuels.The investment and construction of hydropower projects are generally characterized by large investment scale,irreversible investment,high uncertainty,etc.,and accompanied by a long investment recovery period.Choosing a reasonable project investment timing can reduce investment costs,increase project income,and ensure the feasibility and effectiveness of hydropower project investment.However,traditional hydropower project investment decision-making methods usually do not reflect the impact of uncertainty in the project,and ignore the potential value of project management flexibility.Therefore,the true value of hydropower projects is often underestimated,which leads to decision errors.In view of the shortcomings of traditional investment decision-making methods,it is necessary to find more suitable investment decision-making methods,to judge the best investment timing of a project and the true value of the project,and to provide a more reasonable theoretical reference for the timing of project investors.The proposal of the real option method makes up for the shortcomings of the traditional investment decision-making method,and realizes the selection of the best investment opportunity for hydropower station projects and the calculation of project option values.Based on the characteristics of investment decision of hydropower project,this paper establishes a new investment timing decision model based on real option theory.This article first explains the characteristics of real option theory and investment timing,and analyzes the main factors affecting the value of options for hydropower projects,namely the flexibility of project management,the uncertainty of project power generation revenue and the uncertainty of project power generation costs.The study laid a theoretical foundation for the establishment of subsequent models.By analyzing the economic value,flexibility value and strategic value of hydropower station projects,investors can more accurately identify the value contained in hydropower station projects in the early stage of the project.Based on this,this paper focuses on the decision of investment timing,and analyzes and calculates the value of options of hydropower project through dynamic programming method.A decision-making model for investment timing of hydropower projects was established.Finally,this paper carried out an example analysis and calculation on A hydropower project,and obtained the best investment opportunity for the hydropower project to verify the rationality and applicability of the model.This study introduces the real option theory into the investment timing decision research of hydropower station projects,and establishes a new hydropower project investment timing decision model,which considers the option value brought by project uncertainty and makes up for the shortcomings of traditional investment decision-making methods.The proposed decision model will provide investors with more scientific theoretical support for selecting the best investment opportunity,which will help promote the development and construction of hydropower projects,and provide certain reference ideas forinvestment decisions in other similar projects in the field of construction engineering management.