Optimal Investment Decision for Wind Power Projects under Renewable Portfolios Standards in China

Abstract:

China government will introduce the Renewable Portfolios Standards (RPS) to promote the wind power accommodation. As a result, investors face three sources of uncertainty, namely, investment costs, electricity prices and subsidies. This paper adopts a real options approach to analyze investment timing and capacity choice for wind power projects considering these uncertainties under RPS. Simulation results indicate that lower investment costs encourage earlier investment, and higher electricity prices and subsidies create incentives for earlier investment and larger capacity of wind power projects. Besides, the proposed model can be used by policy makers to make appropriate policies.

• Periodical: Applied Mechanics and Materials (Volume 521)
• Pages: 782-785
• DOI: https://doi.org/10.4028/www.scientific.net/AMM.521.782
• Online since: February 2014
• Authors: Yi Sun*, Hai Feng Huang, Jie Han
• Keywords: Capacity Choice, Investment Timing, Real Options, RPS, Wind Power

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