𝔖 Bobbio Scriptorium
✦   LIBER   ✦

A real option analysis of investments in hydropower—The case of Norway

✍ Scribed by Frode Kjærland

Publisher
Elsevier Science
Year
2007
Tongue
English
Weight
244 KB
Volume
35
Category
Article
ISSN
0301-4215

No coin nor oath required. For personal study only.

✦ Synopsis

This paper presents a valuation study of hydropower investment opportunities in the Norwegian context. According to NVE (Norwegian Water Resources and Energy Directorate, the regulator), there is a potential of 39 TWh not yet developed (generation in a normal year is approximately 120 TWh).

By using the conceptual real option framework of Dixit and Pindyck [1994. Investment Under Uncertainty. Princeton University Press, Princeton, NJ] one can estimate the value of investment opportunities to NOK 11 million/GWh (EUR 1.4 million/GWh). Furthermore, the optimal trigger price for initiating an investment based on electricity forward prices is calculated to NOK 0.32/kWh (EUR 0.04/kWh). The analysis shows consistency between real option theory and aggregate investment behaviour in Norwegian hydropower.

📜 SIMILAR VOLUMES

A general equilibrium analysis of foreig
A general equilibrium analysis of foreign direct investment and the real exchange rate
✍ Milind M. Shrikhande 📂 Article 📅 2002 🏛 John Wiley and Sons 🌐 English ⚖ 177 KB 👁 1 views

## Abstract Modern theories of foreign direct investment claim that foreign direct investment occurs because certain domestic assets are worth more under foreign control. This view developed by industrial organization theorists is indifferent to the financing mode of a foreign acquisition as well a

A real options perspective on entreprene
A real options perspective on entrepreneurial entry in the face of uncertainty
✍ Jonathan P. O'Brien; Timothy B. Folta; Douglas R. Johnson 📂 Article 📅 2003 🏛 John Wiley and Sons 🌐 English ⚖ 190 KB

## Abstract In this paper we develop and test theory regarding whether entrepreneurs contemplating starting a new venture account for the value of the option to defer the entry decision. While others have illuminated the theoretical applicability of real options theory to entrepreneurship, empirica

The source of comparative advantage in t
The source of comparative advantage in the biotechnology industry: A real options approach
✍ Brian F. Lavoie; Ian M. Sheldon 📂 Article 📅 2000 🏛 John Wiley and Sons 🌐 English ⚖ 40 KB 👁 1 views

Sources of heterogeneity within the process of research and development (R&D) investment, such as international differences in the maximum per-period rate of investment and level of regulatory uncertainty, offer a plausible explanation for US comparative advantage in biotechnology. Using dynamic sto

A renewable perspective for sustainable
A renewable perspective for sustainable energy development in Turkey: The case of small hydropower plants
✍ Havva Balat 📂 Article 📅 2007 🏛 Elsevier Science 🌐 English ⚖ 303 KB

Renewable energy resources provide a large share of the total energy consumption of many developing countries. Turkey's renewable sources are the second largest source for energy production after coal. About two-thirds of the renewable energy produced is obtained from biomass, while the rest is main