Power Generation Investment Timing in a Post Covid-Era

<p>This paper deals with the optimal timing of power generation investments in the second year of the global COVID-19 pandemic. The research applies the real options methodology during the investment decision-making process and takes, besides a proper uncertainty assessment, the project embedd...

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Autores principales:	Vivien Csapi, Alexandra Posza
Formato:	article
Lenguaje:	EN
Publicado:	EconJournals 2021
Materias:	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5
Acceso en línea:	https://doaj.org/article/9e8de3f7e90d402d95498e1204273d35
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spelling	oai:doaj.org-article:9e8de3f7e90d402d95498e1204273d352021-11-12T07:27:31ZPower Generation Investment Timing in a Post Covid-Era2146-4553https://doaj.org/article/9e8de3f7e90d402d95498e1204273d352021-11-01T00:00:00Zhttps://econjournals.com/index.php/ijeep/article/view/11815https://doaj.org/toc/2146-4553<p>This paper deals with the optimal timing of power generation investments in the second year of the global COVID-19 pandemic. The research applies the real options methodology during the investment decision-making process and takes, besides a proper uncertainty assessment, the project embedded flexibilities into account. Timing flexibility is discussed thoroughly, and the issue of optimal exercise, the timing of the highest potential value creation is examined through a static and dynamic lens. The authors' initial hypothesis presumed uncertainty as the most influential parameter measured by the project's standard deviation. Timing flexibility, optimal timing is analyzed compared to and concerning this volatility. Static and real options-based dynamic investment timing models are being tested in the power generation industry. Of particular interest of the research is whether results could prove the phenomena of renewable technologies being the safe haven of energy investments after the sector became highly volatile due to the COVID-19 pandemic. Results show that the timing of real options and the value will have a positive relationship. Still, the most exciting finding is that time and timing have a more substantial effect on the created value than uncertainty and further embedded growth potential (more flexibility).</p><p><strong>Keywords: </strong>real options, timing, flexibility, power generation, uncertainty<strong> </strong></p><p><strong>JEL Classifications: </strong>G11, C41</p><p>DOI: <a href="https://doi.org/10.32479/ijeep.11815">https://doi.org/10.32479/ijeep.11815</a></p>Vivien CsapiAlexandra PoszaEconJournalsarticleEnvironmental sciencesGE1-350Energy industries. Energy policy. Fuel tradeHD9502-9502.5ENInternational Journal of Energy Economics and Policy, Vol 11, Iss 6, Pp 279-288 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5
spellingShingle	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5 Vivien Csapi Alexandra Posza Power Generation Investment Timing in a Post Covid-Era
description	<p>This paper deals with the optimal timing of power generation investments in the second year of the global COVID-19 pandemic. The research applies the real options methodology during the investment decision-making process and takes, besides a proper uncertainty assessment, the project embedded flexibilities into account. Timing flexibility is discussed thoroughly, and the issue of optimal exercise, the timing of the highest potential value creation is examined through a static and dynamic lens. The authors' initial hypothesis presumed uncertainty as the most influential parameter measured by the project's standard deviation. Timing flexibility, optimal timing is analyzed compared to and concerning this volatility. Static and real options-based dynamic investment timing models are being tested in the power generation industry. Of particular interest of the research is whether results could prove the phenomena of renewable technologies being the safe haven of energy investments after the sector became highly volatile due to the COVID-19 pandemic. Results show that the timing of real options and the value will have a positive relationship. Still, the most exciting finding is that time and timing have a more substantial effect on the created value than uncertainty and further embedded growth potential (more flexibility).</p><p><strong>Keywords: </strong>real options, timing, flexibility, power generation, uncertainty<strong> </strong></p><p><strong>JEL Classifications: </strong>G11, C41</p><p>DOI: <a href="https://doi.org/10.32479/ijeep.11815">https://doi.org/10.32479/ijeep.11815</a></p>
format	article
author	Vivien Csapi Alexandra Posza
author_facet	Vivien Csapi Alexandra Posza
author_sort	Vivien Csapi
title	Power Generation Investment Timing in a Post Covid-Era
title_short	Power Generation Investment Timing in a Post Covid-Era
title_full	Power Generation Investment Timing in a Post Covid-Era
title_fullStr	Power Generation Investment Timing in a Post Covid-Era
title_full_unstemmed	Power Generation Investment Timing in a Post Covid-Era
title_sort	power generation investment timing in a post covid-era
publisher	EconJournals
publishDate	2021
url	https://doaj.org/article/9e8de3f7e90d402d95498e1204273d35
work_keys_str_mv	AT viviencsapi powergenerationinvestmenttiminginapostcovidera AT alexandraposza powergenerationinvestmenttiminginapostcovidera
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Power Generation Investment Timing in a Post Covid-Era

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