Journal of Korean Institute of Industrial Engineers (대한산업공학회지)

Korean Institute of Industrial Engineers (대한산업공학회)
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On Renewable Energy Technology Valuation Using System Dynamics and Compound Real Options

시스템다이내믹스와 복합 리얼옵션 기반 신·재생에너지 기술가치평가

  • Jeon, Chanwoong (Graduate School of Management of Technology, Sungkyunkwan University) ;
  • Shin, Juneseuk (Graduate School of Management of Technology, Sungkyunkwan University)
  • 전찬웅 (성균관대학교 기술경영학과) ;
  • 신준석 (성균관대학교 기술경영학과)
  • Received : 2013.07.22
  • Accepted : 2013.10.11
  • Published : 2014.04.15
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Abstract

The transition from fossil to renewable energy is inevitable due to fossil depletion. So, Renewable energy is very important for energy security and economic growth although it's R&D is long-term and high risky project. We propose new valuation method which combined system dynamics and compound real option method for long-term and high risk projects such as renewable energy. This method can show dynamic valuation results for the complex causal interaction and be easy for Monte-Carlo simulation to estimate volatility. And it can reflect the value of flexible decision for uncertainty. We applied the empirical analysis for Korea's photovoltaic industry by using this method. As results by empirical analysis, photovoltaic's R&D has high valuation using this method compared by traditional valuation methods such as DCF.

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References

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