Real Options Valuation of Photovoltaic Investments: a Case From Turkey

dc.authorid Or, Bartu/0000-0001-8986-6713
dc.authorid Bilgin, Gozde/0000-0001-6899-453X
dc.authorid Birgonul, M. Talat/0000-0002-1638-2926
dc.authorscopusid 58305842500
dc.authorscopusid 56990967500
dc.authorscopusid 57194605354
dc.authorscopusid 6507940743
dc.authorscopusid 7801530959
dc.authorwosid Dikmen, Irem/AAC-9737-2019
dc.authorwosid Or, Bartu/ABA-1351-2020
dc.authorwosid Bilgin, Gozde/G-7883-2019
dc.contributor.author Or, Bartu
dc.contributor.author Bilgin, Gozde
dc.contributor.author Akcay, Emre Caner
dc.contributor.author Dikmen, Irem
dc.contributor.author Birgonul, M. Talat
dc.contributor.other Civil Engineering
dc.date.accessioned 2024-07-05T15:23:21Z
dc.date.available 2024-07-05T15:23:21Z
dc.date.issued 2024
dc.department Atılım University en_US
dc.department-temp [Or, Bartu; Birgonul, M. Talat] Middle East Tech Univ, Dept Civil Engn, Universiteler Mahallesi,Dumlupinar Bulvari 1 Canka, TR-06800 Ankara, Turkiye; [Bilgin, Gozde] Baskent Univ, Dept Civil Engn, Baglica Kampusu, TR-06790 Ankara, Turkiye; [Akcay, Emre Caner] Atilim Univ, Dept Civil Engn, TR-06830 Ankara, Turkiye; [Dikmen, Irem] Univ Reading, Sch Construction Management & Engn, Whiteknights Campus, Reading RG6 6AH, Berks, England en_US
dc.description Or, Bartu/0000-0001-8986-6713; Bilgin, Gozde/0000-0001-6899-453X; Birgonul, M. Talat/0000-0002-1638-2926 en_US
dc.description.abstract Investments in renewable energy resources have become inevitable due to increasing energy demand and energy prices, diminishing non-renewable energy resources, and the outgrowth of carbon footprints. Photovoltaic (PV) systems offer high solar energy potential in sustainable energy production whereas their high initial costs necessitate critical strategic valuation of investments. Valuation with conventional methods has been challenging due to existence of uncertainties such as fluctuating PV panel prices, changing meteorological conditions with certain effects on power generation, and governmental policies on energy market regulations. This study aims to propose a real options approach to valuation of residential rooftop PV system investments considering these uncertainties and demonstrate benefits of this approach with an application on the residential PV investment decisions in Turkey. The proposed method, Real Options Valuation (ROV) with Least-Squares Monte Carlo Simulation (LSMC) considers the deferral option of the investor by utilizing stochastic simulations, the discounted cash flow method, linear regression, and backward dynamic programming and thus evaluates the effects of uncertainties on financial attractiveness of residential PV investments. The case study findings proved that ROV with LSMC having a 7-years deferral option supported the investment decision with realizable cost-effective options while "NPV method" resulted in an infeasible investment. Scenario analysis was also conducted to explore policy options that can be used to promote solar energy investments in Turkey. This study has a potential to have practical contributions for investors as well as implications for policy-makers. en_US
dc.description.sponsorship Scientific and Technological Research Council of Turkey (TUBITAK) [2210/A]; TUBITAK en_US
dc.description.sponsorship This work was supported by a grant from the Scientific and Technological Research Council of Turkey (TUBITAK) [Subprogram code: 2210/A, General Domestic Graduate Scholarship Program] . TUBITAK's support is gratefully acknowledged. en_US
dc.identifier.citationcount 1
dc.identifier.doi 10.1016/j.rser.2023.114200
dc.identifier.issn 1364-0321
dc.identifier.issn 1879-0690
dc.identifier.scopus 2-s2.0-85181009372
dc.identifier.scopusquality Q1
dc.identifier.uri https://doi.org/10.1016/j.rser.2023.114200
dc.identifier.uri https://hdl.handle.net/20.500.14411/2307
dc.identifier.volume 192 en_US
dc.identifier.wos WOS:001143796100001
dc.identifier.wosquality Q1
dc.institutionauthor Akçay, Emre Caner
dc.language.iso en en_US
dc.publisher Pergamon-elsevier Science Ltd en_US
dc.relation.publicationcategory Makale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanı en_US
dc.rights info:eu-repo/semantics/closedAccess en_US
dc.scopus.citedbyCount 6
dc.subject Government incentives en_US
dc.subject Least -squares Monte Carlo simulation (LSMC) en_US
dc.subject Photovoltaic (PV) investments en_US
dc.subject Real Options Valuation (ROV) en_US
dc.subject Residential buildings en_US
dc.subject Solar energy en_US
dc.title Real Options Valuation of Photovoltaic Investments: a Case From Turkey en_US
dc.type Article en_US
dc.wos.citedbyCount 3
dspace.entity.type Publication
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