Research on investment decision-making of renewable power producers under the new Renewable Portfolio Standards

Abstract

Under the new Renewable Portfolio Standards (RPS), China's advancement in renewable energy encounters various difficulties. These influence the investment decisions of renewable power producers. This paper proposes a model to address the uncertainty problem in the renewable power investment decision-making process under the new RPS. The real options (RO) method is adopted, considering multiple influencing factors, including market electricity prices, price policies, Tradable Green Certificate (TGC) prices, tax incentives, and changes in investment costs. The investment value and optimal investment timing of renewable power producers are analyzed in detail. Furthermore, the sensitivity analysis of uncertain factors reveals the impact of the new RPS on the investment decision. The conclusion provides clear recommendations for investors and inspires the government to promote China's energy-low-carbon transformation and development.