InvestExl - Investment under uncertainty in the future energy system: The role of expectations and learning
Recently standard real options models have been extended in various ways. One important extension is the incorporation of Bayesian learning. This new approach encourages active information acquisition and quantifies its impact on decisions.
Special attention in this project will be given to risks stemming from the regulatory side related to climate change policies. We seek to learn about how extensions, revisions or termination of current government policies can affect investment behavior in the long term.
To gain an understanding about the interrelation between a regulated authority and a profit-seeking
renewable energy investor, we seek to extend real options theory to games considering conflicting objectives.
InvestExL will develop knowledge that supports decisionmakers and policymakers in analysing investment processes in energy systems. We will investigate how learning about changes in framework conditions affect investment behavior, and also how to translate the knowledge into practice.