A barrier options approach to modeling project failure: The case of hydrogen fuel infrastructure |
| |
| Institution: | 1. Utrecht University, School of Economics, The Netherlands;2. RODEO Research Centre, Belgium;3. CPB Netherlands Bureau for Economic Policy Analysis, The Netherlands;4. ABN-Amro, The Netherlands;1. Dep. of Electrical Engineering, University of Oviedo, Campus de Viesques, s/n, Oviedo 33204, Spain;2. REGIOlab Regional Economics Laboratory- and Dep. of Applied Economics, University of Oviedo, Campus del Cristo, s/n, Oviedo 33006, Spain;1. TUM School of Management, Technische Universität München, Arcisstrasse 21, 80333 München, Germany;2. Centre for European Economic Research (ZEW), L7, 68167 Mannheim, Germany;4. Katholieke Universiteit Leuven (KU Leuven), Naamsestraat 69, 3000 Leuven, Belgium;4. Research Fellow at Centre for Economic Policy Research (CEPR), London, United Kingdom;5. Bruegel, Rue de la Charité, 33-1210 Brussels, Belgium;1. Freie Universität Berlin, Germany;2. Technische Universität Bergakademie Freiberg, Germany |
| |
| Abstract: | Hydrogen fuel cell vehicles have the potential to contribute to a sustainable transport system with zero tailpipe emissions. This requires the construction of a network of fuel stations, a long-term, expensive and highly uncertain investment. We contribute to the literature by including a knock-out barrier option in an n-fold compound real option model to take account of immediate project failure in a multi-stage sequential investment project. Our model allows to explicitly incorporate the default possibility of large-scale energy infrastructure projects. In our case study of hydrogen infrastructure development, we find that even for the least conservative valuation method no profitable business case can be made for the development of hydrogen as a sustainable transportation mode. However, we do provide some suggestive scenarios that plausible tax schedules can be designed to overcome the starting problems for hydrogen infrastructure development. |
| |
| Keywords: | Sustainable energy Investment uncertainty Barrier option Compound real option Investment failure Multi-stage investment |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
