Decision making on investments in photovoltaic power generation projects based on renewable portfolio standard: Perspective of real option

It is now a main global trend to replace the renewable energy feed-in tariffs (FIT) policy with the renewable portfolio system (RPS) policy in the reform of renewable energy policy systems. To solve the practical problem that the current main studies on the decision making about investments by renewable energy enterprises mainly focus on macroeconomic aspects such as government subsidies, renewable energy FIT and carbon taxes, rather than microeconomic aspects such as RPS and the TGC market's influence, a real option model about photovoltaic power generation projects is established to study these projects' sequential decision making about optimal investment opportunity, optimal installed capacity and phased investment. The result shows that phased investment fruit in much higher investment flexibility, longer economic lives and greater project values, and fewer risks for investors as well; lower technical costs and higher TGC prices help acquire the optimal investment opportunities. The conclusions of this study help make better decision making about investments in photovoltaic power generation projects and, from the microcosmic aspect, prove influence of the RPS policy.