Determining the optimal operation and maintenance contract period of PV poverty alleviation projects based on real options and cooperative game: Evidence from rural China

Abstract

China's photovoltaic poverty alleviation power stations (PPAPS) properly combine poverty alleviation and renewable power generation while also meeting rural energy demands. The fundamental problem is how to optimize the benefits of PPAPS during its limited lifetime. Using the post-operation of photovoltaic poverty alleviation power plants as a starting point, this paper proposes a model combining real option theory and cooperative game to determine the ideal contract period of service committed by the government to the operation and maintenance (O&M) company, thus providing a reference for both parties. The model's validity and applicability are verified by incorporating a PPAPS from Henan Province in China as an example; ultimately, the factors influencing the O&M contract period are ranked using the Sobol global sensitivity analysis. The results show that when the solar industry's environment is positive, the government is more inclined to sign long-term contracts with O&M companies. In contrast, the more the government invests in the facilities, the more likely both parties will sign short-term contracts. Furthermore, the O&M company's capital investment in the power station has a direct impact on the contract period. Finally, corresponding policy recommendations are proposed for future O&M contracts.