Renewable Energy Investment Decision Indices Based on “Element-Performance-Economic Benefits” Causality Under Global Energy Interconnection

Abstract

This paper proposes economic benefits renewable energy investment decision indices under global energy interconnection. The indices are based on “element-performance-economic benefits” causal relationship and attempt to evaluate investment factors from three aspects. Economic indices consider the influence on investment profits of exchange rate, tariff rate and interest rate fluctuation. An improved net present value algorithm combining with the real options method is used to estimate whether a renewable energy project is worthy of investment and when to invest. Performance indices are given from the point of view of clean energy power and power grid. Element indices are defined from the aspects of user demand, technology and international environment. This paper analyzes the causal relationship between investments decisions, elements, performances and economic benefits. Environmental benefits and economic benefits of electric energy replacement are also discussed. This paper provides a framework for investors evaluating renewable energy investment considering its type, scale and location, as well as power grid structure