Capacity Investment Research Articles

Revaluation of Property, Plant and Equipment under the criteria of IAS 16: Property, Plant and Equipment

The paper examines the revaluation of fixed assets under International Accounting Standard 16 (IAS 16), which addresses "Property, Plant and Equipment" in the financial statements. Revaluation involves adjusting the carrying value of assets based on their fair market value at a given point in time. It is highlighted that this process can influence the perception of an entity's financial health and strategic decision making. The research focuses on analyzing the impact of fixed asset revaluation under IAS 16 in a sample of 180 companies in Arequipa, Peru. The results show an increase in the operating profit margin, the value of revalued assets, profitability (ROA), capital structure and investment capacity of these companies after the application of IAS 16. A significant correlation was found between the revaluation of fixed assets and IAS 16, supporting the hypothesis that the application of this standard is associated with improvements in several financial and operational aspects

DYNAMICS OF GROWTH, INVESTMENT AND EMPLOYMENT IN MICRO SMALL AND MEDIUM ENTERPRISES (MSMES) IN ASSAM

Micro, Small and Medium Enterprises (MSMEs) are significant contributor to the economy. This study examines the growth of MSMEs and their role in provision of employment to people in Upper Assam. The study is based on secondary data collected from various sources such as the Annual Survey of Industries, the Statistical Handbook of Assam, and reports from the Reserve Bank of India and the Ministry of Micro, Small, and Medium Enterprises. It analyses the growth of MSMEs in the State during the period 2000–01 to 2018–19 and also investigate the pattern of employment and its trend in MSMEs. The findings of the study revealed that there has been a significant growth in the number of registered MSME units in the State. The number of registered MSME units in Assam increased sharply from 14,453 in 2000-01 to 48,171 in 2018-19. The compound annual growth rate (CAGR) in number of registered MSME units during the period 2000-01 to 2018-19 was found to be 6.54 per. The found differences in growth of investment, employment trends and number of registered MSME units in seven districts of upper Assam. In most districts, employment in MSMEs has grown slowly as compared to growth in number of units. In fact, there has been decline in employment per unit. Additionally, the average investment per unit differed considerably among the districts, indicating that MSMEs in some districts have varying investment capacity and patterns. The results point to the need for focused approaches to reduce regional differences and improve employment prospects by promoting investment for reducing unemployment and achieving balanced industrial growth in Assam. KEY WORDS: MSMEs, Growth, Investment, Employment, Assam.

Exploring European decarbonisation pathways in the Power Decisions Game

BackgroundArticle 12 of the Paris Agreement summons the signing parties to co-operate in improving the education of their citizens on climate change and related matters. The article thereby acknowledges the importance of citizens’ support and understanding of climate change and needed measures to fight climate change. This work aims to inform European citizens on how climate change-related policies affect the power sector in Europe. For this purpose, a serious game, based on sound principles of energy systems analysis, has been developed to allow players to explore how key policy decisions affect capacity mix, investment needs, and electricity costs.ResultsThe game is based on more than 1700 scenarios run through an open-source and accessible, yet technologically detailed, myopic energy system optimisation model for the electricity supply in the EU27 + 3. The game allows the user to take the role of a decision-maker and make decisions in 2020, 2030, and 2040 regarding the usage of CCS, biomass imports, cross-border electricity transmission and the pace of emission reductions. The user is then presented with economic, social, and environmental impacts of these choices. These impacts are, for example, measured and illustrated in the development of accumulated CO2 emissions per capita, levelised cost of electricity, and investment need per citizen.ConclusionThe Power Decisions Game provides a first-of-its-kind open-source infrastructure that allows non-modellers to explore the impact of key decisions and preferences on the design of the future European power system. Furthermore, it provides insights on the consequences of short-sighted decision making. The game can be used to facilitate policy-science discussions.

Determinants of Financial Shortfalls in State-Owned Railway Systems: An Ardl Approach for Sri Lanka Railways

Sri Lanka Railways (SLR) has been experiencing a financial shortfall since the 1940s, characterised by operational expenditure exceeding total revenue. This study aimed to identify the critical determinants of the financial shortfall of Sri Lanka Railways (SLR) using an econometric approach. Employing a quantitative methodology, the study utilised secondary and manipulated data from 1977 to 2022 to examine the effects of four key variables: revenue shortfall from fare revisions (FRFR), subsidised season tickets (FRSS), freight transport volume (FTK), and total wage bill (WB), incorporating the general price level (CCPI) to account for inflation. The regression analysis, using the Auto Regressive Distributed Lag Model, identified a short-run relationship between the financial shortfall (LFS) and lagged variables, including the volume of rail freight transport (LFTK), total employee wage bill (LWB), and the general price level (LCCPI). A long-run relationship was found among revenue shortfall from fare revisions (LFRFR), LWB, LCCPI, and LFS. The findings highlight the significant impact of aligning railway fares with bus fares and managing employee expenses on SLR's financial shortfall. Additionally, the revenue shortfall from subsidised season tickets showed a significant relationship at a 10% significance level, both short-term and long-term. The study underscores the necessity of revising railway fares in line with bus fares to enhance revenue and ensure financial sustainability. Optimising employee-related costs through effective management and reviewing the subsidy structure for season tickets are also recommended. Furthermore, investment in capacity and facility development for freight transport is crucial for mitigating long-term financial shortfalls.

Production or transmission investments? A comparative analysis

AbstractThe European electricity market is moving towards an integration process, and to facilitate that integration and the flow of electricity in that market, the European Transmission System Operator proposes different investments in transmission and production capacities. I develop a model of imperfect competition to study those investments, and I identify the economic forces that determine the equilibrium price and the flow of electricity: The size and the competitive effects. I prove formally when those forces operate simultaneously or independently, and how they determine consumers’ surplus and suppliers’ profits. I prove that an investment in transmission capacity outperforms an investment in production capacity by maximizing consumers’ welfare, but the performance in terms of suppliers’ profits is ambiguous.

Renewable compensation policies and conventional energy investment: A theoretical model

Many jurisdictions are simultaneously expanding natural gas and renewable capacities, largely supported by renewable compensation policies (RCPs). However, RCPs' impacts on firms' incentives for conventional capacity investment remain unclear. This paper develops a two-stage theoretical model to investigate this interaction within an imperfect competition and uncertain demand context. Firms initially invest in conventional energy capacity, followed by competing to supply electricity from conventional and previously owned renewables. Conventional output is compensated at market prices, but renewable output is subject to two common RCPs: feed-in tariffs (FiT) and feed-in premiums (FiP). The illustrative numerical example shows that increasing the proportion of renewable output compensated by a FiT from 20% to 80% increases the market-level conventional investment by 18%, leading to an increase in consumer surplus but decreasing firms' profits. These results exemplify the unintended effects of RCPs, encouraging the adoption of conventional generation capacity. The model presented in this paper provides a theoretical foundation for understanding the relationship between RCPs and conventional energy capacity investment—critical for carbon-intensive nations transitioning to renewables while maintaining reliable electricity supply through conventional generation.

The economic value of sustainability certification for sugarcane farms

Certifications related to sustainability in agribusiness are a crucial tool for promoting agricultural processes with a higher level of socio-environmental responsibility. However, their economic impact on small and medium-sized rural properties remains a topic of discussion. This research, with its comprehensive approach, aims to assess the economic potential generated by Bonsucro certification, an innovation process in sustainability. This process introduces pioneering evaluation criteria to meet the specific sustainability demands in the sugarcane sector on small and medium-sized properties. The approach was quantitative, using the Discounted Cash Flow method supported by Monte Carlo Simulation, where four scenarios were developed considering the small and medium producers without certification and with Bonsucro certification. The results obtained not only allow for obtaining the Economic Value of certified and non-certified producers but also for profiling the modal producer (who possesses traditional characteristics of the region), identifying convergence variables that are common characteristics among them and that impact land management, such as education, average age, investment capacity, among others. The findings demonstrate that small and medium-sized rural properties certified by Bonsucro create more economic-financial and sustainable value than uncertified rural properties. These findings can serve as a powerful motivator for private entities and associations of rural producers to implement certification, thereby empowering small and medium-sized rural producers to address relevant issues that have impacted the sustainability of sugarcane production, bringing significant results in terms of economic viability and socio-environmental impact.

Rational capacity investment for renewable hydrogen-based steelmaking systems: A multi-stage expansion planning strategy

To improve energy efficiency and mitigate environmental impact, the iron and steel industry (ISI) is responsible for implementing a low-carbon transition. The renewable hydrogen-based steelmaking system (RHSS) has emerged as an innovative energy system in the pathway of reducing the carbon footprint of ISI. Nonetheless, the sustainable development requirements of RHSS emphasize the critical need for well-planned capacity investments to boost its economic viability. This study introduces a novel planning strategy for RHSS referred to as a multi-stage expansion planning (MSEP) model, which is aimed to minimize the levelized cost of crude steel over the planning horizon from 2025 to 2050 (EU climate neutrality year). The MSEP model incorporates the construction sequence and dynamic techno-economic parameters to formulate investment strategies that adapt to changing system requirements and external conditions over the planning horizon. To address the complexity of the MSEP model, a rolling-horizon approach (RHA) is proposed to solve the model sequentially while integrating updated information. The proposed approach is benchmarked against both the single-stage approach and the perfect-sight approach through case studies. The numerical results show that the proposed RHA (i) guarantees a rational capacity investment strategy for RHSS considering the construction sequence and dynamic techno-economic parameters over multiple planning stages; (ii) achieves a reduction in the levelized cost of crude steel by approximately 50% relative to the single-stage approach; (iii) resolves the convergence issues encountered with the perfect-sight approach while achieving an optimal solution in a reasonable time frame. Additionally, sensitivity analysis evaluates the uncertainties of multiple factors on the planning results, while the robustness analysis confirms the applicability and adaptability of RHA across various scenarios.

Modeling the impact of end-user flexibility and bill structure on future transmission grid load

Demand-side flexibility is expected to play a key role during the transition towards renewable-dominated power systems and the electrification of transportation and heating sectors. Following this, massive investments in transmission capacities will be required, which may be reduced if end-users appropriately exploit their flexibility from the edge of the network. However, modeling the end-user flexible behavior and its impact on transmission grid load during the planning stage is not straightforward. The rationale behind this is that it results from the aggregation of atomistic loads and that it may be unlocked implicitly, i.e., via the structure of electricity bill. In this paper, assuming economically rational end-users, we develop an equilibrium model of end-users minimizing their electricity bill, while taking into account the elasticity of electricity prices. The proposed approach is used to derive updated transmission load projections, highlighting the benefits of considering end-user flexibility for transmission system planning.

We need more network capacity! But why do we get it? Infrastructural refraction and the contingencies of network growth and energy transitions

It is accepted that electricity networks need to grow in scale and scope to facilitate decarbonisation. It is also accepted that infrastructural change is incremental. Yet, the incremental delivery of network capacity and the relevance of this for energy transitions have received little attention. Instead, broader, evolutionary accounts of change predominate. Opportunities therefore remain to conceptualise and study the incrementality of network growth and to consider the implications of this for energy transitions. I conceptualise investment in network capacity as an outcome of infrastructural refraction: as emergent of varied and unevenly distributed histories and geographies of electrification beaming through and being refracted by the prism of socio-technical infrastructure in ways that condition the sited reconstitution of network capacities. Examining practices of translation, enacted by network operators, provides a method of revealing the constitutive details and dynamic of infrastructural refraction. A case study focused on the technological framing of the delivery of a 33 kV substation in Central Manchester is explored. The analysis stresses the importance of examining the contingencies of investment in capacity. This paper contributes a concept-method package that helps reveal such details and by proxy the polycentric politics of electrification, investment in electricity network capacity, and energy transitions.

Optimal wind power capacity decision consider commitment contracts under uncertain power supply and electricity demand in China

China has been introducing reforms in the electricity market. Since 2016, electricity retailers are allowed to operate in the market once monopolized by traditional power companies. This regulatory environment demands new types of purchase contracts to remunerate the energy agents and deliver better prices for consumers fairly and sustainably. This paper proposes two new electricity purchase contracts with risk sharing mechanism and studies on wind power supplier's optimal capacity investment problem under supply and demand uncertainty. Firstly, a basic model for fixed demand contract is developed, and the optimal capacity is obtained. Secondly, the fixed commitment order contract and the forecast order contract with risk sharing mechanism are proposed to manage the fluctuation of wind power supply randomness. With backward induction, the optimal investment capacity of wind power supplier is solved, and then the fixed order quantity or forecast demand quantity of the electricity retailer can be obtained. Our results show that the fixed order quantity may have a positive influence on the wind power supplier's capacity investment decision. While, the forecast order quantity may have a negative influence on the wind power supplier's capacity investment decision. In addition, wind density has a strong influence on wind power capacity investment, and it has a positive impact on wind power supplier's profit, but it does not always have a positive impact on electricity retailer's profit. At last, based on numerical analysis, we examine how the wind density distribution coefficient change affect members' profit in the electricity supply chain. We also find that even with wind curtailment punishment, the forecast order contract can make a Pareto improvement on the whole electricity supply chain.

Price responsiveness of solar and wind capacity demands

Accurate estimates of the price responsiveness of residential, commercial, and industrial electricity demands are essential for energy policy modelling, integrated resource planning, and determining a competitive wholesale electricity market's generation levels, prices, and capacity investments. Hence, we estimate the own-price elasticities of solar and wind capacity demands of a load serving entity (LSE) that provides retail electricity service, thereby answering two interrelated research questions: (1) does solar capacity demand far exceed wind capacity demand? and (2) are solar and wind capacity demands price-elastic? Inspired by the theory of input demand under input price uncertainty, our innovative methodology integrates (a) wholesale spot energy price forecasts by time of day; (b) pseudo data found by minimizing a LSE's annual risk-adjusted budget for procuring solar and wind capacities; and (c) econometric analysis of (b) to estimate the extent of substitutability between solar and wind capacities and the own-price elasticities of solar and wind capacity demands. Using Texas as an illustrative example, we find that when solar and wind power purchase agreements have similar energy prices, solar capacity demand is approximately four times wind capacity demand. Further, the own-price elasticity estimates are −5.34 for solar capacity demand and −5.65 for wind capacity demand. As a result, solar and wind capacity demands tend to substantially grow (shrink) in response to declining (rising) solar and wind energy prices. This lends support to proposals to raise solar and wind energy prices for mitigating the adverse effects of large-scale variable renewable energy development on an electric grid's efficient operation and system reliability. However, adopting such proposals also slows the grid's pace of decarbonization, thus underscoring the policy and regulatory challenges in the quest for a clean and sustainable electricity future. Hence, our policy recommendation of price managing solar and wind capacity demands is a topic of policy debate that deserves the attention of an electric grid's stakeholders.

Decentralization Of Vietnam'S forestlands: The policy process and impact

The decentralization of land is crucial for effective production, welfare improvement, and social development. However, the formulation, outcome, and impact of land decentralization policies are influenced by political regimes, policy processes, geographical areas, and socio-economic settings. This study focuses on Vietnam's forest and forestland allocation program over the past 30 years to investigate its impact on poverty dynamics. Retrospective policy analysis and an extended random effect treatment model with longitudinal panel data collected from 53,568 plots in 12 provinces across Vietnam from 2008 to 2018 were used. The findings suggest that while the forestland allocation policy has a positive effect on poverty alleviation, it has minimal impact on the poorest household groups. Additionally, actual tree planting is more beneficial to the non-poor group, indicating a lack of incentivized policies for tree planting and inadequate consideration of the genuine livelihood needs and investment capacities of land recipients, especially poor households. Policy improvements are recommended to better align with the rationale, aims, and social expectations.

Optimization of Renewable Energy Hydrogen Production Systems Using Volatility Improved Multi-Objective Particle Swarm Algorithm

Optimizing the energy structure to effectively enhance the integration level of renewable energy is an important pathway for achieving dual carbon goals. This study utilizes an improved multi-objective particle swarm optimization algorithm based on load fluctuation rates to optimize the architecture and unit capacity of hydrogen production systems. It investigates the optimal configuration methods for the architectural model of new energy hydrogen production systems in Xining City, Qinghai Province, as well as the internal storage battery, ALK hydrogen production equipment, and PEM hydrogen production equipment, aiming at various scenarios of power sources such as wind, solar, wind–solar complementary, and wind–solar–storage complementary, as well as intermittent hydrogen production scenarios such as hydrogen stations, hydrogen metallurgy, and continuous hydrogen production scenarios such as hydrogen methanol production. The results indicate that the fluctuation of hydrogen load scenarios has a significant impact on the installed capacity and initial investment of the system. Compared with the single-channel photovoltaic hydrogen production scheme, the dual-channel hydrogen production scheme still reduces equipment capacity by 6.04% and initial investment by 6.16% in the chemical hydrogen scenario with the least load fluctuation.

Groundwater Marketing Dynamics in Northern Dry Zone Farms of Karnataka: A Comparative Study (2006 to 2021)

Groundwater is an essential resource, but it is becoming increasingly scarce and depleting rapidly, particularly in Karnataka. As a result, groundwater markets have emerged as an alternative strategy to manage this limited resource more efficiently and equitably. These markets enable farmers who cannot afford water extraction machinery to access irrigation. This article, aims to study present status of groundwater markets, temporal depletion of water table, groundwater security, economics and factors affecting water trade in Northern Dry Zone of Karnataka, mainly to compare with the results obtained in the past study [1] to analyze changes in scenario and have historical lessons. Multi-stage random sampling technique was used to select farmers, who were then categorized into water sellers, self-users, and buyers. Primary data was collected through a structured, pre-tested schedule and analysed using descriptive and logit regression analysis. Results show that unlike earlier study, buyers in present study owned wells. Depth of borewells has increased (overall 44%), resulting in increased drilling, deepening, and pumping costs. Very few farmers (8%) acknowledged over-extraction from their farms could also contribute to groundwater insecurity. While studying economics it was found that perennial crops had the highest economic rents (260, 610Rs/hr for sellers and buyers).Reason for participation in water market has shifted from no investment capacity to water scarcity compared to earlier study. So farmers could be motivated to participate in water markets instead of relying on new wells during water shortages to encourage optimal water use and reduce negative externalities like increasing wells.

Transforming Health Care Delivery: Innovations in Payment Models for Interprofessional Team-Based Care.

By examining the strengths, limitations, and implications of different payment models we seek to inform policymakers, practitioners, and educators on the path toward patient-cen-tered, efficient, and sustainable primary health care deliv-ery. Health care payment model reform should be viewed as an investment in future health asset capacity and equity production rather than an immediate return on investment for short-term health care cost reduction.

Budgetary fund management in resource-constrained environments: financing strategies

In the process of European integration, it is necessary to implement economic reforms to ensure effective management of state finances. Changes in budgetary relations and the allocation of budget monetary resources are observed in connection with the process of decentralisation and transformation processes in the budgetary system. The aim of this article is to establish the significance of financing budget managers, even under resource constraints. The study focuses on the process of financing budget managers. The research methods employed include analysis, systemic-structural, comparative-legal, and dialectical methods. The results indicate that the current state and societal development necessitate the establishment of a strong and effective state economy. The financing of budget managers under resource constraints is a pertinent issue. Recent events in the country highlight that local budgets encounter various problems and inconsistencies, mainly due to limited financial resources, unclear expenditure powers between different levels of the budgetary system, inefficient spending models, and low investment capacity. Planning and executing local budgets' expenditure is a crucial aspect of budget policy that determines the effectiveness of local self-government bodies in fulfilling their functions and powers. Financial constraints of the state are especially significant in relation to the competence level of participants in the budget process, the ability to allocate budget funds rationally and in line with the priorities of budget policy, and the need to achieve maximum effect with minimal costs for socio-economic development. Proper use of local budgets requires evaluating financial procedures, monitoring the fulfilment of budgetary powers, assessing expected results, and accurately defining needs, among other factors. To address financial constraints, it is necessary to review and adjust budget expenditures and regulate the powers of local authorities regarding expenditure. Increasing spending by local budgets to complete their own responsibilities will enhance the investment aspect of local self-government budgets.

A system dynamics approach for cost-benefit simulation in designing policies to enhance the cybersecurity resilience of small and medium-sized enterprises

The small and medium-sized enterprises (SMEs) with limited investment capacity are likely to be lax in enhancing their cybersecurity. Therefore, to strengthen cybersecurity at a national level, governments must intervene in the market by using support or regulatory policies to overcome market failures and address weaknesses. This study reviewed the efficiency of policy options to improve corporate cybersecurity resilience for SMEs that require government support, unlike large companies that can invest in security on their own. To achieve this, a causal loop diagram was created and analyzed from the perspective of system dynamics. The model incorporated government support variables and the decline in capabilities over time into the existing corporate security investment model reflecting the standard framework for cybersecurity from NIST. The simulation scenarios were constructed based on policy options considered by the Korean government. These include 1) pre-incident or post incident support services, and 2) management through tax credits and regulation. The results indicated that incentives, specifically tax credits, rather than regulation, were more effective in strengthening cyber resilience. This study describes the investment and internal capability development of a company affected by government policy, which is an external factor, and changes in profits can be observed by adding the company's profits and costs as variables. This profit variable allows for the comparison of a company's cyber resilience across scenarios. Additionally, if the government provides direct support immediately after a hacking incident, the company can recover more quickly. If these benefits are known and if the reporting of hacking damage is activated, cyber threat visibility will be secured by revealing hacking attacks that have been secretly conducted. Governments can use cyber threat visibility to strengthen national cybersecurity.

Optimization method for renewable energy investment planning in the electricity carbon coupling market environment considering economy

China is developing rapidly in renewable energy development, electricity market reform, and carbon market construction, using market mechanisms for efficient planning and investment. The electricity and carbon markets are interrelated for market entities. This context has led to a dual-level optimization model for renewable energy investment planning, considering cost recovery and new power system goals. The model includes deriving electricity carbon coupling quotations for conventional units based on dynamic carbon emission characteristics and proposing an electricity spot market mechanism influenced by carbon quota trading. The model’s upper level maximizes renewable energy investment capacity, determining its size and location, while the lower level simulates electricity spot and voluntary emission reduction market trading to guide investment decisions. The model transformed into a mixed integer linear programming problem for optimal solutions was validated numerically, examining various factors affecting optimal renewable energy investment capacity.

Financial Capacity of Insurance Companies as a Factor of Stable Development of the Ukrainian Insurance Market

Abstract The relevance of the article is based on an in-depth study of the financial potential of insurers and its impact on the insurance market, which provides valuable information for the stakeholders of the insurance industry. Therefore, this study aims to determine approaches to revealing the essence of the financial capacity of insurers, based on the scientific tools of financial science. The leading approach to the study of this problem is the analysis of the dynamics of liabilities (raised and borrowed funds) and equity capital of insurers and the relationship between them, which enables a comprehensive look at the impact of these indicators on the development of insurance market and internal and external factors that have both an objective and subjective impact on the financial capacity of insurers and the insurance market. The article defines the stages and methodology of assessing the financial condition of insurers. In particular, the normative method, the comparative method, the static method, the formallogical method, the economic-mathematical method, the method of analysis and synthesis became the leading research methods. These assessment methods are crucial for the timely determination of the current state of financial capacity and its potential. Using a multivariate correlation-regression model, the authors demonstrate the importance of various components of financial capacity. The presented results will be useful to various stakeholders in the insurance industry as they provide a deeper understanding of their financial strength, including the dynamics of liabilities, equity and leveraged funds. First of all, it was established that financial resources are the basis of financial capacity. Secondly, the definition of the insurance company’s financial resources as a source and component of the company’s functioning is formulated. Thirdly, it is shown that the insurer’s financial capacity is logically dependent on its investment capacity, which is determined by the amount of financial resources. It was also determined that financial capacity is a dynamic quantity and is manifested only in the process of its use and ideally should be accompanied by its growth. Among them, it was proved that the main components that significantly affect the formation of the financial potential of insurers and the growth of the insurance market of Ukraine are insurance reserves and authorized capital. These conclusions can easily become the basis for the formation of further state insurance policy, which will be followed through legislative reforms, increased competition in the insurance market and will result in an increase in the level of trust among the population.