Active management in state-owned energy companies: Integrating a real options approach into multicriteria analysis to make companies sustainable

Hernández-Perdomo, Elvis; Mun, Johnathan; Rocco, M S Claudio

doi:10.1016/j.apenergy.2017.03.068

Cited by 29 publications

(10 citation statements)

References 49 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Unlike NPV, the real options theory (ROT) considers that management can react when it has more information about the uncertainties to be faced. The higher the investments and the more unlikely the chances of reversing them, the greater the usefulness of the real options (Choi et al, 2016;Perdomo et al, 2017;Morreale et al, 2017;Gazheli & Bergh, 2018).…”

Section: Discounted Cash Flowmentioning

confidence: 99%

Comparative evaluation of investment analysis methods: an application in renewable energy auctions between 2011 e 2015

Caldas

Júnior

2021

ReA UFSM

View full text Add to dashboard Cite

Purpose - This work aims to analyze the assertiveness of net present value (NPV) and real options theory (ROT), at the moment of decision making for investments in renewable energy projects, considering the 244 winning projects in the auctions of reserve energy that occurred between 2011 and 2015.Design/methodology/approach –This is a quantitative study that used real data from 150 wind power and 94 photovoltaic projects available on ANEEL´s website. For data analysis, the confusion matrix, the area under the ROC Curve and the Kappa Index were used.Findings – It was concluded that NPV is more effective for recommendations to invest in projects with chances to be successful, while ROT is more accurate in suggesting against investing in projects with propensity for failure. It was also found that the degree of agreement between the two techniques is substantial and determined by the level of volatility of real options.Research limitations/implications – The limitations of this study refer to the difficulties of identifying the reasons that motivated failures in the projects.Originality/value – Theoretically, this work contributes to identify the characteristics that effectively differentiate ROT from NPV at the time of decision making. Empirically, this work contributes to doing an ex-post analysis of the projects.

show abstract

Section: Discounted Cash Flowmentioning

confidence: 99%

Comparative evaluation of investment analysis methods: an application in renewable energy auctions between 2011 e 2015

Caldas

Júnior

2021

ReA UFSM

View full text Add to dashboard Cite

show abstract

“…To date, the PROMETHEE has been widely used in a variety of selection issues. Hernandez‐Perdomo et al executed the PROMETHEE approach to assess and rank multiple portfolios holistically. Petrovic et al employed the PROMETHEE II to select the most appropriate project and refrigerant.…”

Section: Literature Reviewmentioning

confidence: 99%

A two‐stage decision framework for inland nuclear power plant site selection based on GIS and type‐2 fuzzy PROMETHEE II: Case study in China

Liu

Huang

et al. 2020

Energy Science & Engineering

View full text Add to dashboard Cite

Site selection is a critical strategic decision for inland nuclear power plants which have broad prospects of development. However, several shortcomings exist in current researches, such as the incomplete decision frameworks, the indiscriminately treated properties, and the information loss. To handle the above flaws, this study establishes a two‐stage site selection framework. In the first stage, the geographic information system and preselection criteria are applied to identify suitable alternative sites. And in the second stage, the interval type‐2 fuzzy PROMETHEE II and suitability criteria are utilized to rank alternatives and select the optimal site, where different preference functions are selected accordingly. Thereinto, the interval type‐2 fuzzy numbers are adopted to describe the uncertainty and vagueness in calculation, without being transformed to exact value. Finally, based on the proposed two‐stage decision framework, a case of Hunan, Hubei, and Jiangxi provinces is studied, to demonstrate its validity and practicability. The results show that S8 is selected as the optimal site for its strong government support, convenient fuel transport, and land availability. This study not only enriches the material databases for inland nuclear power plant site selection, but also offers theoretical reference for site selection studies of various objects.

show abstract

“…Restrepo-Garcés, Manotas-Duque, and Lozano [75] proposed a hybrid method composed of techniques of AHP, the TOPSIS, real option analysis, the Monte Carlo simulation, and the binomial method to select the most adequate technologies for electricity self-generation in shopping centers. Recently, [76] integrated real options analysis into an MCDM framework in order to evaluate and holistically rank a portfolio of multiple firms' projects.…”

Section: Investment Decision As a Multiple Criteria Decision Making (Mcdm) Problemmentioning

confidence: 99%

“…However, the evaluation of investments may also contain qualitative factors, which cannot be quantified in monetary terms [10]. Second, though some scholars ( [10,[74][75][76]) have tried to integrate the real option method and the MCDM framework during the past few years, the traditional MCDM methods like AHP, TOPSIS, etc. assumed independence between criteria.…”

Section: Research Gapsmentioning

confidence: 99%

Evaluating the Investment Projects of Spinal Medical Device Firms Using the Real Option and DANP-mV Based MCDM Methods

Huang

Hsieh

Chen

2020

IJERPH

View full text Add to dashboard Cite

In an era of global aging, spinal and other joint degeneration issues have become a major problem for many elders. Bone-related operations have become the largest percentage of surgeries, accounting for 40% of the top 10 operations in the United States. Further, these spine-related operations are now ranked second among all bone-related operations. Due to this enormous and daily increasing market demand, more and more firms have started to pay closer attention to related medical devices and products. The global venture capitalists (VCs) have also started to follow the mega trend and will continue to invest heavily in this industry. Although most VCs recognize that investing in firms that produce innovative spinal products or devices is a must, very few practical managers or research scholars have defined the appropriate evaluation methods for these firms to use. The traditional net present value (NPV) method, which does not consider operation flexibility and changes in strategy, is far from the reality. The real option method can reveal the vagueness and flexibilities of the values being embedded in the investment projects at spinal medical device firms. However, the real option method is strictly quantitative. Usually, the evaluation aspects contain qualitative factors or local criteria which are hard to quantify in monetary terms. Thus, the adoption of multiple criteria decision making (MCDM) methods that can manipulate both quantitative and qualitative factors will be very helpful in evaluating and selecting investment cases like the spinal medical device firms, where both quantitative and qualitative factors should be considered. An analytical framework that consists of hybrid MCDM methods and the real option method will thus be very useful to evaluate the newly established firms producing spinal medical devices. Therefore, the authors propose a real option valuation as well as the Decision-Making Trial and Evaluation Laboratory (DEMATEL) based analytic network process (DANP) and the modified VIšekriterijumsko KOmpromisno Rangiranje (VIKOR) method (DANP-mV) based MCDM framework for evaluating the investment projects offered by these firms of spinal medical devices. An empirical study based on three newly established spinal medical device companies specializing in vertebral compression fracture (VCF) surgical devices was used to demonstrate the feasibility of the proposed analytical framework. Sensitivity analysis is performed to determine the influence of modeling parameters on ranking results of alternatives. This analytical framework can thus serve as a tool for VCs to use to determine the value of a potential candidate for investment. The proposed method can also serve as an effective and efficient tool for investment projects in other fields.

show abstract

Active management in state-owned energy companies: Integrating a real options approach into multicriteria analysis to make companies sustainable

Cited by 29 publications

References 49 publications

Comparative evaluation of investment analysis methods: an application in renewable energy auctions between 2011 e 2015

Comparative evaluation of investment analysis methods: an application in renewable energy auctions between 2011 e 2015

A two‐stage decision framework for inland nuclear power plant site selection based on GIS and type‐2 fuzzy PROMETHEE II: Case study in China

Evaluating the Investment Projects of Spinal Medical Device Firms Using the Real Option and DANP-mV Based MCDM Methods

Contact Info

Product

Resources

About