Feed-in Tariff Contract Schemes and Regulatory Uncertainty
Autor(a) principal: | |
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Data de Publicação: | 2020 |
Outros Autores: | , , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/11144/4746 |
Resumo: | This paper presents a novel analysis of two feed-in tariffs (FIT) under market and regulatory uncertainty, namely a sliding premium with cap and floor and a minimum price guarantee. Regulatory uncertainty is modeled with a Poisson process, whereby a jump event may reduce the tariff before the signature of the contract. Using a semi-analytical real options framework, we derive the project value, the optimal investment threshold, and the value of the investment opportunity for these schemes. Taking into consideration the optimal investment threshold, we also compare the two aforementioned FITs with the fixed -price FIT and the fixed-premium FIT, which are policy schemes that have been extensively studied in the literature. Our results show that increasing the likelihood of a jump event lowers the investment threshold for all the schemes; moreover, the investment threshold als o decreases when the tariff reduction increases. We also compare the four schemes in terms of the corresponding optimal investment thresholds. For example, we find that the investment threshold of the sliding premium is lower than the minimum price guarantee. This result suggests that the first regime is a better policy than the latter because it accelerates the investment while avoiding excessive earnings to producers. |
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Feed-in Tariff Contract Schemes and Regulatory UncertaintyInvestment AnalysisReal OptionsFeed-In-TariffRegulatory UncertaintyThis paper presents a novel analysis of two feed-in tariffs (FIT) under market and regulatory uncertainty, namely a sliding premium with cap and floor and a minimum price guarantee. Regulatory uncertainty is modeled with a Poisson process, whereby a jump event may reduce the tariff before the signature of the contract. Using a semi-analytical real options framework, we derive the project value, the optimal investment threshold, and the value of the investment opportunity for these schemes. Taking into consideration the optimal investment threshold, we also compare the two aforementioned FITs with the fixed -price FIT and the fixed-premium FIT, which are policy schemes that have been extensively studied in the literature. Our results show that increasing the likelihood of a jump event lowers the investment threshold for all the schemes; moreover, the investment threshold als o decreases when the tariff reduction increases. We also compare the four schemes in terms of the corresponding optimal investment thresholds. For example, we find that the investment threshold of the sliding premium is lower than the minimum price guarantee. This result suggests that the first regime is a better policy than the latter because it accelerates the investment while avoiding excessive earnings to producers.CICEE. Universidade Autónoma de Lisboa2021-01-13T11:23:54Z2020-01-01T00:00:00Z2020info:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/11144/4746enghttps://doi.org/10.26619/UAL-CICEE/WP01.2020Barbosa, LucianaNunes, CláudiaRodrigues, ArturSardinha, Albertoinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-01-11T02:18:28Zoai:repositorio.ual.pt:11144/4746Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T01:33:37.541532Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Feed-in Tariff Contract Schemes and Regulatory Uncertainty |
title |
Feed-in Tariff Contract Schemes and Regulatory Uncertainty |
spellingShingle |
Feed-in Tariff Contract Schemes and Regulatory Uncertainty Barbosa, Luciana Investment Analysis Real Options Feed-In-Tariff Regulatory Uncertainty |
title_short |
Feed-in Tariff Contract Schemes and Regulatory Uncertainty |
title_full |
Feed-in Tariff Contract Schemes and Regulatory Uncertainty |
title_fullStr |
Feed-in Tariff Contract Schemes and Regulatory Uncertainty |
title_full_unstemmed |
Feed-in Tariff Contract Schemes and Regulatory Uncertainty |
title_sort |
Feed-in Tariff Contract Schemes and Regulatory Uncertainty |
author |
Barbosa, Luciana |
author_facet |
Barbosa, Luciana Nunes, Cláudia Rodrigues, Artur Sardinha, Alberto |
author_role |
author |
author2 |
Nunes, Cláudia Rodrigues, Artur Sardinha, Alberto |
author2_role |
author author author |
dc.contributor.author.fl_str_mv |
Barbosa, Luciana Nunes, Cláudia Rodrigues, Artur Sardinha, Alberto |
dc.subject.por.fl_str_mv |
Investment Analysis Real Options Feed-In-Tariff Regulatory Uncertainty |
topic |
Investment Analysis Real Options Feed-In-Tariff Regulatory Uncertainty |
description |
This paper presents a novel analysis of two feed-in tariffs (FIT) under market and regulatory uncertainty, namely a sliding premium with cap and floor and a minimum price guarantee. Regulatory uncertainty is modeled with a Poisson process, whereby a jump event may reduce the tariff before the signature of the contract. Using a semi-analytical real options framework, we derive the project value, the optimal investment threshold, and the value of the investment opportunity for these schemes. Taking into consideration the optimal investment threshold, we also compare the two aforementioned FITs with the fixed -price FIT and the fixed-premium FIT, which are policy schemes that have been extensively studied in the literature. Our results show that increasing the likelihood of a jump event lowers the investment threshold for all the schemes; moreover, the investment threshold als o decreases when the tariff reduction increases. We also compare the four schemes in terms of the corresponding optimal investment thresholds. For example, we find that the investment threshold of the sliding premium is lower than the minimum price guarantee. This result suggests that the first regime is a better policy than the latter because it accelerates the investment while avoiding excessive earnings to producers. |
publishDate |
2020 |
dc.date.none.fl_str_mv |
2020-01-01T00:00:00Z 2020 2021-01-13T11:23:54Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/11144/4746 |
url |
http://hdl.handle.net/11144/4746 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
https://doi.org/10.26619/UAL-CICEE/WP01.2020 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
CICEE. Universidade Autónoma de Lisboa |
publisher.none.fl_str_mv |
CICEE. Universidade Autónoma de Lisboa |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799136814571716608 |