Header

UZH-Logo

Maintenance Infos

What are You Waiting to Invest? Long-Term Investment in Grid-Connected Residential Solar Energy in California. A Real Options Analysis


Chesney, Marc; Vargas, Carlos (2018). What are You Waiting to Invest? Long-Term Investment in Grid-Connected Residential Solar Energy in California. A Real Options Analysis. SSRN 3231984, University of Zurich.

Abstract

The goal of this paper is to assess the optimal choice of a household in California, United States, in terms of their decision if and when to undertake a certain investment in a residential scale, grid connected, solar photo-voltaic system, in order to obtain savings in their monthly expenditures in electricity. This irreversible option is then defined, mainly, by the initial cost of the solar PV system. For this purpose, Real Options Analysis is deployed to assess this investment opportunity for the household. This approach allows determining not only whether the investments should be undertaken or not, but also the optimal timing to do so. Results show it is optimal for a Californian household to invest in a photo-voltaic system, however some delay might be advised depending on the energy production factor of specific areas, and the expected useful life of the equipment. Furthermore, government intervention influencing subsidies and energy prices has a bigger effect in the length such delays and should be avoided whenever possible.

Abstract

The goal of this paper is to assess the optimal choice of a household in California, United States, in terms of their decision if and when to undertake a certain investment in a residential scale, grid connected, solar photo-voltaic system, in order to obtain savings in their monthly expenditures in electricity. This irreversible option is then defined, mainly, by the initial cost of the solar PV system. For this purpose, Real Options Analysis is deployed to assess this investment opportunity for the household. This approach allows determining not only whether the investments should be undertaken or not, but also the optimal timing to do so. Results show it is optimal for a Californian household to invest in a photo-voltaic system, however some delay might be advised depending on the energy production factor of specific areas, and the expected useful life of the equipment. Furthermore, government intervention influencing subsidies and energy prices has a bigger effect in the length such delays and should be avoided whenever possible.

Statistics

Downloads

66 downloads since deposited on 04 Sep 2018
66 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:8 August 2018
Deposited On:04 Sep 2018 14:19
Last Modified:11 Sep 2018 09:53
Series Name:SSRN
Number of Pages:24
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Official URL:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3231984
Other Identification Number:merlin-id:16704

Download

Download PDF  'What are You Waiting to Invest? Long-Term Investment in Grid-Connected Residential Solar Energy in California. A Real Options Analysis'.
Preview
Content: Published Version
Filetype: PDF
Size: 1MB