Over the past few decades, renewable energy has received considerable public support through subsidies. However, its reliance on governments inherently induces policy uncertainty possibility of retroactive changes, i.e., ex post subsidy adjustments, which, in turn, impact private investors' appetite for investments. We empirically investigate effect changes investment decisions by considering common mechanisms EU period 2000–2017. To quantify impact, we estimate a regression model utilizing...

Abstract When do short lead times warrant a cost premium? Decision makers generally agree that enhance competitiveness, but have struggled to quantify their benefits. Blackburn (2012) argued the marginal value of time is low when demand predictable and salvage values are high. de Treville et al. (2014) used real‐options theory relationship between mismatch volatility, demonstrating increases with volatility volatility. We use model explore in three industrial supply chains facing relatively...

Subsidies initially installed to stimulate green capacity investments tend be withdrawn after some time. This paper analyzes the effect on investment of this phenomenon in a dynamic framework with demand uncertainty. We find that increasing probability subsidy withdrawal incentivizes firm accelerate at expense smaller size. A similar is found when size as such increased. When risk zero or very limited, installing could increase welfare. In general we get larger probability, welfare...

The average size of new oil discoveries on the Norwegian Continental Shelf (NCS) is steadily decreasing. As standalone developments are often not economically viable for marginal fields, tiebacks to existing production facilities considered in many cases. At same time, mature areas have spare capacity due depleted reservoirs. In this paper we evaluate tieback development concepts a field having choice between two hosts with different characteristics. We develop model that allows (1)...

We analyse how market price and policy uncertainty, in the form of random provision or retraction a subsidy, interact to affect optimal time investment size renewable energy (RE) project that can be completed either single (lumpy investment) multiple stages (stepwise investment). The subsidy takes fixed premium on top electricity price, and, therefore, is subject uncertainty. show risk permanent (provision) increases (decreases) incentive invest, yet lowers (raises) amount installed...

Abstract As the time between decision about what to produce and moment when demand is observed (the lead ) increases, forecast becomes more uncertain. Uncertainty can increase gradually in time, or as a dramatic change median demand. Whether evolves jumps has important implications for value of responsiveness, which we model cost premium worth paying reduce justified ). Demand uncertainty arising from rather than constant volatility increases an average jump demand, but decreases We fit our...

Driven by ambitious targets to reduce greenhouse gas emissions many countries have introduced support schemes accelerate investments in renewable energy. However, recent years experience showed that, over time, retraction of becomes more likely. This has a severe effect on investment behaviour. In this paper we study the potential subsidy feed-in tariff (FIT) energy capacity, where explicitly account for fact that likelihood policy may change time. We show range FITs, which it is optimal...

Hydrocarbons combustion is one of the primary sources greenhouse gas emissions, causing climate change. As large volumes are burned to power energy-consuming oil and production on offshore platforms, Norwegian petroleum industry contributes significantly country's making it a target for environmental regulations. Hence, companies facing challenge finding solutions comply with increasing requirements while being economically feasible. Offshore platforms electrification helps reduce carbon but...

Rapid technological developments are inducing the shift in consumer demand from existing products towards new alternatives. When operating a declining market, profitability of incumbent firms is largely dependent on ability to correctly time introduction product innovations. This paper contributes literature technology adoption by determining optimal innovate context market. We study problem firm that has an option undertake innovation investment and thereby either add its portfolio (add...

The Norwegian salmon farming industry is currently facing significant obstacles to future growth. major challenge posed by the high level of sea lice in nets at farms. At moment both farmers and supplying industries are working on developing ways deal with problem so that can continue growth observed during last decade. This work attempts fill lack investment studies dealing risk management related challenge, as well analysis investments new technologies used abate this problem....

With the decreasing average size of new discoveries in mature production areas, uncertainties base oil field investment decisions are continually increasing. Fewer appraisal wells, which allow to decrease amount subsurface uncertainty, typically drilled before development a small compared large fields. In this context, novel solutions must be established commercialize under technical and market uncertainties. such conditions, managerial flexibilities, enable change course project event...