Real options analysis for regional investment decisions of household PV-ESS in China

• Published in: Energy (Oxford) 2024-04, Vol.293, p.130725, Article 130725
• Main Authors: Yang, Changhui, Fu, Yuting, He, Lijun, Jiang, Qi, Cui, Yangyu
• Format: Article
• Language: English
• Subjects: Energy storage system; Household photovoltaic; Investment decision; Least-squares Monte Carlo; Real options
• ISSN: 0360-5442
• DOI: 10.1016/j.energy.2024.130725

This paper takes 30 provinces in China as the research subjects and constructs a real options model to explore the impact of carbon emissions trading market, energy storage subsidies, and their synergy on the optimal investment decision of household PV-ESS projects. The results show that a single factor has a catalytic effect on project investment, and both together have a better effect. And, project investment benefits are better in areas with abundant light resources and higher than average electricity prices. In addition, a sensitivity analysis is conducted on the initial investment cost, CO2 price, and energy storage subsidies. The results show that immediate investment in all provincial projects can be achieved when the initial investment cost is reduced by 50%, or the CO2 price is increased by about 33 times, indicating that the current environment is insufficient to attract investors. The results provide a reference framework for investment in household PV-ESS projects. •Use real options methods to assess investment decisions for household PV-ESS projects.•Explore the role of carbon trading market and energy storage subsidies on investment.•Research the impact of different regional power grids on investment value.