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Risk assessment of renewable energy investments: A modified failure mode and effect analysis based on prospect theory and intuitionistic fuzzy AHP

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  • Ilbahar, Esra
  • Kahraman, Cengiz
  • Cebi, Selcuk

Abstract

Most countries intending to replace traditional energy sources with renewable energy sources have started to make major investments in this field. Since renewable energy is a sector requiring large amount of investment costs, evaluation of investment risks are extremely important to make the best investment decisions. However, as risk assessment is a process based on expert judgments, the indecisiveness and cognitive bias of the experts should be eliminated. Therefore, a modified Failure Mode and Effect Analysis (FMEA) based on the prospect theory and interval-valued intuitionistic fuzzy Analytic Hierarchy Process (AHP) is introduced to assess the risks in renewable energy investments for the first time. As a result of the proposed risk assessment approach, renewable energy investment risks are prioritized by effectively overcoming the indecisiveness and cognitive bias of experts.

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  • Ilbahar, Esra & Kahraman, Cengiz & Cebi, Selcuk, 2022. "Risk assessment of renewable energy investments: A modified failure mode and effect analysis based on prospect theory and intuitionistic fuzzy AHP," Energy, Elsevier, vol. 239(PA).
    • Handle: RePEc:eee:energy:v:239:y:2022:i:pa:s0360544221021551
    DOI: 10.1016/j.energy.2021.121907
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