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Financial valuation of investments in future power generation technologies: nuclear fusion and CCS in an emissions trading system

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  • Heinz Klingelhöfer
  • Peter Kurz

Abstract

This paper outlines a model approach for the financial valuation of future power generation technologies, such as nuclear fusion or carbon capture and storage (CCS) under an emissions trading regime. Since on imperfect markets, interdependencies between decisions inhibit the isolated valuation of an investment, we use simultaneous calculation of optimal production, sales and investment programs; these are subject to the constraints and conditions characteristic for investments in low- and zero-carbon technologies such as fusion and CCS. Duality theory allows to derive, identify and economically interpret the determinants for the price ceiling as (corrected) net present values. Sensitivity analysis shows how changes in the technical specification or environmental policies affect the maximum payable price. Particularly, tradable permits have several effects on low-carbon investments and do not always encourage CO 2 abatement. While a zero-emissions technology like fusion always profits from a tightened emissions trading scheme, for low-carbon technology like CCS—in particular cases—this may even be counterproductive from an economic as well as an environmental point of view. Copyright Springer-Verlag 2011

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  • Heinz Klingelhöfer & Peter Kurz, 2011. "Financial valuation of investments in future power generation technologies: nuclear fusion and CCS in an emissions trading system," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 19(4), pages 415-438, December.
    • Handle: RePEc:spr:cejnor:v:19:y:2011:i:4:p:415-438
    DOI: 10.1007/s10100-011-0193-8
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    References listed on IDEAS

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    Cited by:

    1. Heinz Stigler & Udo Bachhiesl & Gernot Nischler & Gerald Feichtinger, 2016. "ATLANTIS: techno-economic model of the European electricity sector," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 24(4), pages 965-988, December.

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