A real options investment model for the evaluation of wind and photovoltaic plants

Recent years have been characterized by an increasing energy demand and by growing attention to energy production sustainability. For this reason, the number of plants powered by renewable sources has increased. Simultaneously, the energy sector has to face increasing uncertainty due to market liberalization. These factors has made it necessary for investors to find a proper evaluation method for their projects able to take into account also these aspects. This work tries to provide two original contributions: firstly, the creation of a model that helps the investor to understand which technology can best satisfy his energy need; and secondly, the implementation of the RO (i.e. Real Option) approach. To verify the consistency of the model, it has been applied to three different real situations.