Risk-return analysis of clean energy grid project investment based on integrated ISM and Monte Carlo model

Shu Li; Junyong Xiang; Rong Li; Duo Wang

doi:10.4108/ew.7243

Authors

Shu Li International Cooperation Centre of National Development and Reform Commission
Junyong Xiang Global Energy Interconnection Development and Cooperation Organization
Rong Li Global Energy Interconnection Development and Cooperation Organization
Duo Wang International Cooperation Centre of National Development and Reform Commission

DOI:

https://doi.org/10.4108/ew.7243

Keywords:

Clean Energy, Investment Risk, Investment Return, ISM, Monte Carlo

Abstract

To solve the problem of complex and difficult to quantify factors affecting investment returns and risks in clean energy power grids, this study comprehensively applies the interpretive structural model and Monte Carlo model to the analysis of investment risk-returns in clean energy power grid projects. The interpretive structural model is utilized to analyze project investment returns, while the Monte Carlo model is used to analyze project investment risks. The project investment risk is based on the factor analysis of project investment returns, and key risk factors are identified through 1000 simulations, and the impact of these risks on project returns is quantified. By combining the two, the investability of the project is analyzed. The results showed that grid electricity prices, kilowatt hour subsidies, technology learning rates, total annual sunshine hours, and system power generation efficiency were key factors driving investment returns. The average expected value of investment return was about 20%, and the probability of investment return below 6% was close to 0. The overall project is worth investing in. From this, it can be seen that the research designed investment risk-return analysis methods for clean energy grid projects can effectively distinguish the main factors affecting investment returns and risks, and pre simulate the risk situation of returns. This study can provide reference for investor decision-making.

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