| Title | R&D investment decision on smart cities: Energy sustainability and opportunity |
|---|---|
| ID_Doc | 40648 |
| Authors | Biancardi, M; Di Bari, A; Villani, G |
| Title | R&D investment decision on smart cities: Energy sustainability and opportunity |
| Year | 2021 |
| Published | |
| Abstract | Public administrations frequently tend to make communities as much sustainable as possible pursuing smart city goals. Solar energy investments represent a valid opportunity to support smart cities and con-sequently the sustainable economic development. The valuation of these projects is not a simple task considering their sequential nature and riskiness. This article proposes a compound Real Options Ap-proach (ROA) as a tool for potential investors to make a conscious R&D renewable investment decision on smart cities. In this sense, we fit the compound ROA with the framework of a typical smart city project in solar energy field. We also provide a case study to make a comparison between classical Expected Net Present Value (ENPV) approach and compound ROA. The results show that ENPV underestimates the project value, whereas compound ROA allows to obtain a more attractive valuation of the project by em -bedding in the analysis the managerial flexibility value. (c) 2021 Elsevier Ltd. All rights reserved. |
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