Renewable energy investment under stochastic interest rate with regime-switching volatility
研究了利率及其长期均值和瞬时方差风险对电力行业可再生能源投资的影响，发现利率上升在补贴足够大时对项目价值有非单调效应，并解释了2023年美国海上风电行业的情况。
We examine the impact of the interest rate and its characteristics, such as long run mean and instantaneous variance risk (VR), on renewable energy investments in the power sector. The model has stochastic electricity price, stochastic interest rate, and variance regime switches. We show that an increase in the interest rate, while generally increasing the value of a power project, can have a non-monotone effect if the subsidy is sufficiently large. VR increases (reduces) the project value in the high variance regime, if the subsidy is sufficiently large (low). Under a fixed price contract, value declines and it is optimal to delay investment following an increase in the interest rate. The model helps to explain the US offshore industry experience in 2023.