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La valorisation du projet nucléaire EPR par la méthode des options réelles

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  • Anne Épaulard
  • Stéphane Gallon

Abstract

Real options theory makes it possible to cost investments which offer flexibility but whose returns are uncertain, such as the construction in 2000 of an EPR prototype; this prototype will enable the European pressurised-water reactor (EPR) to be used to renew EDF's nuclear power stations in 2020 (flexibility) but its economic worth will then depend on the cost of the competing gas-fired power plants (uncertain return). Options theory shows that investing in EPR technology in 2000 provides sufficient flexibility in 2020 to be considered cost-effective, even though use of EPRs is unlikely by that date. The investment made in 2000 to develop EPR technology therefore actually plays the part of an option or, in other words, insurance (against the risk of high gas prices).

Suggested Citation

  • Anne Épaulard & Stéphane Gallon, 2001. "La valorisation du projet nucléaire EPR par la méthode des options réelles," Economie & Prévision, La Documentation Française, vol. 149(3), pages 29-50.
  • Handle: RePEc:cai:ecoldc:ecop_149_0029
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    References listed on IDEAS

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    1. Brennan, Michael J & Schwartz, Eduardo S, 1985. "Evaluating Natural Resource Investments," The Journal of Business, University of Chicago Press, vol. 58(2), pages 135-157, April.
    2. Robert McDonald & Daniel Siegel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, Oxford University Press, vol. 101(4), pages 707-727.
    3. Bar-Ilan, Avner & Strange, William C, 1996. "Investment Lags," American Economic Review, American Economic Association, vol. 86(3), pages 610-622, June.
    4. Anne Épaulard & Stéphane Gallon, 2001. "La valorisation du projet nucléaire EPR par la méthode des options réelles," Economie & Prévision, La Documentation Française, pages 29-50.
    5. James L. Paddock & Daniel R. Siegel & James L. Smith, 1988. "Option Valuation of Claims on Real Assets: The Case of Offshore Petroleum Leases," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 479-508.
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    Cited by:

    1. Hervé-Mignucci, Morgan, 2011. "Rôle du signal prix du carbone sur les décisions d'investissement des entreprises," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/8200 edited by Keppler, Jan Horst, March.
    2. Jay Choi & Marcel Thum, 2009. "The economics of politically-connected firms," International Tax and Public Finance, Springer;International Institute of Public Finance, pages 605-620.
    3. Anne Épaulard & Stéphane Gallon, 2001. "La valorisation du projet nucléaire EPR par la méthode des options réelles," Economie & Prévision, La Documentation Française, pages 29-50.
    4. Anne Épaulard & Stéphane Gallon, 2001. "La valorisation du projet nucléaire EPR par la méthode des options réelles," Economie & Prévision, La Documentation Française, pages 29-50.

    More about this item

    Keywords

    Real options; nuclear power; electricity; gas price; investment; flexibility;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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