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The Use of Real Options in Assessing the Development of Small Energy in Russia

Author

Listed:
  • Natalia Morozko

    (Department of Corporate Finance and Corporate Governance, Financial University under the Government of Russian Federation, Russia,)

  • Nina Morozko

    (Department of Financial Markets and Banks, Financial University under the Government of Russian Federation, Russia.)

  • Valentina Didenko

    (Department of Financial Markets and Banks, Financial University under the Government of Russian Federation, Russia.)

Abstract

The spatial development of small energy in Russia at the present stage solves the problems of energy supply in remote and inaccessible regions of the country, which determines the relevance of the issues addressed. The aim of the study is to assess the development of small energy in the country based on the use of economic and mathematical methods. The study was conducted using long-term strategic planning tools, real options, and a binomial model. Based on PEST analysis, macroeconomic factors affecting the development of small energy have been identified. To assess the development of small energy, it is necessary to take into account many risks and uncertainty, which necessitates the use of flexible management decisions using the real options method. It was revealed that with the uncertainty of demand, but the possibility of growth in demand in the future, as is the case in small energy, it is advisable to use a real option - CALL. A practical example of quantifying the value of a real CALL option is considered.

Suggested Citation

  • Natalia Morozko & Nina Morozko & Valentina Didenko, 2020. "The Use of Real Options in Assessing the Development of Small Energy in Russia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 205-211.
    • Handle: RePEc:eco:journ2:2020-04-25
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    References listed on IDEAS

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    Cited by:

    1. Mikhail Lvovitch Dorofeev, 2021. "Does Income Inequality Create Excessive Threats to the Sustainable Development of Russia? Evidence from Intercountry Comparisons via Analysis of Inequality Heatmaps," Economies, MDPI, vol. 9(4), pages 1-17, November.

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    More about this item

    Keywords

    small energy; real options; binomial model;
    All these keywords.

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • G3 - Financial Economics - - Corporate Finance and Governance
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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