Renewable Energy Power Generation R&D Investment Under Incomplete Information

Abstract

The incomplete information of the future prospects of new renewable energy power generation technology, which is contained in external random events regarding policy, technology and market, together with the technical uncertainty of R&D success will affect the investment decision of renewable electric power enterprises. The critical beliefs, which are necessary for single enterprise and duopoly renewable energy power enterprises for their investment in new power generation technologies, are obtained respectively by taking into consideration the incomplete information, technical uncertainty and competitiveness and construction of decision-making model based on real options, and the equilibrium type that may generate in market competition of the two symmetric enterprises and the generation conditions are further analyzed in this paper. The result indicated that the winnertake- all privilege granted to the leading innovator and the technical uncertainty to innovative technology by policy will make the following enterprises react in two ways, investment delay or investment advancing. The faster signal arrives, the higher the signal quality is and the higher is the investment belief of the following investor. Moreover, the R&D competition equilibrium among enterprises can result in preemptive equilibrium and simultaneous investment equilibrium.