Valuing flexibility in demand-side response: A real options approach

Valuing Operational Flexibility in Manufacturing Systems Using Real Options

In this paper, we look across the manufacturing enterprise to consider opportunities to improve value by switching among suppliers, plants, and markets. We extend this model to address the reality that these switches may often take a period of transition time, rather than occur instantaneously. We value the real options associated with this flexible approach using both a lattice and Monte Carlo...

The Value of IS-Enabled Flexibility in Electricity Demand - a Real Options Approach

As the transition to renewable energy sources progresses, their integration makes electricity production increasingly fluctuating, also causing amplified volatility in electricity prices on energy markets. To contribute to power grid stability, utilities need to balance volatile supply through shifting demand. This measure of demand side management creates flexibility, being enabled as the inte...

A Real Options Approach to Valuing and Hedging Cropland Obligations

Integrating real and financial options in demand-side electricity contracts

In a competitive electricity market traditional demand side management options offering customers curtailable service at reduced rates are replaced by voluntary customer responses to electricity spot prices. In this new environment, customers wishing to ensure a fixed electricity price while taking advantage of their flexibility to curtail loads can do so by purchasing a forward electricity con...

Valuing Innovative 4G (LTE) Technology with Real Options Approach

This paper contains the analysis of pitfalls related with innovationbased investments valuation. Being long-term projects with high uncertainty, innovation-based investments suffer from different types of errors if traditional discounted cash flow methodology is used for their valuation. The real options methodologyis being used for a long time as an alternative view at the evaluation of such p...

A Real Options-based Framework for Valuing

In recent years, considerable research has focused on understanding the value derived from market-based assets such as brands and consumer relationships with comparatively little attention being directed at business relationships. We address this gap in the literature by proposing a real options-based framework for valuing business relationships. The framework provides new insights into the rol...