Research On CTL Project Investment Value Strategic Evaluation Based On System Dynamics And Real Option

With rapid economic development of our country, the contradiction of between oil supply and oil demand is gradually growing and the dependence of oil imports is more and more serious, so our country began to actively explore alternative energy of oil. Thus, more attention has been attracted coal to liquefaction (CTL) technology which is a new coal chemical technology that can produce replacement of the oil. But there is a huge debate about the feasibility of developing CTL project in our country. To a great extent, debate is due to CTL project is complex technology, large-scale investment, device-specific, large future earnings uncertainty, vulnerability to international energy price changes and technology impact of change, which led to the traditional investment decision methods can not reasonably estimated the true value of CTL project, causing the parties have the inconsistencies understanding about the value of CTL project. With DCF method as the representative of the traditional investment decision method ignores flexibility irreversibility, and uncertainty characteristics of CTL investment projects which make it can not scientifically reflect the value of CTL investment project, so led to decision makers make the wrong decisions. In contrast, the real option is an effective method to evaluate the uncertainty, flexibility and irreversibility of project.Based on the above, the paper uses system dynamics theory and real option theory to create a CTL project investment value evaluation model. Real options method and traditional investment decision method is not substitutes, but rather complementary relationship. Real option method evaluate investment value of project not only consider traditional value NPV of the project but also consider the value of flexibility. Firstly the paper uses system dynamics theory to create system dynamics mode of CTL project investment standard value, for analyzing all kinds of influenced factors of CTL project investment standard value and the dynamic relationship among the individual factors and the use the simulation software Vensim get their investment standard value NPV. Comparing with the traditional investment decision method, the simulated NPV more objective and accurate. On this basis, by analyzing the characteristics of CTL project, the paper uses Black-Scholes option pricing model to calculate the flexibility value of CTL project. CTL project investment standard value and flexibility value together constitute the CTL project investment value. Finally, linking the theory with practice, the paper uses CTL project investment value evaluation model to evaluate value of CTL project of A Company, discuss in detail the model application process for CTL project value evaluation, verifying the validity and applicability of the model, offer new method and new idea to CTL project investment value evaluation.