Research On Investment Decisionmaking Of Geothermal Energy Heating Projects Based On The Theory Of Real Options

Geothermal energy is the natural heat energy emitted from the interior of the earth’s crust.This energy comes from lava and radioactive substances in the earth’s interior,and can be conducted to the ground through natural fissures,artificial drilling,etc.people can use geothermal energy to carry out economic activities such as power generation,heating,and breeding.Geothermal energy has the characteristics of green,environmental protection and sustainability,which is an important form of energy to achieve the goal of "30 60 carbon peaking and carbon neutrality" in my country.For geothermal energy heating projects,the traditional method of investment decision-making is the Discounted Cash Flow Method.By estimating the cash flow of the project’s entire life cycle and discounting it to the current period,it is judged whether the project investment meets the requirements of enterprise income.However,this method cannot fully reflect the value brought by the flexible management and the impact and benefits brought by the project’s uncertain boundary conditions during the operation of the enterprise.Real option theory is an interdisciplinary research method proposed by economists in the 1980 s to introduce option theory in the financial field into real investment.In this paper,the theory of real options is introduced into the research of geothermal energy heating projects,and the Black-Scholes Option Pricing Model is used to study the flexible management value of enterprises in the process of operation.And the Monte Carlo method is used to study the influence of the uncertainty boundary conditions of the geothermal energy heating project on the net present value of the project.The sources of these two values are different,and the value of the uncertainty boundary condition is derived from the value given by the market itself.The value of soft management is the management value created by business operators by strengthening the management of uncertainty,so it needs to be discussed separately.Through the exploration of two values,this paper demonstrates the potential option value of the geothermal energy heating project,which further improves the scientificity of the investment decision of the geothermal energy heating project.This paper first uses the discounted cash flow method to build a traditional investment decision-making model dedicated to geothermal energy heating projects,which lays the foundation for the introduction of real options theory.By combining the investment characteristics of geothermal energy heating projects,on the basis of the traditional investment decision-making model,a real option pricing model based on Black-Scholes option pricing model and Monte Carlo method is established.And through specific cases,it studies the investment decision-making pricing model and method of geothermal energy heating project based on real option theory.Through the research,it is found that the value of soft management in the business process has a greater impact on the final results of the model,and is an indispensable key factor in the investment decision-making process.Heating enterprises and local governments can apply the research model results of this paper to judge the potential option value of the project according to the actual situation of their own projects,Heating companies can scientifically judge project investment returns,and finally provide help for heating enterprises to scientifically judge project investment returns and local governments to attract investment.