Research on Evaluation of 3rd Generation Nuclear Power Project Investment Decision Based on Compound Real Option

A two-stage real option model was proposed for the 3rd generation nuclear power project investment evaluation based on compound real option approach. The two stages refer to the technological innovation investment stage and engineering practice stage. The expressions of the option pricing were given in the paper. In addition, the calculation methods for delaying option, abandoning option and expanding option were proposed based on the least squares Monte Carlo simulation in the engineering practice stage. The research on the compound real option pricing model shows that the uncertainty of nuclear power projects can bring flexibility value to the project. Through the quantitative assessment of this value, a numerical basis of the investment decisions can be provided to the nuclear power companies.