The application of grey systems theory in hydropower business valuation

First, the author puts forward in this paper that future income of a hydropower enterprise shall be predicted by starting with reservoir runoff (traditionally, with electricity generated firstly) when future electricity generated is incomparable with past electricity generated because of changes of factors affecting future income of a hydropower enterprise such as hydrological system, number of generating sets and Reservoir Deployment Rules, etc. Secondly, he introduces major methods for hydrological prediction and advantages of grey systems theory in hydrological prediction. Thirdly, he puts forward the opinion that stability of the hydrological system should be judged first when evaluating a hydropower enterprise due to obvious changes in water cycle of some basins as a result of joint influence of human activities and global climate changes. Then on the basis of relevant grey systems theory, he puts forward the method of grey relative difference, analyzes and judges condition of the hydrological system in Manwan power plant Area of Lantsang valley with this method by taking average reservoir runoff of January from 1953 to 2000 as a sequence of raw data and concludes that hydrological system in this area is stable.