Economic evaluation and risk measurement for generation investment based on interval numbers

The restructuring of power industry has increased uncertain factors for generation investment projects, and hence various risks. In particular, problems of investment decision-making arise from the random fluctuations of net cash flow and discount rate. Interval mathematics is introduced to economic evaluation of projects in this paper, establishing economic evaluation models based on interval net present value and interval internal rate of return respectively. These two models solve the problems of the fluctuations in net cash flow and discount rate to some extent Moreover, since uncertainty exists as one of the possible evaluation results according to the criteria in economic evaluation models, corresponding risk measurement models, based on probability theory in the paper, are established to provide investors with more reliable decision support.