Abstract
The opening chapter explores the logic and intuition that capital budgeting employs in evaluating energy investments. It examines how these approaches often lead managers to err in committing to sub-optimal investments, when minimising risks takes precedence over adapting in order to profit from uncertainty. To reframe managerial decision-making, we redefine the energy business and link academic works to inform managerial actions under market and technological uncertainties. An overview of the book is presented, showing how the chapters are organised around thematic clusters.
This is a preview of subscription content, log in via an institution to check access.
References
Amram, M., & Kulatilaka, N. (2009). The invisible green hand: How individual decisions and markets can reduce greenhouse gas emissions. California Management Review, 51(2), 195–218.
Arnold, G. C., & Hatzopoulos, P. D. (2000). The theory-practice gap in capital budgeting: Evidence from United Kingdom. Journal of Business Finance & Accounting, 27(5–6), 603–626.
Arrow, K. J. (1964). The role of securities in the optimal allocation of risk bearing. Review of Economic Studies, 31(2), 91–96.
Awerbuch, S. (2006). Portfolio based electricity generation planning: Policy implications for renewable and energy security. Mitigation and Adaptation Strategies for Global Change, 11, 693–710.
Bar-Lev, D., & Katz, S. (1976). A portfolio approach to fossil fuel procurement in the electric utility industry. Journal of Finance, 31(3), 933–947.
Bogue, M. C., & Roll, R. (1974). Capital budgeting of risky projects with ‘imperfect’ markets for physical capital. Journal of Finance, 29(2), 601–613.
Botterud, A., & Korpås, M. (2007). A stochastic dynamic model for optimal timing of investments in new generation capacity in restructured power systems. Electrical Power & Energy Systems, 29, 163–174.
Chediak, M., & Martin, C. (2015, November 5). Say good bye to solar power subsidies. Bloomberg Businessweek.
Copeland, T., & Tufano, P. (2004, March 1–12). A real-world way to manage real options. Harvard Business Review.
The Conversation (2016, March 2). When will rooftop solar be cheaper than the grid?. US News.
Cox, J. C., Ross, S. A., & Rubinstein, M. (1979). Option pricing: A simplified approach. Journal of Financial Economics, 7(3), 229–263.
Dixit, A. K., & Nalebuff, B. (1991). Thinking strategically: The competitive edge in business, politics and everyday life. New York: Norton.
Driouchi, T., & Bennett, D. (2011). Real options in multinational decision-making: Managerial awareness and risk implications. Journal of World Business, 46, 205–219.
Driouchi, T., & Bennett, D. J. (2012). Real options in management and organisational strategy: A review of decision-making and performance implications. International Journal of Management Reviews, 14(1), 39–62.
Eliasson, G., & Taymaz, E. (2002). Institutions, entrepreneurship, economic flexibility and growth—Experiments on an evolutionary micro-to-macro model. In U. Cantner (Ed.), Economic evolution, learning and complexity. Berlin: Springer.
Enzensberger, N., Wietschel, M., & Rentz, O. (2002). Policy instruments fostering wind energy projects—A multi perspective evaluation approach. Energy Policy, 30(9), 793–801.
Gale, S. F. (2011). Prepare for the unexpected: Investment planning in asset intensive industries. London: Economist Intelligence Unit.
Gordon, M., & Shapiro, E. (1956). Capital equipment analysis: The required rate of profit. Management Science, 3, 102–110.
Graham, J. R., & Harvey, H. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2–3), 187–243.
Hassett, K., & Metcalf, G. (1999). Do consumers discount the future correctly? Energy Policy, 21(6), 710–716.
Helman, C. (2011, September 7). In Iraq oil deal, Tony Hayward and Nat Rothschild are now partners with Sinopec. New York: Forbes.
Humphreys, H. B., & McClain, K. T. (1998). Reducing the impacts of energy price volatility through dynamic portfolio selection. The Energy Journal, 19(3), 107–131.
Jevons, W. S. (1865). The coal question: An inquiry concerning the progress of the nation, and the probable exhaustion of coal mines. London: Macmillan.
Johnston, A., Kavali, A., & Neuhoff, K. (2008). Take-or-pay contracts for renewable deployment. Energy Policy, 36(7), 2481–2503.
Kittel, C., & Kroemer, H. (1980). Thermal Physics. London: Macmillan.
Markowitz, H. (1952). Portfolio selection. Journal of Finance, 7(1), 77–91.
Markowitz, H. M. (1991). Portfolio selection: Efficient diversification of investments (2nd ed.). Oxford: Blackwell.
Näsäkkälä, E., & Fleten, S. E. (2005). Flexibility and technology choice in gas-fired power plant investments. Review of Financial Economics, 14, 371–393.
Pinches, G. E. (1982). Myopia, capital budgeting and decision-making. Financial Management, 11(3), 6–19.
Robinson, J. (2004). Squaring the circle? Some thoughts on the idea of sustainable development. Ecological Economics, 48(4), 369–384.
Roques, F., Hiroux, C., & Saguan, M. (2010). Optimal wind power deployment in Europe—A portfolio approach. Energy Policy, 38, 3245–3256.
Roques, F. A., Newberry, D. M., & Nuttal, W. J. (2008). Fuel mix diversification incentives in liberalized electricity markets: A mean-variance portfolio theory approach. Energy Economics, 30(4), 1831–1849.
Rumelt, R. P. (2011). Good strategy, bad strategy: The difference and why it matters. London: Profile Books.
Sharpe, W. F. (2007). Investors and markets: Portfolio choices, asset prices and investment advice. Princeton, NJ: Princeton University Press.
Smit, H. J. T., & Trigeorgis, L. (2004). Strategic investment: Real options and games. Princeton, NJ: Princeton University Press.
Stacey, K. (2016, March 2). ‘High risk gamble’ sours for Genel Chief as reserves disappoint. Financial Times.
Stenzel, T., & Frenzel, A. (2008). Regulating technological change—The strategic reactions of utility companies towards subsidy policies in the German, Spanish and UK electricity markets. Energy Policy, 36, 2645–2657.
Stigler, G. J. (1971). The theory of economic regulation. The Bell Journal of Economics and Management Science, 2(1), 3–21.
Toke, D., Breukers, S., & Wolsink, M. (2008). Wind power deployment outcomes: How can we account for the differences? Renewable and Sustainable Energy Reviews, 12(4), 1129–1147.
Trigeorgis, L. (1997). Real options. London: Massachusetts Institute of Technology Press, second printing.
Tsoutsos, T. D., & Stamboulis, Y. A. (2005). The sustainable diffusion of renewable energy technologies as an example of an innovation-focused policy. Technovation, 25, 753–761.
Walsh, P. R. (2012). Innovation nirvana or innovation wasteland? Identifying commercialisation strategies for small and medium renewable energy enterprises. Technovation, 32, 32–42.
Author information
Authors and Affiliations
Corresponding author
Copyright information
© 2017 The Author(s)
About this chapter
Cite this chapter
Barcelona, R.G. (2017). Decision-Framing. In: Energy Investments. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-59139-5_1
Download citation
DOI: https://doi.org/10.1057/978-1-137-59139-5_1
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-137-59138-8
Online ISBN: 978-1-137-59139-5
eBook Packages: Business and ManagementBusiness and Management (R0)