A study on the risk management of the CASA-1000 project

Daisuke Sasaki, Mikiyasu Nakayama

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This study aimed at conducting both qualitative and quantitative analyses of the Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000) to obtain risk management information. Consequently, real options were introduced in the form of risk hedges, and we attempted to estimate the hedge cost. Through qualitative analysis we identified the geopolitical risks. We also see that a certain degree of demand risk exists. Therefore, when evaluating project feasibility, it would be better to consider the hedge cost of these risks. Through quantitative analysis, when weighted average cost of capital is ≤10.0% and volatility is below a certain value, a hedge risk based on real options and the introduction of private funds may be possible. Thus, from a risk management viewpoint, it could be suggested that introducing private funds is possible in certain situations.

Original languageEnglish
Pages (from-to)90-96
Number of pages7
JournalHydrological Research Letters
Volume9
Issue number4
DOIs
Publication statusPublished - 2015 Oct 14

Keywords

  • CASA-1000
  • Discounted cash flow
  • Electricity trading
  • Real options analysis
  • Risk management

ASJC Scopus subject areas

  • Water Science and Technology
  • Earth and Planetary Sciences (miscellaneous)

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