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ABSTRACT
Engineer–procure–construct (EPC) projects in the renewable energy field have attracted considerable attention and have become a hot spot of investment because of their management advantages and supportive policies. However, the investment value of EPC projects is difficult to evaluate when considering the uncertainty factors and non-preciseness of input data, which are often neglected by traditional valuation methodology. Therefore, a fuzzy real option pricing model, which can do away with the vagueness of project data, could be a useful approach in evaluating the investment value of EPC projects. Based on the Black–Scholes formula and fuzzy theory, the authors propose a fuzzy real option pricing model that introduces a fuzzy number (T-number) to describe uncertainty factors, and the optimal investment decision criterion is also described to calculate the optimal investment timing. Lastly, a data set of a real EPC project as an illustrative example of valuation is presented, and the results based on the proposed model are satisfactory.