Daisuke Sasaki, Mikiyasu Nakayama
Received 2015/06/15, Accepted 2015/09/29, Released 2015/11/19

Daisuke Sasaki1), Mikiyasu Nakayama1)

1) Graduate School of Frontier Sciences, The University of Tokyo

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.

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