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Affective Influences on Risk-Return Perceptions of Renewable Energy Investors: An Experimental Analysis of Differences between Financial and Strategic Investors

abstract While renewable energies are a relatively young market with risk and uncertainties, they also exhibit attractive growth prospects for financial and strategic investors. Confronted with recent turmoil in the financial system, large institutional investors with a long-term horizon are looking for alternative investment opportunities. Beyond real estate investments, the financing of renewable energy projects is increasingly seen as an attractive asset class by institutional investors. A neglected dimension that heavily influences investments is energy policy. Recent research suggests that investment decision-making is subject to influence beyond risk and return, such as affect.

The Novelty of the proposed research project is twofold. We

(a) compare affective influences between strategic and financial investors, and
(b) use an innovative experimental approach combined with a final reflection of the results in focus groups.

The main research questions of this project are
• What is the role of affective influences on risk-return perceptions of investors in renewable energy projects?
• How do these perceptions differ between financial and strategic investors in renewable energy projects?
• What are the implications for designing effective energy policies in Switzerland?

The final project report is now available online:
http://www.bfe.admin.ch/forschungewg/02544/02810/index.html? lang=en&dossier_id=06122
   
keywords Investment Decision, Bounded Rationality, Asset Allocation, Energy Policy
   
homepage http://goodenergies.iwoe.unisg.ch
partner
type applied research project
status completed
start of project 2012
end of project 2013
principal Swiss Federal Office of Energy
additional informations
topics Energy Economics, Energy Policy, Energy Finance, Technology and Innovation Management, Behavioral Finance, Decision Sciences
methods Focus Groups, Interviews, Experimental Methods
contact Rolf Wüstenhagen