Risk assessment of renewable energy investments: A modified failure mode and effect analysis based on prospect theory and intuitionistic fuzzy AHP

Esra Ilbahar*, Cengiz Kahraman, Selcuk Cebi

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

98 Citations (Scopus)

Abstract

Most countries intending to replace traditional energy sources with renewable energy sources have started to make major investments in this field. Since renewable energy is a sector requiring large amount of investment costs, evaluation of investment risks are extremely important to make the best investment decisions. However, as risk assessment is a process based on expert judgments, the indecisiveness and cognitive bias of the experts should be eliminated. Therefore, a modified Failure Mode and Effect Analysis (FMEA) based on the prospect theory and interval-valued intuitionistic fuzzy Analytic Hierarchy Process (AHP) is introduced to assess the risks in renewable energy investments for the first time. As a result of the proposed risk assessment approach, renewable energy investment risks are prioritized by effectively overcoming the indecisiveness and cognitive bias of experts.

Original languageEnglish
Article number121907
JournalEnergy
Volume239
DOIs
Publication statusPublished - 15 Jan 2022

Bibliographical note

Publisher Copyright:
© 2021 Elsevier Ltd

Keywords

  • Fuzzy sets
  • Investment risks
  • Prospect theory
  • Renewable energy
  • Risk assessment

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