Critical Factors Impacting Investment Valuations of U.S. Power Assets

Abstract

The re-invention of the U.S. power industry in presenting financiers and investors with apparently contradictory and unpredictable asset valuation factors. The authors explore the issues underlying valuations and conclude that three fundamental factors-structural change in the marketplace, the new tactics employed by a great number of market players and innovative transaction structuring-are critical to formulating reliable valuations. In a discussion that links player behavior and transaction analysis with sophisticated additions to financial modeling such as gaming theory, they present the four principles that drive power asset value in today's power environment within their updated valuation process.