Pricing, capacity and financing policies for investment of renewable energy generations.

• Analyze and discuss the company decision-making when banks support to generate renewable energy and demand uncertain. • The repayment ability of the power company depends on sales revenue. • A single newsvendor model is used to determine the optimal renewable energy price, capacity and amount of loan from bank. • Discuss how company responds to the changes of the different situation of energy market. The costs of renewable energy technologies are highly sensitive to financing terms. Power companies are willing to invest in renewable energy generation because of clean and sustainability concerns. However, renewable energy generation poses a potentially high risk, both in generation and consumption. In this study, we consider how a power company makes its decisions if a credit bank willing to lend to it for renewable energy generation. The repayment ability of the company depends on sales revenue under demand uncertainty. We formulate a mathematical model to help the company determine the optimal electricity price, renewable energy capacity, and amount of loan while maximizing the total expected profit. A searching algorithm is proposed to solve the problem. Several numerical examples are provided to illustrate the proposed model and solution approach. Managerially, our study suggests that increasing renewable energy investments through financing institutions requires careful attention to pricing, capacity, and financing policies. [ABSTRACT FROM AUTHOR]