Monte Carlo Simulation approach for economic risk analysis of an emergency energy generation system

On a competitive market gas transportation rates must be as low as possible while recovering capital expenses — Capex and operating and maintenance expenses — Opex at a return rate expected by the project sponsors to recover their investment. To guarantee project feasibility, designers must be concerned not only with technical and direct economic aspects but should also incorporate availability and economic risk analysis to make sure that under operating conditions along the economic life of a project the cash flow will be kept inside predicted values and therefore will not expose project sponsors to undesirable negative Net Present Values — NPV. This paper will present a methodology to address these important aspects with focus on pipeline economics. Pipeline availability study associated with compressor stations failure analysis will be evaluated under Monte Carlo simulation and consequently their impacts on gas pipeline capacity will be economically evaluated. Quantitative economic risk analysis using Monte Carlo simulation is part of the methodology. The adoption of this methodology allows committing more pipeline transmission capacity to a level close to maximum without exposing the Transporter to losses of revenue and contractual penalties. Also prevents designing an oversized and less competitive system with unused spare capacity and consequently higher transportation rates.

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Economic feasibility analysis for co-generation of power by diesel generator at peak time: Monte Carlo simulation approach in a hospital

Acta Scientiarum Technology ◽

10.4025/actascitechnol.v43i1.50965 ◽

2021 ◽

Vol 43 ◽

pp. e50965

Author(s):

Flávio Fraga Vilela ◽

João Victor Soares do Amaral ◽

Gustavo dos Santos Leal ◽

Gabriel Fernandes de Oliveira ◽

José Arnaldo Barra Montevechi ◽

...

Keyword(s):

Monte Carlo Simulation ◽

Monte Carlo ◽

Risk Analysis ◽

Net Present Value ◽

Local Population ◽

Electricity Consumption ◽

Economic Feasibility ◽

Peak Time ◽

Simulation Approach ◽

Diesel Generator

The cost of electricity in hospitals represents a significant portion in its context of operating expenses. Therefore, it is important to constantly think about ways to reduce this cost without losing the quality and reliability required for hospital care activity. It is well known, that reducing electricity consumption has a direct impact on the effective management of hospital cash flow, so it is imperative to rationalize this resource. In this context, the objective of this paper focuses on analyzing the economic feasibility of purchasing and using a diesel generator to find the peak hour demand and verifying financial uncertainty by applying a Monte Carlo simulation approach to risk analysis. The target hospital of this research is located in southeastern of Brazil and it is part of a foundation that covers educational and assistance activities, serving the local population and thousands of patients during the year. Finally, the economic risk analysis applied through the Monte Carlo simulation found that the acquisition of the aforementioned diesel generator has a very high probability of viability. Therefore, it is verified that the investment is viable and attractive from the hospital's economic and operational point of view, while the Net Present Value remains positive, with the expected value of R$ 868,358.84, considering the risk and uncertainty analysis having an attractive internal returning rate of 78.76% per year.

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