scholarly journals Analysis of the incremental cost method and the net present value method applied in the energy sector

2018 ◽  
Vol 49 ◽  
pp. 00075
Author(s):  
Tadeusz Noch ◽  
Zdzisław Kusto
Keyword(s):  
Incremental Cost ◽  
Net Present Value ◽  
Heating System ◽  
Heat Pumps ◽  
Third Party ◽  
Bank Loan ◽  
Heat Sources ◽  
Present Value ◽  
Optimal Heating ◽  
Selection Of

The study characterizes hybrid sources applied in the power industry, created with the use of unconventional energy sources. An example of cooperation of heat pumps and conventional sources was used. The article notes the technological progress also concerning heat exchangers. To calculate economic efficiency, the MKN Incremental Cost Method and the NPV Net Present Value method were used. The article refers to the calculation of investment outlays and operating costs and repayment of a bank loan for individual heat sources. The possibility of assuming separate values of discount rates for the installation of heat pumps and hybrid boilers as well as the comparative installation were shown. Also included is the possibility of adopting a separate discount rate for income derived from savings associated with the purchase of fuel and energy and the sale of heat to a third party consumer. The analysis covered the MKN Incremental Cost Method and the NPV Net Present Value method. The computational algorithm contains costs of hybrid installation with heat pumps and costs of a comparative conventional installation in a version without revenues and with revenues from the sale of heat. Presented is the method of calculating the net present value in the next year of operation, discounting to the zero year and observing in which year the positive value will be obtained. Economic calculations, according to popular views, are the basis for choosing the optimal heating variant. Ecological effects and social demand may provide additional separate criteria in the selection of the heating system.

scholarly journals Assessment of heat pump efficiency for microclimate formation in a greenhouse

2018 ◽  
Vol 245 ◽  
pp. 06017 ◽  
Author(s):  
Polina Tretyakova
Keyword(s):  
Heat Pump ◽  
Thermal Energy ◽  
Closed Loop ◽  
Net Present Value ◽  
Cooling System ◽  
Heating System ◽  
Heat Pumps ◽  
Pump Efficiency ◽  
Present Value ◽  
The City

The article provides information about the ring heating system comprising heat pumps. The system is designed as a closed loop, which includes a pump, a thermal energy battery, and a heat pump. The evaporator is connected to the system of water intake from the well and the cooling system of air inside the greenhouse. The resulting thermal energy is consumed for the needs of heating and watering the greenhouse complex. We present a method for determining the dependence of the net present value on the temperatures in supply and return pipelines and temperature of low-potential heat source. The main economic indicators of the implementation of this system on a typical block greenhouse in the city of Tyumen are determined.

Methodology for Optimizing the Heating Capacity of Heat-Source Equipments in Double-Energy Radiator Heating System

2012 ◽  
Vol 170-173 ◽  
pp. 2743-2746
Author(s):  
Feng Li ◽  
Zhe Tian ◽  
Qiang Fu ◽  
Qian Ru Li
Keyword(s):  
Heat Source ◽  
Operating Cost ◽  
Heating System ◽  
Heat Pumps ◽  
Heating Period ◽  
Heating Performance ◽  
Heating Capacity ◽  
Minimum Operating ◽  
Optimal Heating ◽  
Sewage Source

The double-energy heating system studied in this paper is consisted of centrifugal sewage-source heat pumps and gas boilers. As the grade and price of the two kinds of energy are different, the heating capacity of the heat-source equipments would have a directly impact on the energy consumption and operating cost of the system. In order to obtain the optimal heating capacity of the heat-source equipments, the calculation models on equipments utilized in this system are firstly established, and then different combination patterns of the heat-source equipments were analyzed on the basis of minimum operating cost, finally, the optimal heating capacity of the heat-source equipments and the heating performance factor (HPF) of the system in different outdoor temperatures were obtained, the results indicate the average HPF of the system in the heating period is 3.57. The method and results provide reference for scientific design of the double-energy heating system.

scholarly journals The Energy, Economic and Environmental Efficiency of a PV Installation Cooperating with a Heat Pumpin the Central Part of Europe. Case study

2020 ◽  
Author(s):  
Sylwia Wciślik ◽  
Dagmara Kotrys-Działak
Keyword(s):  
Net Present Value ◽  
Heating System ◽  
Ecological Effect ◽  
Solar Irradiation ◽  
Rate Of Return ◽  
Economic Potential ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Central Heating

The paper addresses an analysis of the efficiency and profitability of the operation of a photovoltaic installation located in the geometric centre of Europe (near Białystok, Poland), where the intensity of solar irradiation is not too high compared to other European countries. It is calculated that in that place average solar irradiation being lower even by approx. 26 kWh than that for the whole Europe, which results in a 26% drop in the economic potential of the utilisation of solar energy for its conversion. A case study and an economic analysis show that without minimum funding amounting to 50% of the investment costs paid for the modernisation of a central heating system assisted by PV cells, the time of return of pecuniary expenditures exceeds 7 years. Apart from the Simple Pay-Back Time SPBT, discount indicators determined in the paper also include the net present value NPV and the internal rate of return IRR. Moreover, a direct ecological effect has been determined for such an investment.

scholarly journals Computing Capital Budgeting for Banking Sector

2021 ◽  
Vol 58 (2) ◽  
pp. 6502-6508
Author(s):  
Sushain Koul, Dr. Parag Ravikant Kaveri
Keyword(s):  
Financial Management ◽  
Banking Sector ◽  
Net Present Value ◽  
Average Rate ◽  
Capital Budgeting ◽  
Rate Of Return ◽  
Present Value ◽  
Banking Organization ◽  
Long Run ◽  
Selection Of

Perhaps the most difficult hurdle which companies come across is the selection of the project which is beneficial to the organization in the long-run and also increases the present value of the shareholders. This is where Capital Budgeting comes into play. Capital Budgeting is one of the most important areas of financial management. This paper gives an overview of what capital budgeting is, what different types of techniques comes under capital budgeting and how to represent capital budgeting technique algorithmically. In this paper we also throw some light on what the results of various capital budgeting techniques will be if any banking organization follows these techniques and compare those results. These techniques namely as Payback Period (PP), Average Rate of Return (ARR), Net Present Value (NPV), Profitability Index (PI) and Internal Rate of Return (IRR) are used to evaluate projects.

scholarly journals Energy saving and optimum insulation thicknesses in building upgrading

2018 ◽  
Vol 240 ◽  
pp. 04007
Author(s):  
Mateusz Orzechowski ◽  
Tadeusz Orzechowski
Keyword(s):  
Renewable Energy ◽  
Renewable Energy Sources ◽  
Heat Pumps ◽  
Hot Water ◽  
Bank Loan ◽  
Existing Buildings ◽  
Historical Buildings ◽  
Renewable Energy Consumption ◽  
Insulation Thickness ◽  
Selection Of

Heat pumps are classified as ecologically friendly heat-generating devices and are one of the most suitable solutions for improving energy efficiency in buildings. Systems based on such solutions replace conventional sources very well. Household sector is one of the major energy consumers, where energy is used mainly for space heating and providing hot water. To increase renewable energy consumption levels, it is necessary to take decisive actions aimed at energy modernization of existing buildings. Particular emphasis must be put on the use of renewable energy sources. A wide selection of insulation materials is available on the market, however proper technologies are required to apply those materials, especially for historical buildings. Therefore, while planning investment, a question must be answered what type of material should be used, and what costs that will generate. The paper presents simple methodology for calculating the optimal insulation thickness so that the costs of the thermo-modernization would be covered by savings in heating expenses, when bank loan for the project is available at fixed interest rate.

NPV modelling for the selection of value-creating biosimilar development candidates

2013 ◽  
Vol 19 (1) ◽  
Author(s):  
Klaus Nickisch ◽  
Kerstin M Bode-Greuel
Keyword(s):  
Small Molecule ◽  
Net Present Value ◽  
Business Risk ◽  
Present Value ◽  
Challenges And Opportunities ◽  
Selection Of

The purpose of this study was to apply net present value (NPV) modelling to evaluate the financial attractiveness and business risk of different categories of biosimilars. Challenges and opportunities of biosimilars are compared with those of standard small molecule generics. Minimum peak sales levels are required to create financial value were determined in order to derive recommendations for the selection of commercially rewarding biosimilar development candidates.

scholarly journals The Use Of Capital Budgeting Techniques In Businesses: A Perspective From The Western Cape

2011 ◽  
Vol 25 (4) ◽  
Author(s):  
Pradeep Brijlal ◽  
Lemay Quesada
Keyword(s):  
Net Present Value ◽  
Capital Budgeting ◽  
Payback Period ◽  
Bank Loan ◽  
Rate Of Return ◽  
Western Cape ◽  
Internal Rate Of Return ◽  
Font Size ◽  
Present Value ◽  
Internal Rate

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; tab-stops: 1.0in;"><span style="font-family: Times New Roman;"><span style="font-size: 10pt; mso-fareast-font-family: Batang;" lang="EN-ZA">Capital budgeting is one of the most important areas of financial management. There are several techniques commonly used to evaluate capital budgeting projects</span><span style="font-size: 10pt;" lang="EN-ZA"> </span><span style="font-size: 10pt; mso-fareast-font-family: Batang;" lang="EN-ZA">namely the payback period, accounting rate of return, present value and internal rate of return and profitability index</span><span style="font-size: 10pt;" lang="EN-ZA">.</span><span style="font-size: 10pt; mso-fareast-font-family: Batang;" lang="EN-ZA"> Recent studies highlight that financial managers worldwide favor methods such as the internal rate of return (IRR) or non-discounted payback period (PP) models over the net present value (NPV), which is the model academics consider superior.</span><span style="font-size: 10pt;" lang="EN-ZA"> In particular this research focused on small, medium and large businesses and investigated a number of variables and associations relating to capital budgeting practices in businesses in the Western Cape province of South Africa. The results revealed that payback period, followed by net present value, appears to be the most used method across the different sizes and sectors of business. It was also found that 64% of businesses surveyed used only one technique, while 32% of the respondents used between two to three different types of techniques to evaluate capital budgeting decisions. The findings show that the more complicated methods such as IRR and NPV are most favored by the large businesses as compared to the small businesses. The majority of the respondents believed that project definition was the most important stage in the capital budgeting process. Implementation stage appeared to be the most difficult stage for the manufacturing sector whereas Project definition, Analysis and selection and Implementation were generally rated as being the difficult stages by the retail sector. Project definition and Analysis and selection </span><span style="font-size: 10pt; mso-ansi-language: EN-GB;" lang="EN-GB">were found to be the most difficult stages by the service sector.</span><span style="font-size: 10pt;" lang="EN-ZA"> Most businesses used the cost of bank loan as a basis in capital budgeting and</span><span style="font-size: 10pt; mso-ansi-language: EN-GB;" lang="EN-GB"> more than two thirds of respondents used non-quantitative techniques to consider risk when making a decision on investing in fixed assets. </span></span><span style="font-size: 10pt;" lang="EN-ZA"></span></p>

scholarly journals SELECTION OF ALTERNATIVES FOR OIL FIELD DEVELOPMENT BY GENETIC ALGORITHMS

2002 ◽  
Vol 1 (2) ◽  
Author(s):  
Yvan J. Túpac ◽  
Marley Maria B.R. Vellasco ◽  
Marco Aurélio C. Pacheco
Keyword(s):  
Genetic Algorithm ◽  
Net Present Value ◽  
Oil Field ◽  
Oil Reservoir ◽  
Present Value ◽  
Field Development ◽  
Oil Field Development ◽  
The One ◽  
Genetic Algorithm Model ◽  
Selection Of

This paper presents a Genetic Algorithm application for selecting the best alternative for oil field development under certainty. The alternatives in this study are related to the arrangement of wells in a known and delimited oil reservoir and serve as a basis for calculating the net present value, which is used to assess the optimization process: the optimal alternative is the one that maximizes the Net Present Value of the field. The results obtained have revealed that the Genetic Algorithm model was able to find good alternatives for the oil field development, achieving good results for the Net Present Value.

scholarly journals Economic Calculus Qua an Instrument to Support Sustainable Development under Increasing Risk

2021 ◽  
Vol 14 (1) ◽  
pp. 15
Author(s):  
Grzegorz Drozdowski
Keyword(s):  
Sustainable Development ◽  
High Risk ◽  
Net Present Value ◽  
Investment Decisions ◽  
Economic Calculation ◽  
Present Value ◽  
Financial Account ◽  
Increasing Risk ◽  
A Company ◽  
Selection Of

Investment decisions in the field of sustainable development should be taken based on an economic calculation, taking into account the analysis of a diverse economic environment. The economic calculus of an enterprise is treated as a kind of way of thinking about the rationality of decisions made by an entrepreneur. In the case of sustainable development, the economic calculus serves as an instrument to support the selection of the investment measure. The result of the economic calculus is based on various types of economic parameters, which are subject to frequent changes and high risk. A risk-based financial account may be of little use in the context of the unpredictability of the forecasted situations. In the article, I attempted to determine the importance of a variable interest rate in the economic calculus of a company as an instrument to support sustainable development. For this purpose, I modified the Net Present Value (NPV) meter, which contains actual (variable) discount rates.

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