A Real Options Approach to Hybrid Electric Vehicle Architecture Design for Flexibility

2016 ◽  
Author(s):  
Namwoo Kang ◽  
Alparslan Emrah Bayrak ◽  
Panos Y. Papalambros
Keyword(s):  
Real Options ◽  
Hybrid Electric Vehicle ◽  
Net Present Value ◽  
Price Volatility ◽  
Real Options Theory ◽  
Real Options Approach ◽  
Hybrid Electric ◽  
Gas Price ◽  
The Impact ◽  
Over Time

Manufacturers launch new product models at various time increments to meet changing market requirements over time. At each design period, product design and price may change. While price decisions can be made at product launching time, redesign decisions must be made in advance. Real options theory addresses such time gap decisions. This paper presents a real options approach with a binomial lattice model to determine optimal design and price decisions for hybrid electric vehicles (HEVs) that maximize expanded net present value of profit under gas price uncertainty over time. Results confirm that we can obtain changing vehicle attributes by changing gear ratios rather than the architectures themselves due to high cost of redesigning. A parametric study examines the impact of gas price volatility on option decisions and shows that larger volatility of gas price causes the change option to be selected more frequently.

scholarly journals A Stochastic Optimal Control Approach for Power Management in Plug-In Hybrid Electric Vehicles

2008 ◽  
Author(s):  
Scott J. Moura ◽  
Hosam K. Fathy ◽  
Duncan S. Callaway ◽  
Jeffrey L. Stein
Keyword(s):  
Power Management ◽  
Hybrid Electric Vehicle ◽  
Single Mode ◽  
Stochastic Dynamic ◽  
Electricity Pricing ◽  
Control Approach ◽  
Potential Benefits ◽  
Hybrid Electric ◽  
The Impact ◽  
Charge Depletion

This paper examines the problem of optimally splitting driver power demand among the different actuators (i.e., the engine and electric machines) in a plug-in hybrid electric vehicle (PHEV). Existing studies focus mostly on optimizing PHEV power management for fuel economy, subject to charge sustenance constraints, over individual drive cycles. This paper adds three original contributions to this literature. First, it uses stochastic dynamic programming to optimize PHEV power management over a distribution of drive cycles, rather than a single cycle. Second, it explicitly trades off fuel and electricity usage in a PHEV, thereby systematically exploring the potential benefits of controlled charge depletion over aggressive charge depletion followed by charge sustenance. Finally, it examines the impact of variations in relative fuel-to-electricity pricing on optimal PHEV power management. The paper focuses on a single-mode powersplit PHEV configuration for mid-size sedans, but its approach is extendible to other configurations and sizes as well.

scholarly journals Modeling and energy management strategy research of a power-split hybrid electric vehicle

2020 ◽  
Vol 12 (10) ◽  
pp. 168781402096262
Author(s):  
Yupeng Zou ◽  
Ruchen Huang ◽  
Xiangshu Wu ◽  
Baolong Zhang ◽  
Qiang Zhang ◽  
...  
Keyword(s):  
Electric Vehicle ◽  
Energy Management ◽  
Fuel Economy ◽  
Hybrid Electric Vehicle ◽  
Research Work ◽  
Energy Management Strategy ◽  
Power Sources ◽  
Power Split ◽  
Hybrid Electric ◽  
The Impact

A power-split hybrid electric vehicle with a dual-planetary gearset is researched in this paper. Based on the lever analogy method of planetary gearsets, the power-split device is theoretically modeled, and the driveline simulation model is built by using vehicle modeling and simulation toolboxes in MATLAB. Six operation modes of the vehicle are discussed in detail, and the kinematic constraint behavior of power sources are analyzed. To verify the rationality of the modeling, a rule-based control strategy (RB) and an adaptive equivalent consumption minimization strategy (A-ECMS) are designed based on the finite state machine and MATLAB language respectively. In order to demonstrate the superiority of A-ECMS in fuel-saving and to explore the impact of different energy management strategies on emission, fuel economy and emission performance of the vehicle are simulated and analyzed under UDDS driving cycle. The simulation results of the two strategies are compared in the end, shows that the modeling is rational, and compared with RB strategy, A-ECMS ensures charge sustaining better, enables power sources to work in more efficient areas, and improves fuel economy by 8.65%, but significantly increases NOx emissions, which will be the focus of the next research work.

Business valuation strategy for new hydroponic farm development – a proposal towards sustainable agriculture development in United Arab Emirates

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gyanendra Singh Sisodia ◽  
Raweya Alshamsi ◽  
Bruno S. Sergi
Keyword(s):  
Food Security ◽  
Real Options ◽  
United Arab Emirates ◽  
Net Present Value ◽  
Good Health ◽  
Social Implications ◽  
Present Value ◽  
Content Type ◽  
Real Options Approach ◽  
Fresh Vegetables

PurposeThis study aims to evaluate a hydroponic farm (through nutrient film technique) while considering uncertainty, sustainability and the system's utility in the dominant desert geography. The idea of the hydroponic farm is to allow individuals/businesses to grow plants. Given the geographical condition, the hydroponic system may be useful in the Gulf context and may lead to food security and sustainability. Additionally, the UAE government has initiated several support schemes that can be availed for investing in such businesses that can contribute to the nation's food security.Design/methodology/approachThe hydroponic farm is evaluated using the net present value and real options approach. The authors studied five scenarios: 1. business as usual, 2. 50% subsidy on initial investment through Khalifa funding, 3. 4% premium, 4. Subsidy plus premium and 5. solar panel installation with bore well.FindingsAs per the assumptions and data usage, all the scenarios shows a positive net present value (NPV); Nevertheless, scenarios 4 and 5 report the significant highest net present and delay value.Research limitations/implicationsThis study has environmental, economic and social implications. Lower imports indirectly lead to lower carbon footprints. The local production of food ensures higher employability in the sector and increase in local consumption. Additionally, fresh food consumption is directly associated to good health.Practical implicationsSupportive policies such as subsidies through Khalifa funding may accelerate the expansion of such projects through domestic and foreign investments. One of the important takeaway from the study is to invest in the training of the workforce.Social implicationsGiven the geographical condition, the UAE usually depends on food imports. If the hydroponic farms become popular, the residents will have access to fresh vegetables and fruits. Higher engagement in agriculture activities also ensures a significant increase in agriculture-related businesses and higher employability.Originality/valueThe study adds novelty to the literature because the effect of Khalifa funding and investment analysis on solar (wells) has not been evaluated in any hydroponic studies. We presented the results with tornado graphs using NPV risk and real options approach in the Gulf context. The study represents functional scenarios that were previously not found in the literature.

VOLATILITY IN OIL PRICES AND MANUFACTURING ACTIVITY: AN INVESTIGATION OF REAL OPTIONS

2011 ◽  
Vol 15 (S3) ◽  
pp. 379-395 ◽  
Author(s):  
John Elder ◽  
Apostolos Serletis
Keyword(s):  
Real Options ◽  
Commodity Prices ◽  
Price Volatility ◽  
Oil Prices ◽  
Capital Budgeting ◽  
Oil Price ◽  
Real Options Theory ◽  
Oil Price Volatility ◽  
Manufacturing Activity ◽  
General Specification

Previous research shows that volatility in oil prices has tended to depress output, as measured by nonresidential investment and GDP. This is interpreted as evidence in support of the theory of real options in capital budgeting decisions, which predicts that uncertainty about, for example, commodity prices will cause firms to delay production and investment. We continue that investigation by analyzing the effect of oil price uncertainty on monthly measures of U.S. firm production related to industries in mining, manufacturing, and utilities. We use a more general specification, an updated sample that includes the increased oil price volatility since 2008, and we control for other nonlinear measures of oil prices. We find additional empirical evidence in support of the predictions of real options theory, and our results indicate that the extreme volatility in oil prices observed in 2008 and 2009 contributed to the severity of the decline in manufacturing activity.

Maintenance Decisions for Offshore Structures Using Real Options Theory

2004 ◽  
Author(s):  
Ernesto Heredia-Zavoni ◽  
Sandra Santa-Cruz
Keyword(s):  
Decision Making ◽  
Real Options ◽  
Cash Flow ◽  
Net Present Value ◽  
Offshore Structures ◽  
Present Value ◽  
Real Options Theory ◽  
Financial Variables ◽  
Maintenance Decisions ◽  
Options Theory

Real Options methods are currently used to assess investment projects considering: (1) the decision options that one can have along the development of the project, such as to expand it, or reduce it, or to abandon it, or to differ it, and (2) the uncertainty in some financial variables for the assessment of the economic investment. In these two regards, Real Options methods are superior to the traditional Net Present Value method. The purpose of the present paper is to establish the basis for Real Options modeling for decision making on design, inspection, maintenance, and decommissioning of offshore structures. The use of Real Options theory is sought in order to account for: (1) uncertainties in the financial variables involved in risk assessment based on expected costs, such as the economic consequences due to failure of a system; and (2) uncertainties associated with the resistance and loading of the structure for reliability assessment. An application of Real Options Theory is given in the paper for decision making on maintenance for an offshore structure. Cash flow from oil revenue is modeled as a stochastic process. Preventive and corrective maintenance is analyzed as a critical situation where the decision maker has the option to pay the costs of maintenance in order to obtain a benefit. Expressions are derived for the estimation of the value of the maintenance option; they are based on the derivation of the Black-Scholes equation for the evaluation of financial options. It is shown that the value of such project is equal to the sum of the net cash flow of the project (as with a Net Present Value evaluation) plus the value of the maintenance option. Projects with one and two decision times along the life of the structure are formulated and analyzed. Closed form solutions are obtained for such cases. An example is given in order to illustrate the differences between maintenance decisions using the Net Present Value and the Real Options method.

Business opportunity assessment in Slovene organic spelt processing: application of real options model

2011 ◽  
Vol 26 (3) ◽  
pp. 179-184 ◽  
Author(s):  
Karmen Pažek ◽  
Črtomir Rozman
Keyword(s):  
Decision Making ◽  
Real Options ◽  
Net Present Value ◽  
Sunk Costs ◽  
Organic Farms ◽  
Processing Application ◽  
The Real ◽  
Business Opportunity ◽  
Real Options Approach ◽  
Flour Production

AbstractDecision making in organic farming is related to risk and uncertainty, and options must be evaluated in the decision-making process. This paper presents the methodology of an integrated deterministic simulation system (KARSIM 1.0) application for decision-making support on organic farms in northeastern Slovenia. An emphasis to modify the net present value (NPVt) criterion by incorporating the real options approach was made. Its application is shown in organic spelt (Triticum aestivum ssp. spelta McKey) production and processing using two real options approaches, the Black–Scholes and binomial models. The NPVt indicates that the decision to process spelt for animal fodder is financially unfeasible, while the real options approach differentiates the results by organic spelt grain and flour production for human nutrition. It may be concluded that the real options approach can be useful when assessing projects with uncertainty, sunk costs and irreversibility, and it can provide for examining agricultural investment decisions.

scholarly journals Digital Twin of Fuel Cell Hybrid Electric Vehicle: a detailed modelling approach of the hydrogen powertrain and the auxiliary systems

2022 ◽  
Vol 334 ◽  
pp. 06003
Author(s):  
Lorenzo Bartolucci ◽  
Edoardo Cennamo ◽  
Stefano Cordiner ◽  
Vincenzo Mulone ◽  
Ferdinando Pasqualini ◽  
...  
Keyword(s):  
Fuel Cell ◽  
Electric Vehicles ◽  
Cell Hybrid ◽  
Energy Demand ◽  
Hybrid Electric Vehicle ◽  
Transport Sector ◽  
Digital Twin ◽  
Hybrid Electric ◽  
The Impact ◽  
Fuel Cell Hybrid

The transport sector is today a major source of pollutant and greenhouse gas emissions. Fuel Cell Hybrid Electric Vehicles are a solution to reduce its environmental impact, thanks to the zero pollutant tailpipe emissions and longer driving ranges if compared with full electric vehicles. A Digital Twin of a FCHEV is developed in this study, through the assessment of models of mechanical and thermal systems within the vehicle. The Simulink/Simscape model here presented is able to support both the design choices and the test of control strategies. The results obtained allow characterizing the impact of the auxiliary systems on the driving range, whose relative value ranges from 28% to 40% of the overall energy demand depending on the ambient temperature, and the range is between 430 km and 356 km respectively for mild and cold temperature.

scholarly journals A Real Options Approach to Valuate Solar Energy Investment with Public Authority Incentives: The Italian Case

Energies ◽  
2020 ◽  
Vol 13 (16) ◽  
pp. 4181
Author(s):  
Antonio Di Bari
Keyword(s):  
Solar Energy ◽  
Real Options ◽  
Real Option ◽  
Net Present Value ◽  
Option Value ◽  
Present Value ◽  
Energy Investment ◽  
The Real ◽  
Real Options Approach ◽  
Real Option Value

Solar energy investment represents currently a valid reason to support sustainable economic development. In fact, over the last few years, governments have applied different measures to incentivize private consumers and firms to use renewable energies. Photovoltaic (PV) projects are characterized by uncertainty due to meteorological conditions, the unpredictable behavior of government, and managerial flexibility. Since the Net Present Value (NPV) approach is not able to capture these uncertain factors, it was replaced with the Real Options Approach (ROA). The latter method manages to embed flexibility in PV investment using binomial trees. This paper valuates PV investment in all regional areas in Italy using an integrated approach between the discounted cash flows method and real option value, called Expanded Net Present Value (ENPV). We fit the probability of tax benefits into a binomial lattice model after analyzing the geographical position and weather conditions of all regional capitals of Italy. The results show that the cities with high irradiance/temperature have positive NPV and high investment values. On the other hand, while most cities have negative NPV, the inclusion of the flexibility in investment decisions gives additional value to the project, making the ENPV positive and implying an attractive investment opportunity with the possibility of delaying the project. We also propose a sensitivity analysis that shows how the real option value changes when incentive policies of the government become more attractive. This paper contributes to the existing literature in the way of considering financial, meteorological/geographical, and political factors to valuate PV investment.

DQ Options

2011 ◽  
pp. 243-276
Author(s):  
Monica Bobrowski ◽  
Sabrina Soler
Keyword(s):  
Data Quality ◽  
Real Options ◽  
Net Present Value ◽  
Critical Role ◽  
Methodological Framework ◽  
Real Options Approach ◽  
Starting Point ◽  
Tactical Decision

Data plays a critical role in organizations up to the point of being considered a competitive advantage. However, the quality of the organizations’ data is often inadequate, affecting strategic and tactical decision making, and even weakening the organization’s image. Nevertheless it is still challenging to encourage management to invest in data quality improvement projects. Performing a traditional feasibility analysis based on Return on Investment, Net Present Value, etc., may not capture the advantages of data quality projects: their benefits are often difficult to quantify and uncertain; also, they are mostly valuable because of the new opportunities they bring about. Dealing with this problem through a real options approach, in order to model its intrinsic uncertainty, seems to be an interesting starting point. This paper presents a methodological framework to assess the benefits of a Data Quality project using a real options approach. Its adequacy is validated with a case study.

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