scholarly journals Measuring the impact of risk on LCOE (levelized cost of energy) in geothermal technology

2021 ◽  
Vol 9 (1) ◽  
Author(s):  
Soojin Park ◽  
Antony Langat ◽  
Kyuhwan Lee ◽  
Yongbeum Yoon
Keyword(s):  
Discount Rate ◽  
Weighted Average ◽  
Theoretical Background ◽  
Certainty Equivalent ◽  
Equivalent Model ◽  
Project Risk ◽  
Levelized Cost ◽  
Cost Of Energy ◽  
The Impact ◽  
Level Of Risk

AbstractGeothermal technology has a high level of uncertainty and, thus, requires thorough risk analysis for economic decisions. The levelized cost of energy (LCOE) is a basic economic analysis widely used in determining an investment or energy mix. Many reputable institutions and government agencies provide LCOE, to which they apply different levels of discount rates to reflect project risk. To this end, the weighted average cost of capital (WACC) is frequently used as a proxy for project risk-adjusted discount rate. However, whether using a higher discount rate for a riskier project is appropriate in calculating LCOE has not been scrutinized. The purpose of this paper is to propose a certainty equivalent method of LCOE as an alternative way for considering risk. We present a theoretical background and formula based on the utility theory, improving the probabilistic LCOE estimation methodology of previous studies. We also perform scenario analysis to show how the certainty equivalent model changes LCOE reflecting different level of risk of the individual variables, which traditional LCOE does not. Additionally, we suggest that the traditional LCOE should be used prudently, recognizing it can distort the result when an individual project has a different level of risk from the industry average.

scholarly journals Measuring The Impact of Risk On LCOE(Levelized Cost of Energy) In Geothermal Technology

2021 ◽  
Author(s):  
Antony Kipkirui Langat ◽  
Yongbeum Yoon ◽  
Soojin Park
Keyword(s):  
Weighted Average ◽  
Theoretical Background ◽  
Certainty Equivalent ◽  
Equivalent Model ◽  
Economic Decisions ◽  
Levelized Cost ◽  
Cost Of Energy ◽  
High Level ◽  
Equivalent Method ◽  
The Impact

Abstract Geothermal technology has a high level of uncertainty and, thus, requires thorough risk analysis for economic decisions. The Levelized Cost of Energy (LCOE) is a basic economic analysis widely used in determining an investment or energy mix. Many reputable institutions and government agencies provide LCOE, to which they apply different levels of discount rates to reflect project risk. It is a proxy for the Weighted Average Cost of Capital (WACC). Theoretically, determining whether using a higher discount rate for a risky project is appropriate in calculating LCOE has not been scrutinized. The purpose of this paper is to propose a certainty equivalent method of LCOE as an alternative way of reflecting risk. We present a theoretical background and formula based on the utility theory, improving the probabilistic LCOE estimation methodology of previous studies. We also perform scenario analysis to show how the LCOE with certainty equivalent model moves over the change of risk in major input factors, whereas traditional LCOE does not. Additionally, we suggest that the traditional LCOE should be used prudently, recognizing it can distort the result when an individual project has a different level of risk from the industry average.

scholarly journals THE PROBLEM OF DETERMINATION OF TECHNICAL AND ECONOMIC INDICATORS OF INDUSTRIAL DEVELOPMENT OF DRINKING SUBSURFACE WATER

2018 ◽  
pp. 96-99
Author(s):  
O. Luibchyk
Keyword(s):  
Feasibility Study ◽  
Discount Rate ◽  
Average Cost ◽  
Cost Of Capital ◽  
Underground Mining ◽  
Weighted Average ◽  
Subsurface Water ◽  
Groundwater Extraction ◽  
Trend Line ◽  
The Impact

The article analyzes the impact of changes to the Tax Code of Ukraine and the NBU discount rate on extraction, and profitability of enterprises for the use of groundwater for the period 2015-2017. Examples of inaccuracies in the formulation of domestic legislation on rent for the use of groundwater are given. The European experience of similar legislative norms is presented. The author summarized the table of changes in the rate for special use during 2015-2017, a trend was observed on the basis of which a trend line was constructed with the forecast of this rate for 25 years. The trend line equation will help calculate the rate for any period that will better predict the risks of the project when calculating the feasibility study for groundwater extraction. It is revealed that in the national practice of the feasibility study for underground mining, the calculation of net discounted profit (NPV) is based on the method of the weighted average cost of capital of the enterprise. The discount rate (E) is taken in accordance with the discount rate of the NBU. An analysis of changes in the discount rate for the period 2015-2017 was conducted, histogram was constructed for clarity. The histogram analysis showed that the NBU discount rate often changes and, besides, its change is difficult to predict – this situation restricts the use of the method of weighted average cost of capital for the calculation of net discounted profit in the feasibility study of groundwater extraction.

scholarly journals Mapping and Analysis of Initial cost Against Levelized Cost of Energy for Residential PV Rooftoop in Indonesia

2018 ◽  
Vol 67 ◽  
pp. 01024 ◽  
Author(s):  
Riadhi Fairuz ◽  
Eko Adhi Setiawan ◽  
Ikhsan Hernanda
Keyword(s):  
Net Present Value ◽  
Economic Feasibility ◽  
Solar Irradiation ◽  
Solar Pv ◽  
Pv Systems ◽  
Levelized Cost ◽  
Initial Cost ◽  
Cost Of Energy ◽  
The Difference ◽  
The Impact

Future electricity tariffs are expected to increase. To overcome this condition, arise the idea how the residential can generate its own electricity by exploiting the potential of solar energy. However, there are some constraints in its implementation due to the difference of the initial cost and sales from solar PV systems in various region of Indonesia. The purpose of this study is to determine the impact of initial cost on the levelized cost of energy from the system. This study uses the calculation of Levelized Cost of Energy (LCoE) and economic feasibility analysis through the calculation of net present value with net metering scheme. Manado is the most optimal city to implement this system. The initial cost will affect to the LCoE, the high initial cost can be covered by the amount of cash flow generated by the system which has huge solar irradiation potentials.

Levelized Cost of Energy Assessment for Offshore Wind Farms—An Examination of Different Methodologies, Input Variables, and Uncertainty

2021 ◽  
Vol 7 (4) ◽  
Author(s):  
Fiona Devoy McAuliffe ◽  
Miriam Noonan ◽  
Jimmy Murphy
Keyword(s):  
Discount Rate ◽  
Energy Production ◽  
Capital Expenditure ◽  
Wind Farms ◽  
Business Case ◽  
Offshore Wind ◽  
Offshore Wind Farms ◽  
Tax Rate ◽  
Levelized Cost ◽  
Cost Of Energy

Abstract Levelized cost of energy (LCoE) is the most common metric used in renewable energy assessments. However, this can be a very complex calculation with numerous methodologies depending on the perspective taken. Inputs including costs, energy production are generally forecasts and predictions based on publicly available information; therefore, they are key areas of uncertainty. Elements of the calculation are site or region specific such as the tax rate or inclusion of grid connection costs. The business case and financial assumptions applied will be very project specific, e.g., the discount rate applied. These numerous variables and uncertainties must be fully understood in order to effectively apply the metric or review and compare LCoEs. Therefore, this paper provides a comprehensive set of LCoE methodologies that provide a reference basis for researchers. A case study demonstrates the application of these methods and the variation in results illustrates the importance of correctly selecting the discount rate and cash flow based on the perspective and motivation of the user. Sensitivity studies further investigates the potential impact of key variables and areas of uncertainty on results. Analysis indicates that the energy production and discount rate applied will have the most significant impact on LCoE, followed by Capital Expenditure (CAPEX) costs. While the key areas of uncertainties cannot necessarily be solved, this paper promotes consistency in the application and understanding of the metric, which can help overcome its limitations.

GRID PARITY OF PV – AN ACCESSIBLE OPPORTUNITY TO ACHIEVE BULGARIA’S RENEWABLE TARGETS BY 2030

2019 ◽  
pp. 239-244
Author(s):  
Georgi Todorov ◽  
Krasimira Keremidchieva
Keyword(s):  
Technological Progress ◽  
Time Frame ◽  
Specific Production ◽  
Final Consumption ◽  
Grid Parity ◽  
Levelized Cost ◽  
Cost Of Energy ◽  
Main Candidate ◽  
Common Vision ◽  
The Eu

On the go is the development and adaptation of an individual target for Bulgaria, in order to increase the share of RES energy, according to the EU common vision for leadership in the implementation of renewables to 32% in the gross final consumption by 2030. The technological progress, the easy applicability and feasibility of the projects, as well as the geographic and climatic specifics of Bulgaria, makes photovoltaic Bulgaria's main candidate for leading technology in this process. With net specific production of 1323kWh/annual per installed kWp, price levels of PV technology of €1360kWp and Levelized cost of energy (LCOE) below €0.12kWh for 20 years time frame, households in Bulgaria are at a stage where photovoltaic projects should be developed as an alternative to the grid supply

Implementasi Probability Impact Matriks (PIM) Untuk Mengidentifikasi Kemungkinan dan Dampak Risiko Proyek

2017 ◽  
Vol 8 (1) ◽  
pp. 43-47
Author(s):  
Sufa'atin Sufa'atin
Keyword(s):  
Risk Assessment ◽  
Cumulative Effect ◽  
Project Risk ◽  
Project Construction ◽  
Index Terms ◽  
Project Objectives ◽  
The Impact

One of the obstacles in project construction is that the project is experiencing delays. The delay is influenced by several factors including the absence of risk recording, the unavoidability of the opportunities and the impact of risks that arise in the project and its handling, and the neglected risks that may disrupt the project. Project risk is the cumulative effect of an uncertain event opportunity, which affects the project objectives. Several methods can be used to handle the occurrence of project risk, one of the methods used to perform a risk assessment is the Probability Impact Matrix (PIM). PIM is a method that can be used to analyze risk qualitatively based on probability and its impact. By using the PIM method, some of the opportunities and impacts of risks that may arise in the project can be identified. In addition, the PIM method can minimize the risks that arise in the project and quickly resolve the risks. Index Terms— Project, Risk, PIM, Possibility, Impact

scholarly journals Antarctic sea-ice thickness and volume estimates from ice charts between 1995 and 1998

2015 ◽  
Vol 56 (69) ◽  
pp. 383-393 ◽  
Author(s):  
E. Rachel Bernstein ◽  
Cathleen A. Geiger ◽  
Tracy L. Deliberty ◽  
Mary D. Lemcke-Stampone
Keyword(s):  
Sea Ice ◽  
Regional Scale ◽  
Weighted Average ◽  
Ice Thickness ◽  
Average Thickness ◽  
Sea Ice Thickness ◽  
Subjective Analysis ◽  
Stage Of Development ◽  
Volume Estimates ◽  
The Impact

AbstractThis work evaluates two distinct calculations of central tendency for sea-ice thickness and quantifies the impact such calculations have on ice volume for the Southern Ocean. The first calculation, area-weighted average thickness, is computed from polygonal ice features and then upscaled to regions. The second calculation, integrated thickness, is a measure of the central value of thickness categories tracked across different scales and subsequently summed to chosen regions. Both methods yield the same result from one scale to the next, but subsequent scales develop diverging solutions when distributions are strongly non-Gaussian. Data for this evaluation are sea-ice stage-of-development records from US National Ice Center ice charts from 1995 to 1998, as proxy records of ice thickness. Results show regionally integrated thickness exceeds area-weighted average thickness by as much as 60% in summer with as few as five bins in thickness distribution. Year-round, the difference between the two calculations yields volume differences consistently >10%. The largest discrepancies arise due to bimodal distributions which are common in ice charts based on current subjective-analysis protocols. We recommend that integrated distribution be used for regional-scale sea-ice thickness and volume estimates from ice charts and encourage similar testing of other large-scale thickness data archives.

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