IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v98y2012icp467-478.html
   My bibliography  Save this article

Monte-Carlo simulation of investment integrity and value for power-plants with carbon-capture

Author

Listed:
  • Di Lorenzo, Giuseppina
  • Pilidis, Pericles
  • Witton, John
  • Probert, Douglas

Abstract

Reducing CO2-emissions from electricity-generating power-plants is a high priority. Several advanced low-carbon power-plants have gained wide acceptance. Uncertainties concerning future costs and performances of new pertinent technologies and unit fuel-prices as well as the types and the comprehensiveness of CO2-emissions regulations exacerbate the difficulty of selecting promising candidates to be considered for future investments. A computer-based Monte-Carlo simulation technique has been devised to help choose the best technology for financial investments: it allows for the stated uncertainties and assesses the trade-offs between expected returns and the key risks imposed on decision makers. The economic-modelling methodology is described. The computer-based model assesses the investment in a new low-carbon integrated reforming combined-cycle (IRCC) power-plant. The worthwhileness of this financial investment is evaluated in terms of net present-value (NPV), internal rate-of-return (IRR) and pay-back period (PBP).

Suggested Citation

  • Di Lorenzo, Giuseppina & Pilidis, Pericles & Witton, John & Probert, Douglas, 2012. "Monte-Carlo simulation of investment integrity and value for power-plants with carbon-capture," Applied Energy, Elsevier, vol. 98(C), pages 467-478.
    • Handle: RePEc:eee:appene:v:98:y:2012:i:c:p:467-478
    DOI: 10.1016/j.apenergy.2012.04.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261912002966
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2012.04.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yang, Ming & Blyth, William & Bradley, Richard & Bunn, Derek & Clarke, Charlie & Wilson, Tom, 2008. "Evaluating the power investment options with uncertainty in climate policy," Energy Economics, Elsevier, vol. 30(4), pages 1933-1950, July.
    2. Savvides, Savvakis C., 1994. "Risk Analysis in Investment Appraisal," MPRA Paper 10035, University Library of Munich, Germany, revised 14 Aug 2008.
    3. Bonini, Charles P, 1975. "Risk evaluation of investment projects," Omega, Elsevier, vol. 3(6), pages 735-750, December.
    4. Maboke, Silky Ntombifuthi & Kachienga, Michael Ogembo, 2008. "Power Transmission Investment Analysis: A New Financial Evaluation Framework for South Africa," The Electricity Journal, Elsevier, vol. 21(4), pages 58-70, May.
    5. Davison, John, 2007. "Performance and costs of power plants with capture and storage of CO2," Energy, Elsevier, vol. 32(7), pages 1163-1176.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kotowicz, Janusz & Michalski, Sebastian, 2015. "Influence of four-end HTM (high temperature membrane) parameters on the thermodynamic and economic characteristics of a supercritical power plant," Energy, Elsevier, vol. 81(C), pages 662-673.
    2. Fang, Kai & Li, Chenglin & Tang, Yiqi & He, Jianjian & Song, Junnian, 2022. "China’s pathways to peak carbon emissions: New insights from various industrial sectors," Applied Energy, Elsevier, vol. 306(PA).
    3. Han, Xiaojuan & Zhang, Hua & Yu, Xiaoling & Wang, Lina, 2016. "Economic evaluation of grid-connected micro-grid system with photovoltaic and energy storage under different investment and financing models," Applied Energy, Elsevier, vol. 184(C), pages 103-118.
    4. Rustico, Erica & Dimitrov, Stanko, 2022. "Environmental taxation: The impact of carbon tax policy commitment on technology choice and social welfare," International Journal of Production Economics, Elsevier, vol. 243(C).
    5. Bartela, Łukasz & Skorek-Osikowska, Anna & Kotowicz, Janusz, 2015. "An analysis of the investment risk related to the integration of a supercritical coal-fired combined heat and power plant with an absorption installation for CO2 separation," Applied Energy, Elsevier, vol. 156(C), pages 423-435.
    6. Romano, Teresa & Fumagalli, Elena, 2018. "Greening the power generation sector: Understanding the role of uncertainty," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 272-286.
    7. Sina Atari & Yassine Bakkar & Eunice Omolola Olaniyi & Gunnar Prause, 2019. "Real options analysis of abatement investments for sulphur emission control compliance," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(3), pages 1062-1087, March.
    8. Esmaeili Aliabadi, Danial & Kaya, Murat & Sahin, Guvenc, 2017. "Competition, risk and learning in electricity markets: An agent-based simulation study," Applied Energy, Elsevier, vol. 195(C), pages 1000-1011.
    9. Abdulaziz M. T. Alzayedi & Suresh Sampath & Pericles Pilidis, 2022. "Techno–Economic and Risk Evaluation of Combined Cycle Propulsion Systems in Large Container Ships," Energies, MDPI, vol. 15(14), pages 1-14, July.
    10. John Michael Humphries Choptiany & Ron Pelot & Kate Sherren, 2014. "An Interdisciplinary Perspective on Carbon Capture and Storage Assessment Methods," Journal of Industrial Ecology, Yale University, vol. 18(3), pages 445-458, May.
    11. Eunice Omolola Olaniyi & Yassine Bakkar & Gunnar Prause, 2019. "Entrepreneurial compliance opportunities for maritime fuel producers," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(4), pages 1550-1565, June.
    12. Cartelle Barros, Juan José & Lara Coira, Manuel & de la Cruz López, María Pilar & del Caño Gochi, Alfredo, 2016. "Probabilistic life-cycle cost analysis for renewable and non-renewable power plants," Energy, Elsevier, vol. 112(C), pages 774-787.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mo, Jian-Lei & Schleich, Joachim & Zhu, Lei & Fan, Ying, 2015. "Delaying the introduction of emissions trading systems—Implications for power plant investment and operation from a multi-stage decision model," Energy Economics, Elsevier, vol. 52(PB), pages 255-264.
    2. Cristóbal, Jorge & Guillén-Gosálbez, Gonzalo & Kraslawski, Andrzej & Irabien, Angel, 2013. "Stochastic MILP model for optimal timing of investments in CO2 capture technologies under uncertainty in prices," Energy, Elsevier, vol. 54(C), pages 343-351.
    3. Casper Agaton, 2017. "Coal, Renewable, or Nuclear? A Real Options Approach to Energy Investments in the Philippines," International Journal of Sustainable Energy and Environmental Research, Conscientia Beam, vol. 6(2), pages 50-62.
    4. Lai, N.Y.G. & Yap, E.H. & Lee, C.W., 2011. "Viability of CCS: A broad-based assessment for Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(8), pages 3608-3616.
    5. Liang, Ying & Cai, Lei & Guan, Yanwen & Liu, Wenbin & Xiang, Yanlei & Li, Juan & He, Tianzhi, 2020. "Numerical study on an original oxy-fuel combustion power plant with efficient utilization of flue gas waste heat," Energy, Elsevier, vol. 193(C).
    6. Schachter, Jonathan A. & Mancarella, Pierluigi & Moriarty, John & Shaw, Rita, 2016. "Flexible investment under uncertainty in smart distribution networks with demand side response: Assessment framework and practical implementation," Energy Policy, Elsevier, vol. 97(C), pages 439-449.
    7. Linnerud, Kristin & Andersson, Ane Marte & Fleten, Stein-Erik, 2014. "Investment timing under uncertain renewable energy policy: An empirical study of small hydropower projects," Energy, Elsevier, vol. 78(C), pages 154-164.
    8. Chu, Fengming & Yang, Lijun & Du, Xiaoze & Yang, Yongping, 2017. "Mass transfer and energy consumption for CO2 absorption by ammonia solution in bubble column," Applied Energy, Elsevier, vol. 190(C), pages 1068-1080.
    9. Gomes, Gabriel Lourenço & Szklo, Alexandre & Schaeffer, Roberto, 2009. "The impact of CO2 taxation on the configuration of new refineries: An application to Brazil," Energy Policy, Elsevier, vol. 37(12), pages 5519-5529, December.
    10. Nemet, Gregory F. & Baker, Erin & Jenni, Karen E., 2013. "Modeling the future costs of carbon capture using experts' elicited probabilities under policy scenarios," Energy, Elsevier, vol. 56(C), pages 218-228.
    11. Brauneis, Alexander & Mestel, Roland & Palan, Stefan, 2013. "Inducing low-carbon investment in the electric power industry through a price floor for emissions trading," Energy Policy, Elsevier, vol. 53(C), pages 190-204.
    12. Zhang, M.M. & Wang, Qunwei & Zhou, Dequn & Ding, H., 2019. "Evaluating uncertain investment decisions in low-carbon transition toward renewable energy," Applied Energy, Elsevier, vol. 240(C), pages 1049-1060.
    13. Zhang, Dongjie & Liu, Pei & Ma, Linwei & LI, Zheng, 2013. "A multi-period optimization model for planning of China's power sector with consideration of carbon dioxide mitigation—The importance of continuous and stable carbon mitigation policy," Energy Policy, Elsevier, vol. 58(C), pages 319-328.
    14. Aydin, Gokhan & Karakurt, Izzet & Aydiner, Kerim, 2010. "Evaluation of geologic storage options of CO2: Applicability, cost, storage capacity and safety," Energy Policy, Elsevier, vol. 38(9), pages 5072-5080, September.
    15. Georgios Varvoutis & Athanasios Lampropoulos & Evridiki Mandela & Michalis Konsolakis & George E. Marnellos, 2022. "Recent Advances on CO 2 Mitigation Technologies: On the Role of Hydrogenation Route via Green H 2," Energies, MDPI, vol. 15(13), pages 1-38, June.
    16. Zhang, M.M. & Zhou, D.Q. & Zhou, P. & Chen, H.T., 2017. "Optimal design of subsidy to stimulate renewable energy investments: The case of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 873-883.
    17. Wu Haibo & Liu Zhaohui, 2018. "Economic research relating to a 200 MWe oxy‐fuel combustion power plant," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 8(5), pages 911-919, October.
    18. Chen, Wei-Hsin & Tsai, Ming-Hang & Hung, Chen-I, 2013. "Numerical prediction of CO2 capture process by a single droplet in alkaline spray," Applied Energy, Elsevier, vol. 109(C), pages 125-134.
    19. Tang, YuTing & Ma, XiaoQian & Lai, ZhiYi & Chen, Yong, 2013. "Energy analysis and environmental impacts of a MSW oxy-fuel incineration power plant in China," Energy Policy, Elsevier, vol. 60(C), pages 132-141.
    20. Gavenas, Ekaterina & Rosendahl, Knut Einar & Skjerpen, Terje, 2015. "CO2-emissions from Norwegian oil and gas extraction," Energy, Elsevier, vol. 90(P2), pages 1956-1966.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:98:y:2012:i:c:p:467-478. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.