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The application of DNPV to unlock foreign direct investment in waste-to-energy in developing countries

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  • Shimbar, Ali
  • Ebrahimi, Seyed Babak

Abstract

Commercial potential in developing countries has always received a great attention from international investors, but this is not the case in Waste-to-Energy sector. Waste-to-Energy is bound up with various uncertainties rooted in its long-term nature therefore incorporating risks regarding political matters in developing countries makes it more complex. The present study substantiates the incompatibility of classic valuation methods in risky projects. Consequently, to deal with the riskiness of Waste-to-Energy investment in less developed countries, the combination of binomial tree analysis and Decoupled NPV is proposed. The hybrid approach is deployed to value a Waste-to-Energy project in Iran, and all evidence attest to the robustness of the method. The contribution of this paper can open up new vistas for investing in Waste-to-Energy industry, thus abating the catastrophic effects of landfill gas emissions.

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  • Shimbar, Ali & Ebrahimi, Seyed Babak, 2017. "The application of DNPV to unlock foreign direct investment in waste-to-energy in developing countries," Energy, Elsevier, vol. 132(C), pages 186-193.
    • Handle: RePEc:eee:energy:v:132:y:2017:i:c:p:186-193
    DOI: 10.1016/j.energy.2017.05.098
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    3. Putna, Ondřej & Janošťák, František & Šomplák, Radovan & Pavlas, Martin, 2018. "Demand modelling in district heating systems within the conceptual design of a waste-to-energy plant," Energy, Elsevier, vol. 163(C), pages 1125-1139.
    4. Roychaudhuri, Pritam Sankar & Kazantzi, Vasiliki & Foo, Dominic C.Y. & Tan, Raymond R. & Bandyopadhyay, Santanu, 2017. "Selection of energy conservation projects through Financial Pinch Analysis," Energy, Elsevier, vol. 138(C), pages 602-615.
    5. Shimbar, A., 2021. "Environment-related stranded assets: An agenda for research into value destruction within carbon-intensive sectors in response to environmental concerns," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    6. Tavana, Alireza & Emami Javid, Alireza & Houshfar, Ehsan & Mahmoudzadeh Andwari, Amin & Ashjaee, Mehdi & Shoaee, Saeed & Maghmoomi, Abtin & Marashi, Fatima, 2019. "Toward renewable and sustainable energies perspective in Iran," Renewable Energy, Elsevier, vol. 139(C), pages 1194-1216.
    7. Ramadan, Mohamad & Murr, Rabih & Khaled, Mahmoud & Olabi, Abdul Ghani, 2018. "Mixed numerical - Experimental approach to enhance the heat pump performance by drain water heat recovery," Energy, Elsevier, vol. 149(C), pages 1010-1021.
    8. Shimbar, Ali, 2021. "Environment-related stranded assets: What does the market think about the impact of collective climate action on the value of fossil fuel stocks?," Energy Economics, Elsevier, vol. 103(C).
    9. Imran Khan & Shahariar Chowdhury & Kuaanan Techato, 2022. "Waste to Energy in Developing Countries—A Rapid Review: Opportunities, Challenges, and Policies in Selected Countries of Sub-Saharan Africa and South Asia towards Sustainability," Sustainability, MDPI, vol. 14(7), pages 1-27, March.

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