Analyses of risks in independent power production : case of a biomass co-generation project in Thailand | |
| Author | Prabaaharan, Sinnathamby |
| Call Number | AIT Thesis no. ET-01-8 |
| Subject(s) | Biomass energy--Thailand Risk management--Thailand |
| Note | A thesis submitted in partial fulfillment of the requirements for the degree of Master of Engineering, School of Environment, Resources and Development |
| Publisher | Asian Institute of Technology |
| Abstract | This study analyzes the risks associated in investment on iice husk fuelled cogeneration project and power purchase contract between utility and independent power producer. In this study, option valuation approach has been used to analyze the risk in investing on a rice husk fuelled co-generation plant in the presence of alternative technologies. Different cases have been considered when the important cost parameters of the cogeneration plant were changed, and the risk associated with them estimated quantitatively. Also, the optimal timing and option prices of the foregone options have been estimated. The study has revealed that when the annul price escalation rate of rice husk is 4%, cost of capital is 1200 $/kW, if the va1iable operating and maintenance cost exceeds 3.0 mills/kWh, then the cogeneration plant will not be selected in least cost generation expansion scenario. The study has suggested if there is no revenue from rice husk ash, then it will be very high risk to invest on this type of technology now and even when the price of ash is 50 $/ton for above case, the investment has to be delayed for 4.5 years. Sensitivity analysis has revealed that if the revenue from ash reaches 225 $/ton, then the investment will be completely risked free. This study has analyzed the risk sharing between utility and independent power producer in the context of incentive contract. The coefficient of variability of the probability distribution of expected net profit of Independent Power Producer was used as a quantitative measure of risk. For each sharing rate, corresponding coefficient of variability was found using Monte-Carlo simulation. And fuel price, fuel escalation rate, plant heat rate, variable O&M cost, capacity factor, availability factor were considered as uncertain parameters. The sensitivity analysis of uncertain parameters shows that the availability factor affects the probability distributions of the expected net profit highly. The capacity factor is the second larger sensitive parameter on the net profit. The revenue from rice husk ash sale creates considerable uncertainty on expected net profit. If there is no revenue from ash, then it is highly risky to make a contract. When the sharing rate equals to 0.5, the contract will be almost risk free. The increment in discount, tax rates and decrement in return on equity increase the uncertainty about the net profit of IPP. i |
| Year | 2001 |
| Type | Thesis |
| School | School of Environment, Resources, and Development (SERD) |
| Department | Department of Energy and Climate Change (Former title: Department of Energy, Environment, and Climate Change (DEECC)) |
| Academic Program/FoS | Energy Technology (ET) |
| Chairperson(s) | Shrestha, Ram M.;Pacudan, Romeo B. |
| Examination Committee(s) | Surapong Chirarattananon; Lacrosse, Ludovic |
| Scholarship Donor(s) | The Govenunent of France - AIT |
| Degree | Thesis (M.Eng.) - Asian Institute of Technology, 2001 |