0210se05econfeas -...

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1.818J/2.65J/3.564J/10.391J/11.371J/22.811J/ESD166J SUSTAINABLE ENERGY Prof. Michael W. Golay Nuclear Engineering Dept. 1
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ECONOMIC FEASIBILITY AND ASSESSMENT METHODS 2
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PROJECT LEVEL ECONOMIC ANALYSES LECTURE OUTLINE • Introduction – Levels of Analysis • Time Value of Money and Discounting • Inflation • Economies of Scale and Learning (serial production) • Treatments of Uncertainty • Externalities 3
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SCHEMATIC OF OUR POINT OF VIEW FOR ECONOMIC ANALYSES Mandated Abatement Devices Goods and Domain of Project Internal Economic Assessment: “The System” Emissions and Other Services Harmful Impacts (Externalities): Taxes or Fees Subsidies, and Services Products Tax Breaks For Sale Conceptual System “The Surroundings”: Boundary For Purposes The External World, of Economic Analysis The Commons 4
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HIERARCHY OF ENERGY MODELS PROJECT ASSESSMENT (purview of this chapter) PLANNING PROJECTIONS WORLD ENERGY/ECONOMY/ENVIRONMENT MODELLING General Circulation Models (GCMs) UTILITY SYSTEM NATIONAL/REGIONAL ENERGY SYSTEM GLOBAL ENVIRONMENTAL IMPACT PREDICTION: Increasing uncertainty and complexity, Decreasing maturity of model development, Increasing sociopolitical import, Recency of scholarly attention 5
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LEVELIZED ELECTRICITY GENERATION (BUSBAR) COST PROJECTIONS (at 10%/yr Real Discount Rate) 6 Source: Figure 5.3 in Tester, et al. Sustainable Energy: Choosing Among Options . Cambridge, MA: MIT Press, 2005. Courtesy of The MIT Press. Used with permission.
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HOW TO CALCULATE LIFETIME LEVELIZED COST AND/OR RATE OF RETURN ses - 7
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ILLUSTRATIVE BEHAVIOR OF THE EXPONENTIAL FUNCTION 0 0 x y = e x x is + Exponential Growth x is - Exponential Decay 0 0 log y or ln y x Straight Line 1.0 The exponential function applies to processes where the % increase in y is a fixed fraction of the % increase in x . Pragmatically: Just push the e x button on your scientific calculator or Use the exp(x) function in most computer languages. 8
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HOW TO CALCULATE LIFETIME LEVELIZED COST AND/OR RATE OF RETURN, Continued 9
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