The lack of precision in an economic analysis of an energy production facility is expressed quantitatively with an uncertainty to the 68% confidence level. The sensitivities of various parameters to imperfect projections is propagated through a fairly simple technique into an overall uncertainty for the feasibility indicator, such as benefit-cost (BC) ratio. The technique assumes that each of the variable parameters is unrelated, from a Gaussian population, and that the individual sensitivities have a normal probability distribution. The effects of these assumptions on applications of the uncertainty technique are described. The technique is illustrated through a case study involving the economic analyses of hydropower feasibility.
|Original language||English (US)|
|Number of pages||16|
|Journal||Journal of Energy Engineering|
|State||Published - Apr 1990|