Economic analysis of energy projects with uncertainty

Judson Woods, John S. Gulliver

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

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 languageEnglish (US)
Pages (from-to)1-16
Number of pages16
JournalJournal of Energy Engineering
Volume116
Issue number1
DOIs
StatePublished - Apr 1990

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