Cost-Effectiveness Analysis for Wind Energy Projects

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Cost-Effectiveness Analysis for Wind Energy Projects"

Transcription

1 15 Cos-Effeciveness Analysis for Wind Energy Projecs Wagner Sousa de Oliveira and Anonio Jorge Fernandes Deparmen of Economics, Managemen and Indusrial Engineering, Universiy of Aveiro, Porugal Absrac-This paper presens he cos effeciveness indicaors or mehods for economic cos analysis applied o wind energy projecs. I discusses abou Levelezed Cos of Energy (LCOE), Toal Life-Cycle Cos (TLCC), Ne Presen Cos (NPC), Levelized Elecriciy Generaion Cos (LEGC) and Uniary Presen Average Cos (UPAC). For each indicaor sudied is poined ou is bolenecks abou he applicaion in evaluaion and managemen of wind energy projecs direcly. However, i is imporan o consider he purpose and scope of a paricular analysis a he ouse because his will prescribe he course o follow. The perspecive of he analysis is imporan, ofen dicaing he approach o be used. Also, he ulimae use of he resuls of an analysis will influence he level of deail underaken. Keywords-Cos-Effeciveness; Economic Analysis; Wind Energy; WECS I. INTRODUCTION Cos analysis of he elecriciy supplied by wind energy conversion sysems (WECS) is a raher difficul ask requiring he esimaion of oupu power generaion as well as he cos of he WECS, in addiion o he analysis of he wind disribuion parameers. Power generaion of he WECSs is closely relaed no only o he sysem s performance bu also o operaing condiions, which means he wind characerisics of he sie, as well. Therefore, he selecion and insalling of suiable wind elecric generaor o produce elecrical energy economically in he windy areas requires a number of aciviies ha include he invesigaion of he source, feasibiliy assessmen ec. The economic cos analysis of wind power is dependen upon he following facors: ( available wind resource, (i insalled capial coss and cos of capial, (ii operaion and mainenance coss, (iv) wind inegraion coss, (v) ransmission line inerconnecion and grid upgrade coss, (v value of available subsidies or incenives, and (vi willingness of cusomers o pay a premium for wind energy. A. Specific Measures of Economic Performance for Energy Projecs TableI EXAMPLE OF NET CASH FLOW FOR ECONOMIC PERFORMANCE IN ENERGY PROJECTS (NPV METHOD) Cash Flows Period (years) NPV years Alernaive 1 Ne Cash Flow ,1 Alernaive 2 Ne Cash Flow ,4 Source: [2]. The coss levelized (or revenue revenues levelized) is a echnique o compare invesmen alernaives (such as renewable energy projecs), involving differen amouns of capial (i.e., differen sizes) and/or differen ime periods wih differen life-cycles. Applying he NPV mehod is done implicily on assumpions necessary reinvesmen in renewable energy projecs. These implici assumpions can be avoided by smoohing of cash flows: even involves he calculaion of seady cash flow, ne presen value (NPV) is equal o a given cash flow variable [1]. Suppose ha wo invesmen alernaives for renewable energy projecs have he following ne cash flow per period, as shown in Table I. The alernaive 1 implies a higher iniial invesmen (capial requiremens) and provides higher absolue reurn han alernaive 2. Alernaive 2 has only a small iniial invesmen, bu also shorer lifeime (3 versus 5 years). I is difficul o make a direc comparison beween he wo projecs. In calculaing he NPV of he projec (wih a discoun rae of 10%) resuls in NPV = 14.1 for an alernaive 1 and NPV = 11.4 o alernaive 2. For he NPV rule suggess ha an alernaive 1 is chosen. The levelizing of cash flows (ne) is o find a consan amoun g during he life of he projec NPV wih his flow in equal amouns g o become equal o he NPV of he original projec, as shown in Fig. 1. Fig. 1 Schemaic of he cash flows levelizing process for renewable energy projecs [2]. This amoun g (also called "annuiy") is calculaed using he formula below: n i( 1+ g = NPV UCRF = NPV (1) n ( 1+ 1 The UCRF (Uniform Capial Recovery Facor), is he facor by which he NPV mus be muliplied o reach he consan value g given discoun rae i for a series of n periods. In he example in Table 6, he alernaive creaes an annuiy of 3.73 (in moneary unis). The five cash inflows of 3.73 are equal o a NPV of 14.1, exacly equal o he NPV of cash flows of he projec plan (including iniial invesmen). Alernaive 2 Vol.2 No PP C World Academic Publishing ~ 15 ~

2 16 generaes annuiy of 4.58 (in moneary unis). By comparing he poenial of heir projecs o generae sable cash flows, he alernaive 2 should be higher han he alernaive 1. Annuiies are no specific o renewable energy projecs. The concep LCOE is used o compare he differen alernaives of energy producion. Revenues are fixed and equal beween hese alernaives (e.g., because he price is se by he regulaor and does no depend on he echnology used o produce energy, hen he alernaives differ only in heir coss (cash flows of revenues are equal o all alernaives) [3]. The above concep is applied only o cash ouflows (coss). The sum of all coss involved in he projec during is full life cycle (Toal Life Cycle Cos - TLCC) are discouned o presen value and convered ino a sream of equal cash ouflows for each year of he projec ("annuiy negaive"). If he value is divided by he annual amoun of energy produced, he resul is called he Levelized Cos of Energy (LCOE - Levelezed Cos of Energy). The LCOE is assigned each uni of energy produced (or saved) by he projec during he analysis period is equal o he TLCC when discouned o he base year (period 0). The LCOE can be used o rank differen alernaives for producion (or consumpion) of energy, as shown in Fig. 2. Fig. 2 Values in $/kwh LCOE (Levelezed Cos of Energy) in 2005 for various convenional and renewable echnologies [3]. B. Levelezed Cos of Energy The Levelezed Cos of Energy (LCOE) is he real cos of producion of kilowa-hours (kwh) of elecriciy. Includes he oal consrucion, cenral producion coss of he power saion during is economic lifeime; financing coss, reurn on capial and depreciaion. Coss are leveled in curren moneary values, or adjused o eliminae he impac of inflaion. The LCOE is wha i would cos he owner of he faciliy o produce one kwh of energy. For elecriciy producion, he LCOE is a mehod o compare renewable energy echnologies adoped o produce elecriciy. The model LCOE mos known and used in energy projecs by he Naional Renewable Energy Laboraory [4]. The calculaion mehod is defined below. FCR ICC + LRC LCOE = + O & M + PTC (2) AEPne Where: FCR Fixed Charge Rae; ICC Iniial Capial Cos; LRC Levelezed Replacemen Cos; O&M Operaions and Mainenance; PTC Producion Tax Credi and AEPne Ne Annual Energy Producion. The calculaion of LRC can be accomplished wih he equaion 3, where MR Machine Raing [3]. LRC = $ MR (3) kw For correc analysis of he leveled cos of energy, he ne annual energy producion of he wind farm is given by equaion 4. The availabiliy is defined as he raio of hours he wind sysem is capable of producing energy relaive o he number of hours during he sudy period and losses represen loss of marix, dir on he blades and ice formaion, he cenral producion downime for mainenance and miscellaneous sysem losses in producion and disribuion of energy o he elecric grid [5]. ( losses) AEPne = AEPgross Availabili y 1 (4) Where: AEPgross Annual Energy Producion. The LCOE was adoped by he Unied Saes Deparmen of Energy in he Low Speed Wind Turbine Program (LWST) and makes reasonable approximaion of he COE (Cos of Energy), which is esimaed by he poenial invesor o consider he reliabiliy of he equipmen o deermine AEP (Annual Energy Producion), O&M (Operaions and Mainenance) and LRC (Levelezed Replacemen Cos). The AEP is affeced by he availabiliy of equipmen due o he shudown of wind urbines due o scheduled and unscheduled mainenance. The coss of O&M consis of programmed coss (prevenive) and coss unscheduled (repair) mainenance, including coss for replacemen pars, supplies, manpower, leases (royalies) of land, among oher expenses arising from he operaion of a wind farm. II. FIXED CHARGE RATE The capial cos componen of COE is deermined by he spread of insalled capial cos over he lifeime of he projec done in a linear basis over he years hrough he FCR (Fixed Charge Rae). The FCR is a percenage of he cos of insalled capial coss including deb service (financing coss) allocaed o each year of he projec. The componen of he cos of capial is analogous o a paymen of fixed rae morgage of a house, or fixed amoun per pay period during he erm of he deb. The analysis period may be he life of a physical plan for he producion or lifeime for accouning purposes. The lifeime of a wind farm ranges from 20 o 30 years, while lifeime used for financial accouning purposes may be smaller [2], [6]. The FCR is he annual value for each moneary uni of iniial capial cos needed o fully cover he iniial capial cos, reurn on equiy and deb, and oher overheads. The fee is charged from a hypoheical projec, spread over cash flow. The curren base model, FCR mus include funding for consrucion, financing raes, reurn on equiy and deb, amorizaion of equipmen and faciliies, ax revenue and profis all on an annual basis [4]. III. INITIAL CAPITAL COST The iniial capial cos (ICC) is he sum of he cos of wind power sysem and he cos srucure of he wind farm. No included is cos of financing he consrucion or financing raes, as hey are calculaed and added separaely hrough he FCR. Nor does i include he coss of he reserve fund for deb service (charges for financing coss). This cos measure includes all he Vol.2 No PP C World Academic Publishing ~ 16 ~

3 17 planning, equipmen acquisiion, consrucion and insallaion coss of he wind sysem, leaving he wind farm ready o operae. This cos includes wind urbine owers and delivered and insalled on sie along wih all mainenance, elecrical sysem and oher infrasrucure suppor. For a wind farm, he cos of insalled capial should include he sysem of collecion of elecriciy which exends from each wind urbine o he subsaion and poin of inerconnecion wih he grid. Depending on he policy and pracice of grid adminisraor and disribuor, he elecrical sysem may or may no be included in he cos of capial [2]. The ICC includes coss for buildings o suppor he operaion and mainenance, he iniial sock of spare pars and mainenance of diagnosic equipmen. Oher coss should be included as coss of pre-consrucion planning, including assessmen and analysis of wind resources, surveying, and consulancy for obaining financing. The insalled capial cos of a wind farm includes he following elemens [1]: Assessmen and analysis of wind resources; Consrucion of service roads; Consrucion of foundaions for wind urbines, infrasrucure o moun ransformers and subsaions; Purchase of wind urbines and owers wih local delivery and insallaion; Consrucion and insallaion of wind sensors, able o communicae wind urbine unis for conrols; Consrucion of he power recepion sysem, including wiring of each wind urbine for he mouning of he ransformer and deck moun ransformers for he subsaion; Consrucion of faciliies needed for operaions and mainenance during he regular operaion of he wind farm; Consrucion and insallaion of he communicaion sysem of wind farms o suppor he command and conrol daa flow from each wind urbine o a cenral faciliy operaions; Inegraion and verificaion of all sysems for proper operaion of he wind farm; Commissioning for wind farm period of decommissioning. IV. LEVELEZED REPLACEMENT COST Depending on he deails of he projec, he major review of he wind urbine occurs every 5, 10 or 15 years. The review focuses on he large gears, bearings, seals and oher moving pars. Usually he nacelle and is machinery are removed from he ower and ranspored o he plan mainenance garage of he wind farm. Ofen, removal of he nacelle and equipmen is replaced immediaely by all already rebuil [3]. The replacemen of he blades of wind urbines is an example of his caegory of frequen replacemen of subsysems. Since hese coss occur a inervals of several years and infrequen during each year, correc accouning for hese coss requires annual exercise of funds (working capial). The aim is o make funds available when needed o repair or oal replacemen of occurrence. The exercise involves calculaing he ne presen value or even o allocae coss for review and replacemen on an annualized basis consisen wih oher cos elemens [1]. V. OPERATIONS AND MAINTENANCE COST The coss of operaions and mainenance (O&M) include coss normally associaed wih recurren rouine operaion of he plan insalled. The O&M coss do no include overime worked or infrequenly, such as major repairs of wind urbines and oher sysems. These coss are included in he cos componen LRC (Levelezed Repalcemen Coss). Mos of he O&M coss is associaed wih mainenance and generally grouped ino hree caegories [7]: Cos of unscheduled visis, bu saisically predicable, rouine mainenance visis o roubleshoo he operaion of wind urbines; Scheduled prevenive mainenance coss for wind urbines and energy collecion sysem; Coss of major repairs and replacemens scheduled subsysems of wind urbines. The firs wo coss occur during he course of a year in operaion and are included in he cos componen of O&M. The hird occurs a inervals of 5, 10 or 15 years and involves financial year over he nex few years, herefore, is included in he cos componen LRC. The purpose of prevenive mainenance is o replace componens and reform sysems ha have finie lifeime, generally smaller han he projeced life of he urbine. Tasks include periodic inspecions of equipmen, lubricaing oil and filer changes, calibraion and adjusmen of sensors and conrollers, replacemen of consumables such as brake pads. The cleaning of he blades in general, fis ino his caegory. The specific asks and frequency are usually explicily defined in he mainenance manuals provided by he manufacurer of he urbine. The coss associaed wih planned mainenance can be esimaed wih reasonable accuracy, bu may vary according o labor coss locaion, locaion and accessibiliy. The scheduled mainenance coss also depend on he ype and cos of consumables used [8]. The unscheduled mainenance should be anicipaed in any proposed wind energy producion. Commercial wind urbines conain a variey of complex sysems ha mus funcion correcly for he urbine work and ge bes possible performance. Failure or malfuncion of he smaller componen (subsysem), i ofen shus down he urbine and require he aenion of mainenance professionals. Unplanned coss can be separaed ino direc and indirec coss. Direc coss associaed wih labor and equipmen needed for repair or replacemen and consumables used in he process. The resul of he indirec coss associaed wih he revenue los due o sop he urbine. Depending on he deails of ownership and locaion of he wind farm, here may also be coss associaed wih negoiaing land use agreemens, conracs, power purchase agreemens and access o ransmission and disribuion of energy produced [9]. Besides he cos of operaions and mainenance, spare pars and oher mainenance iems in he cos elemen of O&M may also include: Taxes on propery where he wind farm operaes; Paymen of land use; Miscellaneous insurance; Access o ransmission and disribuion raes; Managemen fees and general and adminisraive expenses. Vol.2 No PP C World Academic Publishing ~ 17 ~

4 18 The values of cos of operaions vary wih he siuaion. The ax srucure is where he wind farm conrac, land use, insurance raes and oher fees vary from locaion o locaion and insallaion of wind farms o anoher. In comparison o mainenance coss, operaing coss are ypically very small relaive o he cos of producion of a cenral power generaion [7]. VI. PRODUCTION TAX CREDIT The Producion Tax Credi (PTC) is a ype of public incenive, usually graned by he Federal Governmen for he renewable energy secor. This incenive is offered in he form of ax credis for producing energy for a cerain period of operaion of he cenral producion of energy. The PTC is adjused for inflaion rae prevailing in he counry concerned, wihin 10 o 15 years, falling on each MWh of renewable energy produced and sold o he disribuion grid. For he producion of wind power in Porugal, Decree-Law No. 33-A/ sipulaes ha farms ha have already obained permission o esablish he dae of enry ino force of he law or hey may obain he license for esablishmen wihin one year afer he enry ino force, mainaining he curren ariff of /MWh from 2005, progressing a he rae of inflaion, for a period of 15 years from he dae of enry ino force of ha legislaion. A he end of his period, he rae will converge o marke price plus he premium for he sale of green cerificaes. The Levelezed Cos of Energy mehod has drawbacks ha limi is applicaion in he assessmen and managemen of projecs in renewable energy, paricularly in wind energy projecs: The echnical and economic parameers direcly impac he mehod LCOE and should be carefully considered in he analysis of he final cos of energy produced. The dramaic reducions in LCOE occur when he wind farm wind resource is above average, or when we obain improvemens in capaciy facor. This suggess ha he increase in capaciy facor from values below he levels of average capaciy facor can lead mainly o large reducions in LCOE [ 10]. The LRC ha maches he coss for equipmen replacemen in he long erm, i has been repored o be increasingly significan componen o he annual cos of wind power and if i is overvalued, can inflae he cos of energy currenly produced. The echnological improvemen in wind power can make he cos of capial is smaller in he coming years. The LCOE is a mehodology for deermining and analyzing he cos of energy producion resriced o cerain period of ime. The fac ha he analysis is for one year of producion (a single uni of ime) ignores gains economies of scale hroughou he projec life. A. Toal Life-Cycle Cos The evaluaion mehod Toal Life-Cycle Cos (TLCC) mehod is derived from he NPV, as i akes ino accoun only iems of coss (cash ouflows). The TLCC evaluaes he 1 Available in hp:// L33A-2005.pdf differences in cos (and ime of occurrence of coss) beween projec alernaives over he life cycle. Cash ouflows associaed wih he projec (alernaives) are evaluaed for each period and are hen discouned o presen value using a discoun rae as defined in he NPV approach [11]. The TLCC calculae he presen value of all cash ouflows (cos iems), bu no cash inflows (revenues). This only makes sense if: There is no revenue generaed by he projec (Noe ha he cos saved are recorded as revenue) or, Revenues are independen of he invesmen decision (e.g., because revenues are fixed, no maer wha he invesmen decision is chosen). The analysis may focus only on cash ouflows. Soon he TLCC akes no accoun of he projec income, which makes his indicaor no adequae o evaluae absolue araciveness of an invesmen alernaive. I can be used o evaluae he relaive araciveness of alernaive invesmens when considering he cos per uni of oupu as a facor of choice. By definiion, he calculaion of TLCC is defined by he following formula [10]: Co Co Co Co 1 2 TLCC = = 2 ( 1+ ( 1+ ( 1+ ( 1+ (5) Where: TLCC Toal Life -Cycle Cos; Co Cash ouflows in period ; i Discoun rae and Number of periods. The TLCC has disadvanages ha limi is applicaion in assessing and managing projecs in wind energy projecs: The need o know he acual capial cos of he projec. As he ineres rae ha measures he cos of capial for an invesmen should include he risk of he projec, he ask of defining he real value of capial cos is no always easy o accomplish. The failure o consider he projec's revenues, here is inerference by he revenue coss, because here are coss ha are direcly influenced by income, as is he case of axes on income in energy projecs ha may or may no be suppored by incenive programs governmens on renewable energy. Coss are projeced for he life of he projec, which makes he financial cycle equal o he operaing cycle of he invesmen, which by classical rules of accouning does no always coincide. B. Ne Presen Cos The Ne Presen Cos (NPC) of a renewable energy projec is he sum of he curren value of all coss during he projec's ineres period (generally considered is lifeime), including residual values 2 as coss. The ne presen cos of a projec is he sum of all cos componens, including [ 13]: The invesmen of capial or iniial capial cos; O&M coss, excluding fuel (in case of wind); Coss of major replacemens; 2 I is undersood by residual values, he difference beween he book value of he commercial value of a fixed asse afer he projec lifeime. 12.Newnan, D.G. and Jerome P. Lavelle., Engineering Economic Analysis1998, Ausin, TX.: Engineering Press.. Vol.2 No PP C World Academic Publishing ~ 18 ~

5 19 Energy coss (fuel coss, including oher associaed coss); Any oher coss such as fees and legal fees, among ohers. If a series of projecs or invesmen opions are being considered, he lowes ne presen cos will be he bes opion. By definiion, he formula for calculaing he NPC is defined as [14], [3]: NPC Co Co.... Co D Co D 1 2 v v = = + N N 2 ( 1+ ( 1+ ( 1+ ( 1+ ( 1+ ( 1+ (6) Where: NPC Ne Presen Cos; Co Cash ouflows in period ; i Discoun rae; Number of periods of ouflows; N Lifeime of wind park and Dv disinvesmen value. The NPC has disadvanages ha limi heir applicaion in he evaluaion and managemen of wind energy projecs: The discoun rae or cos of capial remains unchanged hroughou he period under review he projec because he cos of capial depends on he behavior of he risk of he aciviy ha ends o be decreasing wih he years of operaion and echnological mauriy. The financial indicaors considered over he life of he projec (inflaion, discoun rae, insurance, axes, among ohers) also remain consan hroughou he period analyzed wha makes he NPC no o be influenced by he uncerainies of he economic scenario where he projecs are insered. The fac of considering he value of disinvesmen, especially for wind energy projecs, because i is capial inensive projec, makes he value of he divesmen is high compared o oher renewable echnologies. In he case of wind energy projecs reurn higher ne presen cos. C. Levelized Elecriciy Generaion Cos The Levelized Elecriciy Gereraion Cos (LEGC) per kw is he proporion of he oal cos over he lifeime of he projec from anicipaed resuls expressed in equivalen erms by he curren value. This cos is equivalen o he average cos being paid by consumers o cover producion coss included capial coss, operaions and mainenance, fuel, rae of reurn equivalen o he discoun rae. The formula used for calculaing he LEGC for one uni of elecriciy generaion is defined by IEA [2] ( I + M + F )( 1 + r) f LEGC = (7) AAR ( 1 + r) Where: LEGC Levelized Elecriciy Generaion Cos; I Invesmen expendiures in he year ; M Operaions and mainenance expendiures in he year ; F Fuel expendiures in he year ; AAR Average Annual Revenue based on hourly producion and r Discoun rae; Number of ouflows periods. By comparing LEGC for wind energy projecs in differen sies, i is imporan o define he limis of "producion sysem" and coss ha are included in i. For example, ransmission lines and disribuion sysems should be included in he cos? Usually only connecion coss o he producion source for he ransmission sysem is included as cos of producion. One mus be careful o delimi he border of cos analysis, wha should or should no be included in he cos of energy [8]. The LEGC has disadvanages ha limi applicaion in he assessmen and managemen of projecs in wind energy projecs: The discoun rae or cos of capial remains unchanged hroughou he period under review he projec because he cos of capial depends on he behavior of he risk of he aciviy ha ends o be decreasing wih he years of operaion and echnological mauriy. Capial coss are regarded as a lump sum a he beginning of he analysis; however here are oher capial coss as major equipmen insallaions and replacemens ha occur in oher periods of he plan's lifeime producion. All recurren coss begin o accumulae from he firs period and are grouped ogeher and considered o occur a he end of he curren period. By using he discoun rae o updae and add coss in differen periods, one runs he risk of his rae is differen from he rae a which raise coss and oher curren expendiure over he life of he projec. D. Uniary Presen Average Cos The Uniary Presen Average Cos (UPAC) is significan for each year. However i is less meaningful if he evaluaion period exends from he invesmen decision unil he end of he lifeime of he plan producion. The average annual cos per uni calculaed for he wo soluions, boh echnically and financially differen, may be he same and be differen han he ineres of such soluions. To obain he average uni cos updaed, updae separaely charges (invesmen, operaions and mainenance, fuel, and ohers) and oal oupu during he lifeime of he plan producion. Assigning charges generally updaed by PVCo and annual accumulaed and updaed by PVsAEP, UPAC ( /kw), is given by [3]: PVCo UPAC = PVs AEP (8) Where: PVCo Presen value of cash ouflows and PVsAEP Presen value of cumulaed annual energy producion. The acualizaion process i means calculae he amoun as paymens and receips made on various daes if made a ime = 0. To se he model o consider is necessary o esablish precisely wha is expeced escalaion for he exis and enries for cash. A fairly general model can admi ha boh he inpus (energy sales) and cash ouflows (invesmen, operaing coss) are irregularly spread over a period of n years of life. Alhough paymens and receips are disribued more or less irregulariy over ime, can be assumed: Expendiure is done on he firs day of he year during which hey pay, Revenues go ino he las day of he year in which hey acually receive i. The ineres and depreciaion depend on he condiions of financing, acceped he same for all projecs being compared. The following calculaion is he average cos o dae, considers iself neiher ineres nor amorizaion. Invesed capial and is depreciaion could never be considered simulaneously, i Vol.2 No PP C World Academic Publishing ~ 19 ~

6 20 would be duplicaion [15]. In his model of assessmen of coss, cash ouflows are classified as invesmen coss and operaing expenses. The invesmen coss include all cash ouflows arising from he physical srucure of he cenral producion (machinery and equipmen, civil works, roads and access, conrol sysems, among oher hings of ha naure). How operaing coss shall include O&M coss, fuel and oher charges relaed o he regular funcioning of he power plan. The calculaion of he UPAC, saring of he equaion 8, i is assumed he following parameers: Invesmen (ICC) focuses on he iniial momen of he projec ( = 0). The annual use of power (capaciy facor for wind projecs) insalled is consan hroughou he lifeime of he projec. The O&M coss are consan over he useful lifeime and equal o C O&M. There are no charges for fuel, will be he case of small hydroelecric plans, wind farms and phoovolaic cells. The various charges are void or may be included in he O&M coss. Accordingly, he UPAC is defined by: ICC( 1 + CO& M α ) ICC( β + CO& M ) UPAC = = ( AEP ) (8) α AEPs Where: UPAC Uniary Presen Average Cos; ICC Iniial Capial Cos; CO&M Operaions and Mainenance coss and AEPs Cumulaed annual energy producion. β = For hose facors ( 1+ α = i( 1+ i( 1+, UCRF = ( and Where: i = ineres rae and = number of ouflows or lifeime of he projec. The UPAC has disadvanages ha limi is use in evaluaing and managing projecs in wind energy: Capial coss (ICC) are considered as a fixed sum a he beginning of he projec; however here are oher capial coss as major equipmen insallaions and replacemens ha occur in oher periods of he plan's lifeime producion. The capaciy facor is no fixed hroughou he period of operaion of he projec (lifeime), which makes he wind producion variable over he years. By oscillaing energy producion, here is also flucuaion in wind energy revenues and coss. The O&M coss are no fixed over he lifeime of he projec. The mainenance conracs for wind farms are defined according o he warrany period given by equipmen manufacurers. The duraion of mainenance conrac ouside he manufacurer s warrany is 5 o 12 years, ye he life of he wind farms are for a leas 20 years. E. Peculiariies in he Cos Analysis of Wind Energy Projecs The adopion of sandardized mehodology for calculaing he cos of wind energy projecs is necessary in he efficien managemen of a wind farm. Some approaches can be used for economic assessmen in various conexs, o reflec he crieria and prioriies of differen economic agens involved in he venure. For he correc definiion and calculaion of he cos of one uni of energy produced by a cenral producion is essenial o characerize he boundaries of he projec under sudy. I is imporan o compare he power plans mee he cos of energy produced in isolaion, bu may no reflec he oal economic impac of new power when conneced o he nework wihin an exising elecrical sysem. I is imporan from he sandpoin of he producer o esimae he cos of producing one uni of energy for he managemen and evaluaion of he projec as a business uni mus ensure ha economic reurn for he invesor/manager [16]. The average cash cos mehodology for he series of coss o presen values a a given base year by applying he discoun rae. The discoun rae considered appropriae for he energy secor may differ from counry o counry, and in he same counry, from echnology o echnology. Applying he discoun rae akes ino accoun he ime value of money, or an amoun earned or spen in he pas or fuure, has he same value as he same amoun (in real erms) gained or spen on his. The discoun rae may be relaed o raes of reurns ha can be earned on invesmens ypical, which may be a fee required by regulaors incorporaing he provision for financial risks and/or derived from naional macroeconomic analysis. Despie he invesmen opion no o depend enirely on how i is financed, as i should be profiable by iself, funding may influence he araciveness of he projec. This is especially rue for renewable energy projecs. How ofen is very capial inensive and require large amoun of iniial deb and equiy. The financial condiions for such a loan, becoming an imporan facor in he projec evaluaion [6]. VII. SUMMARY AND CONCLUSIONS The objecive of an economic analysis is o provide he informaion needed o make a judgmen or a decision. The mos complee analysis of an invesmen in a echnology or a projec requires he analysis of each year of he life of he invesmen, aking ino accoun relevan direc coss, indirec and overhead coss, axes, and reurns on invesmen, plus my exernaliies, such as environmenal impacs, ha are relevan o he decision o be made. However, i is imporan o consider he purpose and scope of a paricular analysis a he ouse because his will prescribe he course o follow. The perspecive of he analysis is imporan, ofen dicaing he approach o be used. Also, he ulimae use of he resuls of an analysis will influence he level of deail underaken. The decision-making crieria of he poenial invesor mus also be considered. Among he economic indicaors presened in his paper, as shown in Table II, i is possible o summary up hese poins: LCOE is recommended for use when ranking alernaives given a limied budge simply because he measure will provide a proper ordering of he alernaives, which may hen be seleced unil he budge is expended. LCOE is no recommended when selecing among muually exclusive alernaives because differing invesmen sizes. TLCC is no recommended for economic evaluaion o decide wheher o accep or rejec an invesmen because TLCC provides no frame of reference for wha are accepable and unaccepable coss, and TLCC does no address benefis and Vol.2 No PP C World Academic Publishing ~ 20 ~

7 21 reurns. TLCC can be used for ranking or selecing among muually exclusive alernaives ha provide exacly he same benefis and reurns. NPC is no recommended for economic evaluaion o decide ino differen size invesmen because his indicaor TABLE II akes ino consideraion he value of disinvesmen, especially for wind energy projecs, as i is capial inensive projec. In he wind energy projecs reurn higher ne presen cos. OVERVIEW OF METHODS OF ECONOMIC COSTS EVALUATION TO SPECIFIC FEATURES AND DECISIONS Significan invesmens (negaive ne cash flow) afer firs reurn Mehods of economic coss evaluaion LCOE TLCC NPC LEGC UPAC Possible Possible Possible No useful No useful Invesmen subjec o regulaion Possible Possible Possible Possible Possible Projec-specific deb-financing needed Possible Possible Possible Possible No useful Social coss (exernaliies) Possible Possible Preferred No useful Possible Taxes Possible Possible Possible Possible Possible Selec from muually exclusive alernaives No useful Possible Preferred Possible Possible Ranking (Limied budge) Preferred Possible Possible Possible Possible Risks Possible Possible Possible Possible Possible LEGC is no recommended for economic evaluaion o decide abou significan invesmens and social coss (exernaliies) because he border of cos analysis is no specific and can change is dimension depends on he analys concepion. In wind energy projecs his border can be oally differen. UPAC is no recommended for economic evaluaion o wind projecs because his indicaor akes ino consideraion he ICC and O&M coss fixed in he beginning of he projec. Wind projecs differ from i due o is projec s naure. This paper canno provide an exhausive and complee exposiion of he heory and pracical pifalls of paricular economic mehods. No analysis will be valid if i is no based on sound and consisen daa. The economic measures described in deail in his paper can be used o compare alernaive invesmens or wind projecs. These mehods can be used as comparison ools. ACKNOWLEDGEMENT This work was suppored in par by he Sae Governmen of Maranhão hrough Foundaion for Research and Technological and Scienific Developmen of Maranhão (FAPEMA) Brazil under PhD scholarship (BD-00007/08). REFERENCES [1] NWCC. Wind Energy Coss NWCC Wind Energy Series [cied 2009 February 2]; No.11.:[Naional Wind Coordinaing Collaboraive]. Available from: hp:// [2] IEA. Guidelines for he Economic Analysis of Renewable Energy Technology Applicaions [cied 2010 March 23]; Inernaional Energy Agency]. Availablefrom:hp:// pdf. [3] NREL, A Manual for he Economic Evaluaion of Energy Efficiency and Source: Adaped from [2],[3]. Renewable Energy Technologies., U.S. Deparmen of Energy, Edior 1995, Naional Renewable Energy Laboraory.: Springfield. p [4] Cohen, J.M. A Mehodology for Compuing Wind Turbine Cos of Elecriciy Using Uiliy Economic Assumpions. in Windpower San Francisco, California. [5] RETScreen Inernaional Clean Energy Decision Suppor Cenre. Clean Energy Projec Analysis: RETScreen Engineering & Cases Texbook [cied 2008 January 10]; Available from: [6] Harper, J., M. Karcher, and M. Bolinger, Wind Projec Financing Srucures: A Review & Comparaive Analysis., U.S. Deparmen of Energy, Edior 2007, Lawrence Berkeley Naional Laboraory. [7] Chrisopher A. Walford. Wind Turbine Reliabiliy: Undersanding and Minimizing Wind Turbine Operaion and Mainenance Coss [cied March ]; Available from: hp://prod.sandia.gov/echlib/access-conrol.cgi/2006/ pdf. [8] IEA. Projeced Coss of Generaing Elecriciy [cied 2010 March 27]; Inernaional Energy Agency]. Available from: hp:// [9] Blanco, M.I., The economics of wind energy. Renewable & Susainable Energy Reviews, (6-7): p [10] K. Cory and P. Schwabe, Wind Levelized Cos of Energy: A Comparison of Technical and Financing Inpu Variables., U.S. Deparmen of Energy, Edior 2009, NREL. Colorado. [11] Kreih, F. and R.E. Wes, CRC Handbook of Energy Efficiency1997, USA: CRC Press [12] Newnan, D.G. and Jerome P. Lavelle., Engineering Economic Analysis1998, Ausin, TX. Engineering Press. [13] Blackler, T. and M.T. Iqbal, Pre-feasibiliy sudy of wind power generaion in holyrood, newfoundland. Renewable Energy, (4): p [14] K. George and T. Schweizer., Primer: The DOE Wind Energy Program s Approach o Calculaing Cos of Energy., U.S. Deparmen of Energy, Edior 2008, NREL.: Rockville/Maryland. [15] Damodaran, A., Corporae Finance: Theory and Pracice. 2nd ed2001: John Wiley and Sons Ld, [16] Johasson, T.B., Renewable Energy: Sources for Fuels and Elecriciy1993, London: Earhscan Publicaions Vol.2 No PP C World Academic Publishing ~ 21 ~

SKF Documented Solutions

SKF Documented Solutions SKF Documened Soluions Real world savings and we can prove i! How much can SKF save you? Le s do he numbers. The SKF Documened Soluions Program SKF is probably no he firs of your supplier parners o alk

More information

Chapter 1.6 Financial Management

Chapter 1.6 Financial Management Chaper 1.6 Financial Managemen Par I: Objecive ype quesions and answers 1. Simple pay back period is equal o: a) Raio of Firs cos/ne yearly savings b) Raio of Annual gross cash flow/capial cos n c) = (1

More information

PROFIT TEST MODELLING IN LIFE ASSURANCE USING SPREADSHEETS PART ONE

PROFIT TEST MODELLING IN LIFE ASSURANCE USING SPREADSHEETS PART ONE Profi Tes Modelling in Life Assurance Using Spreadshees PROFIT TEST MODELLING IN LIFE ASSURANCE USING SPREADSHEETS PART ONE Erik Alm Peer Millingon 2004 Profi Tes Modelling in Life Assurance Using Spreadshees

More information

Reporting to Management

Reporting to Management CHAPTER 31 Reporing o Managemen Inroducion The success or oherwise of any business underaking depends primarily on earning revenue ha would generae sufficien resources for sound growh. To achieve his objecive,

More information

4. International Parity Conditions

4. International Parity Conditions 4. Inernaional ariy ondiions 4.1 urchasing ower ariy he urchasing ower ariy ( heory is one of he early heories of exchange rae deerminaion. his heory is based on he concep ha he demand for a counry's currency

More information

A Note on Using the Svensson procedure to estimate the risk free rate in corporate valuation

A Note on Using the Svensson procedure to estimate the risk free rate in corporate valuation A Noe on Using he Svensson procedure o esimae he risk free rae in corporae valuaion By Sven Arnold, Alexander Lahmann and Bernhard Schwezler Ocober 2011 1. The risk free ineres rae in corporae valuaion

More information

PROFIT TEST MODELLING IN LIFE ASSURANCE USING SPREADSHEETS PART TWO

PROFIT TEST MODELLING IN LIFE ASSURANCE USING SPREADSHEETS PART TWO Profi Tes Modelling in Life Assurance Using Spreadshees, par wo PROFIT TEST MODELLING IN LIFE ASSURANCE USING SPREADSHEETS PART TWO Erik Alm Peer Millingon Profi Tes Modelling in Life Assurance Using Spreadshees,

More information

Glenn P. Jenkins Queen s University, Kingston, Canada and Eastern Mediterranean University, North Cyprus

Glenn P. Jenkins Queen s University, Kingston, Canada and Eastern Mediterranean University, North Cyprus COST-BENEFIT ANALYSIS FOR INVESTMENT DECISIONS, CHAPTER 3: THE FINANCIAL APPRAISAL OF PROJECTS Glenn P. Jenkins Queen s Universiy, Kingson, Canada and Easern Medierranean Universiy, Norh Cyprus Developmen

More information

A Brief Introduction to the Consumption Based Asset Pricing Model (CCAPM)

A Brief Introduction to the Consumption Based Asset Pricing Model (CCAPM) A Brief Inroducion o he Consumpion Based Asse Pricing Model (CCAPM We have seen ha CAPM idenifies he risk of any securiy as he covariance beween he securiy's rae of reurn and he rae of reurn on he marke

More information

Depreciation and Corporate Taxes

Depreciation and Corporate Taxes 205 Depreciaion and Corporae Taxes Chris Hendrickson Carnegie Mellon Universiy Tung Au Carnegie Mellon Universiy 205.1 Depreciaion as Tax Deducion 205.2 Tax Laws and Tax Planning 205.3 Decision Crieria

More information

Market Analysis and Models of Investment. Product Development and Whole Life Cycle Costing

Market Analysis and Models of Investment. Product Development and Whole Life Cycle Costing The Universiy of Liverpool School of Archiecure and Building Engineering WINDS PROJECT COURSE SYNTHESIS SECTION 3 UNIT 11 Marke Analysis and Models of Invesmen. Produc Developmen and Whole Life Cycle Cosing

More information

What is a swap? A swap is a contract between two counter-parties who agree to exchange a stream of payments over an agreed period of several years.

What is a swap? A swap is a contract between two counter-parties who agree to exchange a stream of payments over an agreed period of several years. Currency swaps Wha is a swap? A swap is a conrac beween wo couner-paries who agree o exchange a sream of paymens over an agreed period of several years. Types of swap equiy swaps (or equiy-index-linked

More information

Performance Center Overview. Performance Center Overview 1

Performance Center Overview. Performance Center Overview 1 Performance Cener Overview Performance Cener Overview 1 ODJFS Performance Cener ce Cener New Performance Cener Model Performance Cener Projec Meeings Performance Cener Execuive Meeings Performance Cener

More information

Chapter 6: Business Valuation (Income Approach)

Chapter 6: Business Valuation (Income Approach) Chaper 6: Business Valuaion (Income Approach) Cash flow deerminaion is one of he mos criical elemens o a business valuaion. Everyhing may be secondary. If cash flow is high, hen he value is high; if he

More information

Diagnostic Examination

Diagnostic Examination Diagnosic Examinaion TOPIC XV: ENGINEERING ECONOMICS TIME LIMIT: 45 MINUTES 1. Approximaely how many years will i ake o double an invesmen a a 6% effecive annual rae? (A) 10 yr (B) 12 yr (C) 15 yr (D)

More information

Chapter 8: Regression with Lagged Explanatory Variables

Chapter 8: Regression with Lagged Explanatory Variables Chaper 8: Regression wih Lagged Explanaory Variables Time series daa: Y for =1,..,T End goal: Regression model relaing a dependen variable o explanaory variables. Wih ime series new issues arise: 1. One

More information

Individual Health Insurance April 30, 2008 Pages 167-170

Individual Health Insurance April 30, 2008 Pages 167-170 Individual Healh Insurance April 30, 2008 Pages 167-170 We have received feedback ha his secion of he e is confusing because some of he defined noaion is inconsisen wih comparable life insurance reserve

More information

YTM is positively related to default risk. YTM is positively related to liquidity risk. YTM is negatively related to special tax treatment.

YTM is positively related to default risk. YTM is positively related to liquidity risk. YTM is negatively related to special tax treatment. . Two quesions for oday. A. Why do bonds wih he same ime o mauriy have differen YTM s? B. Why do bonds wih differen imes o mauriy have differen YTM s? 2. To answer he firs quesion les look a he risk srucure

More information

THE FIRM'S INVESTMENT DECISION UNDER CERTAINTY: CAPITAL BUDGETING AND RANKING OF NEW INVESTMENT PROJECTS

THE FIRM'S INVESTMENT DECISION UNDER CERTAINTY: CAPITAL BUDGETING AND RANKING OF NEW INVESTMENT PROJECTS VII. THE FIRM'S INVESTMENT DECISION UNDER CERTAINTY: CAPITAL BUDGETING AND RANKING OF NEW INVESTMENT PROJECTS The mos imporan decisions for a firm's managemen are is invesmen decisions. While i is surely

More information

Present Value Methodology

Present Value Methodology Presen Value Mehodology Econ 422 Invesmen, Capial & Finance Universiy of Washingon Eric Zivo Las updaed: April 11, 2010 Presen Value Concep Wealh in Fisher Model: W = Y 0 + Y 1 /(1+r) The consumer/producer

More information

Morningstar Investor Return

Morningstar Investor Return Morningsar Invesor Reurn Morningsar Mehodology Paper Augus 31, 2010 2010 Morningsar, Inc. All righs reserved. The informaion in his documen is he propery of Morningsar, Inc. Reproducion or ranscripion

More information

WATER MIST FIRE PROTECTION RELIABILITY ANALYSIS

WATER MIST FIRE PROTECTION RELIABILITY ANALYSIS WATER MIST FIRE PROTECTION RELIABILITY ANALYSIS Shuzhen Xu Research Risk and Reliabiliy Area FM Global Norwood, Massachuses 262, USA David Fuller Engineering Sandards FM Global Norwood, Massachuses 262,

More information

BALANCE OF PAYMENTS. First quarter 2008. Balance of payments

BALANCE OF PAYMENTS. First quarter 2008. Balance of payments BALANCE OF PAYMENTS DATE: 2008-05-30 PUBLISHER: Balance of Paymens and Financial Markes (BFM) Lena Finn + 46 8 506 944 09, lena.finn@scb.se Camilla Bergeling +46 8 506 942 06, camilla.bergeling@scb.se

More information

Ecodesign Requirements for Electric Motors Towards a System-Approach. Demonstrating the benefits of motor starters for fixed speed applications

Ecodesign Requirements for Electric Motors Towards a System-Approach. Demonstrating the benefits of motor starters for fixed speed applications Ecodesign Requiremens for Elecric Moors Towards a Sysem-Approach Demonsraing he benefis of moor sarers for fixed speed applicaions A message from he CAPIEL Presidens Philippe Sauer CAPIEL Presiden Karlheinz

More information

Vector Autoregressions (VARs): Operational Perspectives

Vector Autoregressions (VARs): Operational Perspectives Vecor Auoregressions (VARs): Operaional Perspecives Primary Source: Sock, James H., and Mark W. Wason, Vecor Auoregressions, Journal of Economic Perspecives, Vol. 15 No. 4 (Fall 2001), 101-115. Macroeconomericians

More information

Why Do Real and Nominal. Inventory-Sales Ratios Have Different Trends?

Why Do Real and Nominal. Inventory-Sales Ratios Have Different Trends? Why Do Real and Nominal Invenory-Sales Raios Have Differen Trends? By Valerie A. Ramey Professor of Economics Deparmen of Economics Universiy of California, San Diego and Research Associae Naional Bureau

More information

Cannibalization and Product Life Cycle Management

Cannibalization and Product Life Cycle Management Middle-Eas Journal of Scienific Research 19 (8): 1080-1084, 2014 ISSN 1990-9233 IDOSI Publicaions, 2014 DOI: 10.5829/idosi.mejsr.2014.19.8.11868 Cannibalizaion and Produc Life Cycle Managemen Ali Farrukh

More information

LEASING VERSUSBUYING

LEASING VERSUSBUYING LEASNG VERSUSBUYNG Conribued by James D. Blum and LeRoy D. Brooks Assisan Professors of Business Adminisraion Deparmen of Business Adminisraion Universiy of Delaware Newark, Delaware The auhors discuss

More information

Lecture III: Finish Discounted Value Formulation

Lecture III: Finish Discounted Value Formulation Lecure III: Finish Discouned Value Formulaion I. Inernal Rae of Reurn A. Formally defined: Inernal Rae of Reurn is ha ineres rae which reduces he ne presen value of an invesmen o zero.. Finding he inernal

More information

The Grantor Retained Annuity Trust (GRAT)

The Grantor Retained Annuity Trust (GRAT) WEALTH ADVISORY Esae Planning Sraegies for closely-held, family businesses The Granor Reained Annuiy Trus (GRAT) An efficien wealh ransfer sraegy, paricularly in a low ineres rae environmen Family business

More information

II.1. Debt reduction and fiscal multipliers. dbt da dpbal da dg. bal

II.1. Debt reduction and fiscal multipliers. dbt da dpbal da dg. bal Quarerly Repor on he Euro Area 3/202 II.. Deb reducion and fiscal mulipliers The deerioraion of public finances in he firs years of he crisis has led mos Member Saes o adop sizeable consolidaion packages.

More information

The Greek financial crisis: growing imbalances and sovereign spreads. Heather D. Gibson, Stephan G. Hall and George S. Tavlas

The Greek financial crisis: growing imbalances and sovereign spreads. Heather D. Gibson, Stephan G. Hall and George S. Tavlas The Greek financial crisis: growing imbalances and sovereign spreads Heaher D. Gibson, Sephan G. Hall and George S. Tavlas The enry The enry of Greece ino he Eurozone in 2001 produced a dividend in he

More information

Capital Budgeting and Initial Cash Outlay (ICO) Uncertainty

Capital Budgeting and Initial Cash Outlay (ICO) Uncertainty Financial Decisions, Summer 006, Aricle Capial Budgeing and Iniial Cash Oulay (ICO) Uncerainy Michael C. Ehrhard and John M. Wachowicz, Jr. * * The Paul and Beverly Casagna Professor of Finance and Professor

More information

SPECIAL REPORT May 4, Shifting Drivers of Inflation Canada versus the U.S.

SPECIAL REPORT May 4, Shifting Drivers of Inflation Canada versus the U.S. Paul Ferley Assisan Chief Economis 416-974-7231 paul.ferley@rbc.com Nahan Janzen Economis 416-974-0579 nahan.janzen@rbc.com SPECIAL REPORT May 4, 2010 Shifing Drivers of Inflaion Canada versus he U.S.

More information

House Price Index (HPI)

House Price Index (HPI) House Price Index (HPI) The price index of second hand houses in Colombia (HPI), regisers annually and quarerly he evoluion of prices of his ype of dwelling. The calculaion is based on he repeaed sales

More information

Double Entry System of Accounting

Double Entry System of Accounting CHAPTER 2 Double Enry Sysem of Accouning Sysem of Accouning \ The following are he main sysem of accouning for recording he business ransacions: (a) Cash Sysem of Accouning. (b) Mercanile or Accrual Sysem

More information

Topic Overview. Learning Objectives. Capital Budgeting Steps: WHAT IS CAPITAL BUDGETING?

Topic Overview. Learning Objectives. Capital Budgeting Steps: WHAT IS CAPITAL BUDGETING? Chaper 10: THE BASICS OF CAPITAL BUDGETING Should we build his plan? Topic Overview Projec Types Capial Budgeing Decision Crieria Payback Period Discouned Payback Period Ne Presen Value () Inernal Rae

More information

Appendix D Flexibility Factor/Margin of Choice Desktop Research

Appendix D Flexibility Factor/Margin of Choice Desktop Research Appendix D Flexibiliy Facor/Margin of Choice Deskop Research Cheshire Eas Council Cheshire Eas Employmen Land Review Conens D1 Flexibiliy Facor/Margin of Choice Deskop Research 2 Final Ocober 2012 \\GLOBAL.ARUP.COM\EUROPE\MANCHESTER\JOBS\200000\223489-00\4

More information

Capital budgeting techniques

Capital budgeting techniques Capial budgeing echniques A reading prepared by Pamela Peerson Drake O U T L I N E 1. Inroducion 2. Evaluaion echniques 3. Comparing echniques 4. Capial budgeing in pracice 5. Summary 1. Inroducion The

More information

INVESTIGATION OF THE INFLUENCE OF UNEMPLOYMENT ON ECONOMIC INDICATORS

INVESTIGATION OF THE INFLUENCE OF UNEMPLOYMENT ON ECONOMIC INDICATORS INVESTIGATION OF THE INFLUENCE OF UNEMPLOYMENT ON ECONOMIC INDICATORS Ilona Tregub, Olga Filina, Irina Kondakova Financial Universiy under he Governmen of he Russian Federaion 1. Phillips curve In economics,

More information

Outline of Medicare Supplement Coverage

Outline of Medicare Supplement Coverage Underwrien by Serling Life Insurance Company Ouline of Medicare Supplemen Coverage Benefi Char of Medicare Supplemen Plans Sold wih Effecive Daes on or afer June 1, 2010 TX OC (09/11) Medicare Supplemen

More information

Switching Regulator IC series Capacitor Calculation for Buck converter IC

Switching Regulator IC series Capacitor Calculation for Buck converter IC Swiching Regulaor IC series Capacior Calculaion for Buck converer IC No.14027ECY02 This applicaion noe explains he calculaion of exernal capacior value for buck converer IC circui. Buck converer IIN IDD

More information

Inflation Accounting. Advanced Financial Accounting

Inflation Accounting. Advanced Financial Accounting Inflaion Accouning Advanced Financial Accouning Inflaion: Definiions Decrease in purchasing power of money due o an increase in he general price level A process of seadily rising prices resuling in diminishing

More information

MACROECONOMIC FORECASTS AT THE MOF A LOOK INTO THE REAR VIEW MIRROR

MACROECONOMIC FORECASTS AT THE MOF A LOOK INTO THE REAR VIEW MIRROR MACROECONOMIC FORECASTS AT THE MOF A LOOK INTO THE REAR VIEW MIRROR The firs experimenal publicaion, which summarised pas and expeced fuure developmen of basic economic indicaors, was published by he Minisry

More information

Supply Chain Management Using Simulation Optimization By Miheer Kulkarni

Supply Chain Management Using Simulation Optimization By Miheer Kulkarni Supply Chain Managemen Using Simulaion Opimizaion By Miheer Kulkarni This problem was inspired by he paper by Jung, Blau, Pekny, Reklaii and Eversdyk which deals wih supply chain managemen for he chemical

More information

Chapter 9 Bond Prices and Yield

Chapter 9 Bond Prices and Yield Chaper 9 Bond Prices and Yield Deb Classes: Paymen ype A securiy obligaing issuer o pay ineress and principal o he holder on specified daes, Coupon rae or ineres rae, e.g. 4%, 5 3/4%, ec. Face, par value

More information

CVA calculation for CDS on super senior ABS CDO

CVA calculation for CDS on super senior ABS CDO MPRA Munich Personal RePEc Archive CVA calculaion for CDS on super senior AS CDO Hui Li Augus 28 Online a hp://mpra.ub.uni-muenchen.de/17945/ MPRA Paper No. 17945, posed 19. Ocober 29 13:33 UC CVA calculaion

More information

Premium Income of Indian Life Insurance Industry

Premium Income of Indian Life Insurance Industry Premium Income of Indian Life Insurance Indusry A Toal Facor Produciviy Approach Ram Praap Sinha* Subsequen o he passage of he Insurance Regulaory and Developmen Auhoriy (IRDA) Ac, 1999, he life insurance

More information

APPLICATION OF ECONOMIC INDICATORS TO ASSES THE BRIDGES OF REHABLITATION

APPLICATION OF ECONOMIC INDICATORS TO ASSES THE BRIDGES OF REHABLITATION Vol. 11, Issue 1/2015, 69-75 DOI: 10.1515/cee-2015-0009 APPLICATION OF ECONOMIC INDICATORS TO ASSES THE BRIDGES OF REHABLITATION Marin PITOŇÁK 1,*, Milan VALUCH 2 1 Cenre of Excellence in Transpor Engineering,

More information

Valuation Beyond NPV

Valuation Beyond NPV FIN 673 Alernaive Valuaion Approaches Professor Rober B.H. Hauswald Kogod School of Business, AU Valuaion Beyond NPV Corporae Finance revolves around hree fundamenal quesions: wha long-erm invesmens should

More information

4. The Poisson Distribution

4. The Poisson Distribution Virual Laboraories > 13. The Poisson Process > 1 2 3 4 5 6 7 4. The Poisson Disribuion The Probabiliy Densiy Funcion We have shown ha he k h arrival ime in he Poisson process has he gamma probabiliy densiy

More information

Duration and Convexity ( ) 20 = Bond B has a maturity of 5 years and also has a required rate of return of 10%. Its price is $613.

Duration and Convexity ( ) 20 = Bond B has a maturity of 5 years and also has a required rate of return of 10%. Its price is $613. Graduae School of Business Adminisraion Universiy of Virginia UVA-F-38 Duraion and Convexiy he price of a bond is a funcion of he promised paymens and he marke required rae of reurn. Since he promised

More information

Chapter 8 Student Lecture Notes 8-1

Chapter 8 Student Lecture Notes 8-1 Chaper Suden Lecure Noes - Chaper Goals QM: Business Saisics Chaper Analyzing and Forecasing -Series Daa Afer compleing his chaper, you should be able o: Idenify he componens presen in a ime series Develop

More information

Behavior Analysis of a Biscuit Making Plant using Markov Regenerative Modeling

Behavior Analysis of a Biscuit Making Plant using Markov Regenerative Modeling Behavior Analysis of a Biscui Making lan using Markov Regeneraive Modeling arvinder Singh & Aul oyal Deparmen of Mechanical Engineering, Lala Lajpa Rai Insiue of Engineering & Technology, Moga -, India

More information

State Machines: Brief Introduction to Sequencers Prof. Andrew J. Mason, Michigan State University

State Machines: Brief Introduction to Sequencers Prof. Andrew J. Mason, Michigan State University Inroducion ae Machines: Brief Inroducion o equencers Prof. Andrew J. Mason, Michigan ae Universiy A sae machine models behavior defined by a finie number of saes (unique configuraions), ransiions beween

More information

Distributing Human Resources among Software Development Projects 1

Distributing Human Resources among Software Development Projects 1 Disribuing Human Resources among Sofware Developmen Proecs Macario Polo, María Dolores Maeos, Mario Piaini and rancisco Ruiz Summary This paper presens a mehod for esimaing he disribuion of human resources

More information

The Real Business Cycle paradigm. The RBC model emphasizes supply (technology) disturbances as the main source of

The Real Business Cycle paradigm. The RBC model emphasizes supply (technology) disturbances as the main source of Prof. Harris Dellas Advanced Macroeconomics Winer 2001/01 The Real Business Cycle paradigm The RBC model emphasizes supply (echnology) disurbances as he main source of macroeconomic flucuaions in a world

More information

Wages and Unemployment. 1. Pre-Keynesian economics. Equilibrium in all markets, FE of labor in labor market equilibrium. 2. Keynes' revolution

Wages and Unemployment. 1. Pre-Keynesian economics. Equilibrium in all markets, FE of labor in labor market equilibrium. 2. Keynes' revolution Wages and Unemploymen 1. Pre-Keynesian economics Equilibrium in all markes, FE of labor in labor marke equilibrium 2. Keynes' revoluion 3. Inflaion His ideas developed in he hisorical conex of pos-wwi

More information

Economics 140A Hypothesis Testing in Regression Models

Economics 140A Hypothesis Testing in Regression Models Economics 140A Hypohesis Tesing in Regression Models While i is algebraically simple o work wih a populaion model wih a single varying regressor, mos populaion models have muliple varying regressors 1

More information

Doctoral Students Conference th 7 th July, 2009 Thessaloniki, Greece

Doctoral Students Conference th 7 th July, 2009 Thessaloniki, Greece Docoral Sudens Conference h 7 h July, 2009 Thessaloniki, Greece 6 h Susainable Developmen and he Bulgarian Naional Sraegy for Regional Developmen 2005-2015: 2015: an applicaion of a hree dimensional heoreical

More information

PRM and VTM Parallel Array Operation

PRM and VTM Parallel Array Operation APPLICATION NOTE AN:002 M and V Parallel Array Operaion Joe Aguilar VI Chip Applicaions Engineering February 2014 Conens Page Inroducion 1 High-Level Guidelines 1 Sizing he Resisor 4 Arrays of Six or 5

More information

Benefit-Cost Analysis

Benefit-Cost Analysis Slide 1 Benefi-Cos Analysis Sco Pearson Sanford Universiy Sco Pearson is Professor Emerius of Agriculural Economics a he Food Research Insiue, Sanford Universiy. He has paricipaed in projecs ha combined

More information

Estimating Rates of Return on Capital. Gallina Vincelette (PRMED) Apirl 26-30, 2010

Estimating Rates of Return on Capital. Gallina Vincelette (PRMED) Apirl 26-30, 2010 Esimaing Raes of Reurn on Capial Gallina Vincelee (PRMED) Apirl 26-30, 2010 Rae of Reurn on Capial (RoR) RoR is imporan for applied growh economic work Measures he conribuion of invesmen o economic growh

More information

CALIFORNIA STANDARD PRACTICE MANUAL ECONOMIC ANALYSIS OF DEMAND-SIDE PROGRAMS AND PROJECTS

CALIFORNIA STANDARD PRACTICE MANUAL ECONOMIC ANALYSIS OF DEMAND-SIDE PROGRAMS AND PROJECTS CALIFORIA STADARD PRACTICE MAUAL ECOOMIC AALYSIS OF DEMAD-SIDE PROGRAMS AD PROJECTS OCTOBER 200 Table of Conens Page Chaper... Basic Mehodology... Background... Demand-Side Managemen Caegories and Program

More information

1. Fund types and population covered

1. Fund types and population covered Performance and financial overview of invesmen funds - France 1 March 016 The Banque de France draws up he following informaion for invesmen funds: 1 monhly saisics on fund ousandings and flows, and on

More information

A Guide to Valuing Natural Resources Wealth

A Guide to Valuing Natural Resources Wealth A Guide o Valuing Naural esources Wealh Policy and Economics Team Environmen Deparmen, World Bank For quesions: Giovanni ua, grua@worldbank.org Conens: Basic framework Sub-soil asses Fores (imber asses)

More information

One dictionary: Native language - English/English - native language or English - English

One dictionary: Native language - English/English - native language or English - English Faculy of Social Sciences School of Business Corporae Finance Examinaion December 03 English Dae: Monday 09 December, 03 Time: 4 hours/ 9:00-3:00 Toal number of pages including he cover page: 5 Toal number

More information

Total factor productivity growth in the Canadian life insurance industry: 1979-1989

Total factor productivity growth in the Canadian life insurance industry: 1979-1989 Toal facor produciviy growh in he Canadian life insurance indusry: 1979-1989 J E F F R E Y I. B E R N S T E I N Carleon Universiy and Naional Bureau of Economic Research 1. Inroducion Produciviy growh

More information

Impact of Debt on Primary Deficit and GSDP Gap in Odisha: Empirical Evidences

Impact of Debt on Primary Deficit and GSDP Gap in Odisha: Empirical Evidences S.R. No. 002 10/2015/CEFT Impac of Deb on Primary Defici and GSDP Gap in Odisha: Empirical Evidences 1. Inroducion The excessive pressure of public expendiure over is revenue receip is financed hrough

More information

Relationships between Stock Prices and Accounting Information: A Review of the Residual Income and Ohlson Models. Scott Pirie* and Malcolm Smith**

Relationships between Stock Prices and Accounting Information: A Review of the Residual Income and Ohlson Models. Scott Pirie* and Malcolm Smith** Relaionships beween Sock Prices and Accouning Informaion: A Review of he Residual Income and Ohlson Models Sco Pirie* and Malcolm Smih** * Inernaional Graduae School of Managemen, Universiy of Souh Ausralia

More information

Strategic Optimization of a Transportation Distribution Network

Strategic Optimization of a Transportation Distribution Network Sraegic Opimizaion of a Transporaion Disribuion Nework K. John Sophabmixay, Sco J. Mason, Manuel D. Rossei Deparmen of Indusrial Engineering Universiy of Arkansas 4207 Bell Engineering Cener Fayeeville,

More information

Working Paper No. 482. Net Intergenerational Transfers from an Increase in Social Security Benefits

Working Paper No. 482. Net Intergenerational Transfers from an Increase in Social Security Benefits Working Paper No. 482 Ne Inergeneraional Transfers from an Increase in Social Securiy Benefis By Li Gan Texas A&M and NBER Guan Gong Shanghai Universiy of Finance and Economics Michael Hurd RAND Corporaion

More information

MSCI Index Calculation Methodology

MSCI Index Calculation Methodology Index Mehodology MSCI Index Calculaion Mehodology Index Calculaion Mehodology for he MSCI Equiy Indices Index Mehodology MSCI Index Calculaion Mehodology Conens Conens... 2 Inroducion... 5 MSCI Equiy Indices...

More information

An empirical analysis about forecasting Tmall air-conditioning sales using time series model Yan Xia

An empirical analysis about forecasting Tmall air-conditioning sales using time series model Yan Xia An empirical analysis abou forecasing Tmall air-condiioning sales using ime series model Yan Xia Deparmen of Mahemaics, Ocean Universiy of China, China Absrac Time series model is a hospo in he research

More information

Economics of equipment cost and energy recovery in VOC thermal oxidation for industrial air pollution control applications

Economics of equipment cost and energy recovery in VOC thermal oxidation for industrial air pollution control applications Economics of equipmen cos and energy recovery in VOC hermal oxidaion for indusrial air polluion conrol applicaions Aruna S. K. Warahena, Yew Khoy Chuah Deparmen of Energy, efrigeraing and Air-condiioning

More information

A Further Examination of Insurance Pricing and Underwriting Cycles

A Further Examination of Insurance Pricing and Underwriting Cycles A Furher Examinaion of Insurance ricing and Underwriing Cycles AFIR Conference, Sepember 2005, Zurich, Swizerland Chris K. Madsen, GE Insurance Soluions, Copenhagen, Denmark Svend Haasrup, GE Insurance

More information

Chapter Four: Methodology

Chapter Four: Methodology Chaper Four: Mehodology 1 Assessmen of isk Managemen Sraegy Comparing Is Cos of isks 1.1 Inroducion If we wan o choose a appropriae risk managemen sraegy, no only we should idenify he influence ha risks

More information

Fifth Quantitative Impact Study of Solvency II (QIS 5) National guidance on valuation of technical provisions for German SLT health insurance

Fifth Quantitative Impact Study of Solvency II (QIS 5) National guidance on valuation of technical provisions for German SLT health insurance Fifh Quaniaive Impac Sudy of Solvency II (QIS 5) Naional guidance on valuaion of echnical provisions for German SLT healh insurance Conens 1 Inroducion... 2 2 Calculaion of bes-esimae provisions... 3 2.1

More information

Level I Study Handbook Sample

Level I Study Handbook Sample Level I Sudy Handbook Sample The UpperMark Sudy Handbooks for Level I are comprised of 3 Volumes, each covering abou 10 Topics from he CAIA curriculum. This is a sample of one of he Topic chapers. You

More information

Journal of Business & Economics Research Volume 1, Number 10

Journal of Business & Economics Research Volume 1, Number 10 Annualized Invenory/Sales Journal of Business & Economics Research Volume 1, Number 1 A Macroeconomic Analysis Of Invenory/Sales Raios William M. Bassin, Shippensburg Universiy Michael T. Marsh (E-mail:

More information

A Conceptual Framework for Commercial Property Price Indexes

A Conceptual Framework for Commercial Property Price Indexes Gran-in-Aid for Scienific Research(S) Real Esae Markes, Financial Crisis, and Economic Growh : An Inegraed Economic Approach Working Paper Series No.4 A Concepual Framework for Commercial Propery Price

More information

CRISES AND THE FLEXIBLE PRICE MONETARY MODEL. Sarantis Kalyvitis

CRISES AND THE FLEXIBLE PRICE MONETARY MODEL. Sarantis Kalyvitis CRISES AND THE FLEXIBLE PRICE MONETARY MODEL Saranis Kalyviis Currency Crises In fixed exchange rae regimes, counries rarely abandon he regime volunarily. In mos cases, raders (or speculaors) exchange

More information

Newton's second law in action

Newton's second law in action Newon's second law in acion In many cases, he naure of he force acing on a body is known I migh depend on ime, posiion, velociy, or some combinaion of hese, bu is dependence is known from experimen In

More information

ARCH 2013.1 Proceedings

ARCH 2013.1 Proceedings Aricle from: ARCH 213.1 Proceedings Augus 1-4, 212 Ghislain Leveille, Emmanuel Hamel A renewal model for medical malpracice Ghislain Léveillé École d acuaria Universié Laval, Québec, Canada 47h ARC Conference

More information

Cable & Wireless Jamaica s Price Cap Plan

Cable & Wireless Jamaica s Price Cap Plan Office of Uiliies Regulaion Cable & Wireless Jamaica s Price Cap Plan Deerminaion Noice 2001 Augus 1 Absrac Cable and Wireless Jamaica (C&WJ) has radiionally been regulaed under a rae of reurn regime.

More information

Relative velocity in one dimension

Relative velocity in one dimension Connexions module: m13618 1 Relaive velociy in one dimension Sunil Kumar Singh This work is produced by The Connexions Projec and licensed under he Creaive Commons Aribuion License Absrac All quaniies

More information

Graduate Macro Theory II: Notes on Neoclassical Growth Model

Graduate Macro Theory II: Notes on Neoclassical Growth Model Graduae Macro Theory II: Noes on Neoclassical Growh Model Eric Sims Universiy of Nore Dame Spring 2011 1 Basic Neoclassical Growh Model The economy is populaed by a large number of infiniely lived agens.

More information

Understanding Sequential Circuit Timing

Understanding Sequential Circuit Timing ENGIN112: Inroducion o Elecrical and Compuer Engineering Fall 2003 Prof. Russell Tessier Undersanding Sequenial Circui Timing Perhaps he wo mos disinguishing characerisics of a compuer are is processor

More information

4.8 Exponential Growth and Decay; Newton s Law; Logistic Growth and Decay

4.8 Exponential Growth and Decay; Newton s Law; Logistic Growth and Decay 324 CHAPTER 4 Exponenial and Logarihmic Funcions 4.8 Exponenial Growh and Decay; Newon s Law; Logisic Growh and Decay OBJECTIVES 1 Find Equaions of Populaions Tha Obey he Law of Uninhibied Growh 2 Find

More information

Model Formulation to Estimate Manpower Demand for the Real-Estate Construction Projects in India

Model Formulation to Estimate Manpower Demand for the Real-Estate Construction Projects in India Formulaion o Esimae Manpower Demand for he Real-Esae Consrucion Projecs in India Anil L. Agarwal NICMAR; 25/1, Balewadi, Pune (India) anilagarwal@nicmar.ac.in B. L. Rajpu NICMAR; 25/1, Balewadi, Pune (India)

More information

Establishing Prefabricated Wood I-Joist Composite EI

Establishing Prefabricated Wood I-Joist Composite EI July 008 Esablishing Prefabricaed Wood I- Composie EI INTRODUCTION Composie (glued/nailed) floors are common in boh residenial and commercial consrucion, and have been successfully designed by Prefabricaed

More information

How Much Life Insurance Do You Need?

How Much Life Insurance Do You Need? How Much Life Insurance o You Need? Chris Robinson 1 and Vicoria Zaremba 2 Augus 14, 2012 Absrac We presen formal models of he differen mehods of esimaing a person s required life insurance coverage. The

More information

THE DETERMINATION OF PORT FACILITIES MANAGEMENT FEE WITH GUARANTEED VOLUME USING OPTIONS PRICING MODEL

THE DETERMINATION OF PORT FACILITIES MANAGEMENT FEE WITH GUARANTEED VOLUME USING OPTIONS PRICING MODEL 54 Journal of Marine Science and echnology, Vol. 13, No. 1, pp. 54-60 (2005) HE DEERMINAION OF POR FACILIIES MANAGEMEN FEE WIH GUARANEED VOLUME USING OPIONS PRICING MODEL Kee-Kuo Chen Key words: build-and-lease

More information

USE OF EDUCATION TECHNOLOGY IN ENGLISH CLASSES

USE OF EDUCATION TECHNOLOGY IN ENGLISH CLASSES USE OF EDUCATION TECHNOLOGY IN ENGLISH CLASSES Mehme Nuri GÖMLEKSİZ Absrac Using educaion echnology in classes helps eachers realize a beer and more effecive learning. In his sudy 150 English eachers were

More information

RC, RL and RLC circuits

RC, RL and RLC circuits Name Dae Time o Complee h m Parner Course/ Secion / Grade RC, RL and RLC circuis Inroducion In his experimen we will invesigae he behavior of circuis conaining combinaions of resisors, capaciors, and inducors.

More information

ANALYSIS AND ACCOUNTING OF TOTAL CASH FLOW

ANALYSIS AND ACCOUNTING OF TOTAL CASH FLOW Annals of he Universiy of Peroşani, Economics, 12(1), 2012, 205-216 205 ANALYSIS AND ACCOUNTING OF TOTAL CASH FLOW MELANIA ELENA MICULEAC ABSTRACT: In order o reach he objecive of supplying some relevan

More information

Markit Excess Return Credit Indices Guide for price based indices

Markit Excess Return Credit Indices Guide for price based indices Marki Excess Reurn Credi Indices Guide for price based indices Sepember 2011 Marki Excess Reurn Credi Indices Guide for price based indices Conens Inroducion...3 Index Calculaion Mehodology...4 Semi-annual

More information

DYNAMIC MODELS FOR VALUATION OF WRONGFUL DEATH PAYMENTS

DYNAMIC MODELS FOR VALUATION OF WRONGFUL DEATH PAYMENTS DYNAMIC MODELS FOR VALUATION OF WRONGFUL DEATH PAYMENTS Hong Mao, Shanghai Second Polyechnic Universiy Krzyszof M. Osaszewski, Illinois Sae Universiy Youyu Zhang, Fudan Universiy ABSTRACT Liigaion, exper

More information

Fourier series. Learning outcomes

Fourier series. Learning outcomes Fourier series 23 Conens. Periodic funcions 2. Represening ic funcions by Fourier Series 3. Even and odd funcions 4. Convergence 5. Half-range series 6. The complex form 7. Applicaion of Fourier series

More information

LECTURE: SOCIAL SECURITY HILARY HOYNES UC DAVIS EC230 OUTLINE OF LECTURE:

LECTURE: SOCIAL SECURITY HILARY HOYNES UC DAVIS EC230 OUTLINE OF LECTURE: LECTURE: SOCIAL SECURITY HILARY HOYNES UC DAVIS EC230 OUTLINE OF LECTURE: 1. Inroducion and definiions 2. Insiuional Deails in Social Securiy 3. Social Securiy and Redisribuion 4. Jusificaion for Governmen

More information