Please use this identifier to cite or link to this item: http://hdl.handle.net/1942/26037
Title: Combining Monte Carlo simulations and experimental design for incorporating risk and uncertainty in investment decisions for cleantech: a fast pyrolysis case study
Authors: KUPPENS, Tom 
RAFIAANI, Parisa 
VANREPPELEN, Kenny 
YPERMAN, Jan 
CARLEER, Robert 
SCHREURS, Sonja 
THEWYS, Theo 
VAN PASSEL, Steven 
Issue Date: 2018
Source: Clean Technologies and Environmental Policy, 20 (6), p. 1195-1206
Abstract: The value of phytoextracting crops (plants cultivated for soil remediation) depends on the proftability of the sequential investment in a conversion technology aimed at the economic valorization of the plants. However, the net present value (NPV) of an investment in such an innovative technology is risky due to technical and economic uncertainties. Therefore, decision makers want to dispose of information about the probability of a positive NPV, the largest possible loss, and the crucial economic and technical parameters infuencing the NPV. This paper maps the total uncertainty in the NPV of an investment in fast pyrolysis for the production of combined heat and power from willow cultivated for phytoextraction in the Belgian Campine. The probability of a positive NPV has been calculated by performing Monte Carlo simulations. Information about possible losses has been provided by means of experimental design. Both methods are then combined in order to identify the key economic and technical parameters infuencing the project’s proftability. It appears that the case study has a chance of 87% of generating a positive NPV with an expected value of 3 million euro (MEUR), while worst-case scenarios predict possible losses of 7 MEUR. The amount of arable land, the biomass yield, the purchase price of the crop, the policy support, and the product yield of fast pyrolysis are identifed as the most infuential parameters. It is concluded that both methods, i.e., Monte Carlo simulations and experimental design, provide decision makers with complementary information with regard to economic risk.
Notes: Kuppens, T (reprint author), UHasselt Hasselt Univ, Environm Econ Res Grp, Ctr Environm Sci CMK, Agoralaan, B-3590 Diepenbeek, Belgium. tom.kuppens@uhasselt.be
Keywords: Economic risk; Monte Carlo simulations; Experimental design; Cleantech; Pyrolysis; Phytoremediation
Document URI: http://hdl.handle.net/1942/26037
ISSN: 1618-954X
e-ISSN: 1618-9558
DOI: 10.1007/s10098-018-1543-1
ISI #: 000439453500007
Category: A1
Type: Journal Contribution
Validations: ecoom 2019
Appears in Collections:Research publications

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