The applicability of computer simulation using Monte Carlo techniques in windfarm profitability analysis

Montes, Germán Martínez; Martín, Enrique Prados; Bayo, Javier Alegre; García, Javier Ordóñez

doi:10.1016/j.rser.2011.07.078

Cited by 22 publications

(12 citation statements)

References 15 publications

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“…This literature has a long tradition of exploring the effective and efficient use of knowledge-management systems (e.g., Chow et al, 2005;Gunasekaran & Ngai, 2007), and given the importance of knowledge for opportunity identification and exploitation, it seems reasonable to assume that such systems can complement the entrepreneurial process. In addition, the more recent development of systems based on artificial intelligence (e.g., Kuo et al, 2002;Pinson et al, 1997) and simulation techniques (e.g., Kull & Closs, 2008;Montes et al, 2011;Song & Kim, 2001) can provide tools that (corporate) entrepreneurs can use to make better decisions in terms of both creating optimal outputs for the firm and matching decision makers' preferences to potential opportunities. However, few entrepreneurship scholars have studied the (potential) role of these computer-based systems in the entrepreneurial process or their complementarities and interactions.…”

Section: Discussionmentioning

confidence: 99%

“…The payoffs for entrepreneurial action include, exploiting a potential opportunity and being right, exploiting a potential opportunity and being wrong, not exploiting a potential opportunity and being right, and not exploiting a potential opportunity and being wrong. For example, operations management research has drawn on simulation techniques for profitability analysis (Montes, Martin, Bayo, & Garcia, 2011;Song & Kim, 2001) and has analyzed the consequences of supply chain failures (Kull & Closs, 2008). Perhaps these systems can serve as a basis for developing simulation processes for the type I and type II errors resulting from exploiting a potential opportunity.…”

Section: Operations Management Of Opportunity Identification and Evalmentioning

confidence: 99%

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Researching at the Intersection of Innovation, Operations Management, and Entrepreneurship

Shepherd

Patzelt

2017

Trailblazing in Entrepreneurship

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Section: Discussionmentioning

confidence: 99%

Section: Operations Management Of Opportunity Identification and Evalmentioning

confidence: 99%

Researching at the Intersection of Innovation, Operations Management, and Entrepreneurship

Shepherd

Patzelt

2017

Trailblazing in Entrepreneurship

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“…The IRR is a metric used in the capital budget to estimate the profitability of the potential investments [34]. The IRR is a discount rate that makes the net present value (NPV) [35] of all cash flows of a project zero [15].…”

Section: Internal Rate Of Returnmentioning

confidence: 99%

Evaluating the Effect of Financing Costs on PV Grid Parity by Applying a Probabilistic Methodology

2019

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This paper presents a study that analyses the effect of financing costs on grid parity in photovoltaic (PV) installations by applying a probabilistic methodology. Three different case studies, located in Spain, have been considered, with 500 kW, 50 kW and 5 kW grid-connected PV generators. The technical and economic calculations were performed, considering the interest rate, yield across the Spanish geography, and PV module cost as parameters. The Monte Carlo method was applied to consider the full probabilistic range of values given to the different variables. The goal of this study was to determine, for the studied cases, the levelised cost of energy (LCOE) and the internal rate of return by considering realistic values of the variables. A success rate parameter was calculated, which determined the likelihood of the number of times that the LCOE was below the retail cost of electricity. All the cases were evaluated by applying 10,000 iterations, considering the standard deviations and means defined.

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“…The impacts of stochastic variables on the values of international OG projects are studied, therefore the probabilistic model can overcome the inherent defects of the traditional NPV model. The Monte Carlo Simulation method can comprehensively measure and analyze the stochastic characters of risk factors of international OG projects, therefore it is proper to apply the Monte Carlo Simulation method to measure the impacts of uncertain factors (Falconett and Nagasaka 2010;Montes et al 2011;Welkenhuysen et al 2017).…”

Section: Probabilistic Modelmentioning

confidence: 99%

Risk measurement of international oil and gas projects based on the Value at Risk method

et al. 2018

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International oil and gas projects feature high capital-intensity, high risks and contract diversity. Therefore, in order to help decision makers make more reasonable decisions under uncertainty, it is necessary to measure the risks of international oil and gas projects. For this purpose, this paper constructs a probabilistic model that is based on the traditional economic evaluation model, and introduces value at risk (VaR) which is a valuable risk measure tool in finance, and applies VaR to measure the risks of royalty contracts, production share contracts and service contracts of an international oil and gas project. Besides, this paper compares the influences of different risk factors on the net present value (NPV) of the project by using the simulation results. The results indicate: (1) risks have great impacts on the project's NPV, therefore, if risks are overlooked, the decision may be wrong. (2) A simulation method is applied to simulate the stochastic distribution of risk factors in the probabilistic model. Therefore, the probability is related to the project's NPV, overcoming the inherent limitation of the traditional economic evaluation method. (3) VaR is a straightforward risk measure tool, and can be applied to evaluate the risks of international oil and gas projects. It is helpful for decision making.

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The applicability of computer simulation using Monte Carlo techniques in windfarm profitability analysis

Cited by 22 publications

References 15 publications

Researching at the Intersection of Innovation, Operations Management, and Entrepreneurship

Researching at the Intersection of Innovation, Operations Management, and Entrepreneurship

Evaluating the Effect of Financing Costs on PV Grid Parity by Applying a Probabilistic Methodology

Risk measurement of international oil and gas projects based on the Value at Risk method

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