Monte-Carlo simulation of investment integrity and value for power-plants with carbon-capture

Reducing CO2-emissions from electricity-generating power-plants is a high priority. Several advanced low-carbon power-plants have gained wide acceptance. Uncertainties concerning future costs and performances of new pertinent technologies and unit fuel-prices as well as the types and the comprehensiveness of CO2-emissions regulations exacerbate the difficulty of selecting promising candidates to be considered for future investments. A computer-based Monte-Carlo simulation technique has been devised to help choose the best technology for financial investments: it allows for the stated uncertainties and assesses the trade-offs between expected returns and the key risks imposed on decision makers. The economic-modelling methodology is described. The computer-based model assesses the investment in a new low-carbon integrated reforming combined-cycle (IRCC) power-plant. The worthwhileness of this financial investment is evaluated in terms of net present-value (NPV), internal rate-of-return (IRR) and pay-back period (PBP).

► An evaluation model for investment appraisals in CCS power plants is proposed.
► Monte-Carlo method allows for uncertainties concerning such emerging technologies.
► An application of the model to an IRCC plant is reported.
► The model identifies, quantifies and manages uncertainties in the evaluation.
► The prospect of the IRCC investment achieving the expected value is shown.