Cost comparison of energy projects: Discounted cash flow and revenue requirement methods

Journal Article · Mon Aug 11 00:00:00 EDT 2003 · Energy

DOI:https://doi.org/10.1016/0360-5442(80)90029-8· OSTI ID:5436882

Phung, D. ^[1]

---

1. Oak Ridge Associated Universities, TN (United States). Inst. for Energy Analysis

Both the discounted-cash-flow (DCF) and the revenue-requirement (RR) methods are frequently used in the cost analysis of energy projects. Each is uniquely needed in special circumstances, but in the early stages of most ventures, the RR method appears to be more useful. Further, this paper provides simple formulations for the two methods and some special cases of interest to costing practices. Both formulations are applicable to either free or regulated enterprises and in constant or inflated dollars. It is stressed that the interpretation of cost results depends on the selection of cash-flow streams and/or the intent of revenue requirements. Several numerical examples are given.

• Research Organization: Oak Ridge Associated Universities, Inc., TN (United States). Inst. for Energy Analysis
• Sponsoring Organization: USDOE
• Grant/Contract Number: AC05-76OR00033
• OSTI ID: 5436882
• Report Number(s): ORAU/IEA--80-8(M)
• Journal Information: Energy, Journal Name: Energy Journal Issue: 10 Vol. 5; ISSN 0360-5442
• Publisher: Elsevier
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
292000 -- Energy Planning & Policy-- Supply
Demand & Forecasting
ACCOUNTING
CALCULATION METHODS
COST
ECONOMIC ANALYSIS
ECONOMICS
ENERGY FACILITIES
ENERGY SOURCE DEVELOPMENT
FINANCING
MANAGEMENT
PUBLIC ENTERPRISES
SERVICE LIFE