Using real options to evaluate the flexibility in the deployment of SMR
- Univ. of Lincoln, Lincoln School of Engineering, Brayford Pool, Lincoln LN6 7TS (United Kingdom)
- Politecnico di Milano, Dept. of Management, Economics and Industrial Engineering, Via Lambruschini 4/B, Milano (Italy)
- Universidad Politecnica de Madrid, Dep. de Ingenieria de Organizacion, Administracion de Empresas y Estadistica, C/ Jose Gutierrez Abascal, 2, 28006-Madrid (Spain)
According to recent estimations the financial gap between Large Reactors (LR) and Small Medium Reactors (SMRs) seems not as huge as the economy of scale would suggest, so the SMRs are going to be important players of the worldwide nuclear renaissance. POLIMIs INCAS model has been developed to compare the investment in SMR with respect to LR. It provides the value of IRR (Internal Rate of Return), NPV (Net Present Value), LUEC (Levelized Unitary Electricity Cost), up-front investment, etc. The aim of this research is to integrate the actual INCAS model, based on discounted cash flows, with the real option theory to measure flexibility of the investor to expand, defer or abandon a nuclear project, under future uncertainties. The work compares the investment in a large nuclear power plant with a series of smaller, modular nuclear power plants on the same site. As a consequence it compares the benefits of the large power plant, coming from the economy of scale, to the benefit of the modular project (flexibility) concluding that managerial flexibility can be measured and used by an investor to face the investment risks. (authors)
- Research Organization:
- American Nuclear Society, 555 North Kensington Avenue, La Grange Park, IL 60526 (United States)
- OSTI ID:
- 22107908
- Resource Relation:
- Conference: ICAPP '12: 2012 International Congress on Advances in Nuclear Power Plants, Chicago, IL (United States), 24-28 Jun 2012; Other Information: Country of input: France; 50 refs.; Related Information: In: Proceedings of the 2012 International Congress on Advances in Nuclear Power Plants - ICAPP '12| 2799 p.
- Country of Publication:
- United States
- Language:
- English
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