Cost Uncertainty Research Articles

Sensitivity Analysis of a Nuclear Hybrid Energy System With Thermal Energy Storage in Deregulated Electricity Markets Considering Time Series Uncertainty in Electricity Price

ABSTRACTAdding thermal energy storage to nuclear power plants has been proposed as a way to allow nuclear plants to operate more flexibly and potentially be more competitive in deregulated electricity markets. The economics of these systems in deregulated markets are subject to uncertainties in capital costs, operating costs, and revenue. This study quantifies the uncertainty in the net present value of a nuclear power plant with integrated thermal energy storage in three U.S. deregulated electricity markets considering these sources of uncertainty and quantifies, for the first time, the relative contributions each source makes to the overall uncertainty. To accomplish this, a computationally efficient block bootstrap method is introduced to quantify uncertainty contributions from the stochastic time series of electricity prices, achieving a two order of magnitude decrease computational time compared to the model‐based methods used in previous works while also relaxing several strict assumptions made by the model‐based approach. Up to 18.5% of the overall variance in net present value is attributable to variance in the electricity price stochastic process, with this sensitivity varying significantly across markets.

The costs of hydrogen and conventional energy carriers: temporal evolutions and mutual price correlations – global insights with a focus on Belgium

ABSTRACT Energy systems design is challenged by uncertainties in energy carrier costs. This study explores hydrogen and conventional energy carrier costs, providing global insights with a focus on Belgium. Over two years, European natural gas prices surged 55-fold, while solid biomass prices varied only 1.8-fold over 13 years. Regression analysis (adjusted R 2 >0.9) reveals mutual correlations among energy carriers, allowing for cost ranking relative to the natural gas price. The relationship between electricity and natural gas prices underscores financial challenges for heat pumps in Belgium. Hydrogen cost estimations for 2024 are 43.7, 48.8, 16.4, and 17.5 €/GJH2,LHV for green, yellow (grid), grey and blue hydrogen, respectively. Achieving cost parity between blue and grey hydrogen requires a carbon tax of 67.5–123 €/tonCO2. Present approach incorporates uncertainties in energy carrier costs by varying natural gas price scenarios, facilitating prompt identification of cases for in-depth evaluation in future energy systems.

Airline industry equities under external uncertainty shocks

We gauge the impact of news and other relevant external uncertainties facing airline firms via an equity market lens. Using local projections, we establish that rising investors’ fear shocks have long-lasting negative effects on airline industry equity returns, while increasing geopolitical, climate policy, and fuel cost uncertainties have comparatively short-lived impacts. Our results are robust to several alternative model specifications, including a pre-pandemic subsample. Based on our findings, we provide a promising avenue for future research in airline financial management.

Economic analysis of shipping route planning in deep-sea mining operations under uncertain shipping market

Deep-sea mining is an emerging interdisciplinary and cross-domain research topic. As commercialization of deep-sea mining advances, economic analysis of the maritime transportation of minerals is critical to forming sound commercial plans. This paper proposes an approach for the economic analysis of shipping route planning in deep-sea mining operations, considering the varying capacities of the proposed mobile offshore minerals units (MOMUs) and the limited capacity. Capital expense (CAPEX), operational expense (OPEX), and voyage expense (VOYEX) are taken into account according to the arrangement of mineral transportation vessels (MTVs) with different capacities of MOMUs and fluctuating shipping prices. Monte Carlo Simulation is used to analyze the uncertainties of the total cost for MTVs with respect to CAPEX, OPEX, and VOYEX. A case study of the shipping route from the Chinese contract area in the Clarion-Clipperton Zone to Ningbo-Zhoushan Port is presented to interpret the proposed approach. The derived results demonstrate that 120,000 tons is the most economically viable MOMU size, saving at least 1.9 % of the total cost. These savings are mainly due to better scheduling, speed, and resilience to market prices. The proposed approach can support economic feasibility for deep-sea mining projects and provide investors with more specific operational measures to make well-informed decisions.

Multi-Stage Rolling Grid Expansion Planning for Distribution Networks Considering Conditional Value at Risk

Existing single-stage planning and multi-stage non-rolling planning methods for distribution networks have problems such as low equipment utilization efficiency and poor investment benefits. In order to solve the above problems, this paper firstly proposes a multi-stage rolling planning method for distribution networks based on analyzing the limitations of the existing planning methods, which divides the planning cycle of the distribution network into multiple planning stages, and makes rolling amendments to the planning scheme of each stage according to the latest information during the planning cycle. Then, a multi-stage rolling planning model of distribution network taking into account conditional value at risk is established with the objective of minimizing the total investment and operation cost of the distribution network. On the one hand, the users’ electricity bill is taken into account in the objective function, and the necessity of this part of the benefits is demonstrated. On the other hand, the conditional value at risk is used to quantify the uncertainty of the operation cost in the process of the expansion planning of the distribution network, which reduces the operation cost risk of the distribution network. Next, this paper uses the rainflow counting method to characterize the capacity decay characteristics of energy storage in the distribution network, and proposes an iterative solution framework that considers energy storage capacity decay to solve the proposed model. Finally, the proposed method is applied to an 18-node distribution network planning case. This confirms that the multi-stage rolling planning method could improve the investment benefits and reduce the investment cost by approximately 27.27%. Besides, it will increase the total cost by approximately 2750 USD in the case if the users’ electricity bill is not taken into account. And the maximum capacity of energy storage may decay to 87.6% of the initial capacity or even lower during operation, which may cause the line current to exceed the limit if it is not taken into account.

A Nationwide Physical Activity Intervention for 654,500 Adults in Singapore: Cost-Utility Analysis.

Increasing physical inactivity is a primary risk factor for diabetes and hypertension, contributing to rising health care expenditure and productivity losses. As Singapore's aging population grows, there is an increased disease burden on Singapore's health systems. Large-scale physical activity interventions could potentially reduce the disease burden but face challenges with the uncertainty of long-term health impact and high implementation costs, hindering their adoption. We examined the cost-effectiveness of the Singapore National Steps Challenge (NSC), an annual nationwide mobile health (mHealth) intervention to increase physical activity, from both the health care provider perspective, which only considers the direct costs, and the societal perspective, which considers both the direct and indirect costs. We used a Markov model to assess the long-term impact of increased physical activity from the NSC on adults aged 17 years and older. A Monte Carlo simulation with 1000 samples was conducted to compare two situations: the NSC conducted yearly for 10 years against a no-intervention situation with no NSC. The model projected inpatient and outpatient costs and mortality arising from diabetes and hypertension, as well as their complications. Health outcomes were expressed in terms of the quality-adjusted life-years (QALYs) gained. All future costs and QALYs were discounted at 3% per annum. Sensitivity analyses were done to test the robustness of our model results. We estimated that conducting the NSC yearly for 10 years with a mean cohort size of 654,500 participants was projected to prevent 6200 diabetes cases (95% credible interval 3700 to 9100), 10,500 hypertension cases (95% credible interval 6550 to 15,200), and 4930 deaths (95% credible interval 3260 to 6930). This led to a reduction in health care costs of SGD (Singapore dollar) 448 million (95% credible interval SGD 132 million to SGD 1.09 billion; SGD 1=US $0.73 for the year 2019). There would be 78,800 (95% credible interval 55,700 to 102,000) QALYs gained. Using a willingness-to-pay threshold of SGD 10,000 per QALY gained, the NSC would be cost-saving. When indirect costs were included, the NSC was estimated to reduce societal costs by SGD 1.41 billion (95% credible interval SGD 353 million to SGD 3.80 billion). The model was most sensitive to changes in the inpatient cost of treatment for diabetes complications, time horizon, and program compliance. In this modeling study, increasing physical activity by conducting a yearly nationwide physical activity intervention was cost-saving, preventing diabetes and hypertension and reducing mortality from these diseases. Our results provide important information for decision-making in countries that may consider introducing similar large-scale physical activity programs.

Corporate finance, collateralized borrowing, and monetary policy

We construct a monetary model in which entrepreneurs facing uncertainty in input costs and returns of projects may finance investment internally and with bank credit. Entrepreneurs using money as a down payment and bonds as collateral can reduce the default probability. Working through these key channels, lower nominal policy rates and open market sales can reduce the real lending rate. The central bank’s private asset purchases improve availability of credit and compress risk spreads. Our model identifies the risk-reducing channel of private asset purchases—the policy functions as if the government had supplied more bonds, and the increased collateralizable bonds are allocated more to corporate borrowings with a higher lending risk. Risk-retention requirements associated with asset purchases are essential to welfare. As uncertainty with respect to input costs and investment returns intensifies, the central bank should lower the optimal risk-retention rate to encourage lending and reduce business failures.

A Comparative Study of Precast and Cast-in Place Concrete in Construction Home Project by Life Cycle Cost Analysis

Construction industry plays a significant role in economic growth, and the industry will continue to grow with the economic expansion. However, the industry is known for its labor-intensiveness, In order to shorten construction time and address labor issues, developers have explored new systems of construction such as a precast system. This paper is to present a comparative study of precast and cast-in place concrete system in construction home project by life cycle cost analysis by dividing project period into 3 phase (Preparing phase, Construction phase and O&M phase). In modelling life cycle costs, sensitivity analysis and Monte Carlo simulation will be employed to incorporate uncertainty of material and labor costs into the proposed model. The study also found that in 6 home projects, there have risk factors that impact to life cycle cost by using sensitivity analysis are construction cost, major repair and minor repair. The result from this study is life cycle cost from precast and cast -in place systems

Comprehensive evaluation of CCUS technology: A case study of China's first million-tonne CCUS-EOR project

CCUS, an emerging technology for reducing carbon emission, plays a crucial role in achieving the goal of carbon neutrality. CCUS technology exemplified by CO2 enhanced oil recovery (EOR) is gradually progressing from project demonstration to large-scale application. However, the commercial application still faces uncertainties in economic cost, energy efficiency and environmental benefits. This paper takes China's first million-tonne CCUS-EOR project (Qilu Petrochemical-Shengli Oilfield CCUS-EOR project) as an example, and establishes a comprehensive research framework for evaluating CCUS from the three dimensions of energy, environment, and economy, based on economic viability, energy input-output analysis, and carbon input-output analysis. The results demonstrate that during the project lifecycle, when the average oil price is $90/bbl, the project's NPV is $56.09 million, the project's IRR is 13.4 %, the payback period is 8.34 years, and the threshold oil price for the project to be economically profitable is $81.52/bbl. Furthermore, the Energy Return on Investment (EROI) of the project is 9.09, which considerably superior to that of the Shengli Oilfield's non-EOR, and the net energy output is approximately 18,472.57 kilobarrels. The Carbon Return on Investment (CROI) of the project is 4.12, with significant environmental benefits, and the cumulative net carbon emission reduction is approximately 8078.55 kilotonnes. Furthermore, the trends in EROI and CROI of the CCUS-EOR project demonstrate nearly opposite trajectories. The variation trends in EROI emerge N-shaped curve, while that of CROI emerge S-shaped curve. In summary, the Qilu Petrochemical-Shengli Oilfield CCUS-EOR project exhibits notable advantages in terms of energy efficiency and environmental benefits. However, the threshold oil price for triggering economic profitability is relatively high, which may pose certain economic risks to investors during periods of low oil price.

A two-stage distributionally robust maximum expert consensus model with asymmetric costs and risk aversion

The maximum expert consensus model (MECM) emerges as a widely used consensus optimization model in group decision making (GDM). However, contemporary complexities in decision-making environment lead to the asymmetry and uncertainty of adjustment costs of decision-makers (DMs), which are critical during the consensus reaching process (CRP). Additionally, the risks emerging with the uncertainty during CRP should also be analyzed. Therefore, this paper focuses on developing the two-stage distributionally robust MECM (DRO-MECM) with asymmetric adjustment costs under an uncertain environment to improve the CRP. Specifically, we propose a MECM with asymmetric costs. Moreover, we build the two-stage DRO-MECM based on the mean-CVaR under two uncertain scenarios, allowing it to manage uncertain costs effectively while considering the risk preferences of DMs. The first stage aims to maximize the number of DM within consensus and the second stage seeks to minimize the consensus cost. Finally, the applicability of the proposed models is demonstrated by applying them to the allocation of healthcare and security capacity enhancement subsidy funds in China. The efficiency of the models is further corroborated by sensitivity analysis and comparison analysis.

A multi-objective optimization approach for sustainable and personalized trip planning: A self-adaptive evolutionary algorithm with case study

In the modern tourism landscape, the fusion of sustainability and personalized travel plans marks a significant paradigm shift. This paper presents a novel multi-objective optimization approach for crafting sustainable and personalized tourist trip plans. The proposed model is designed to provide tailored recommendations to tourists, simultaneously minimizing total costs, environmental impacts, and maximizing individual preferences. These recommendations encompass choices such as hotel and resting place selection, daily sequence of attractions, precise visit schedules, and preferred modes of transportation. Addressing intricacies within an urban multi-modal transport system, including factors like traffic lights, weather conditions, and distinct features of each transport mode, the model ensures that tourists can explore scenic spots within their available time windows. To tackle uncertainties in travel time, travel costs, and visit durations, a practical fuzzy optimization approach is employed. For efficient resolution of the multi-objective optimization model, a self-adaptive evolutionary algorithm based on Non-Dominated Sorting Genetic Algorithm II (SA-NSGAII) is developed. The effectiveness of the proposed solution method is verified through comparisons with Augmented ε-Constraint (AUGMECON) and NSGA-II methods, utilizing various benchmark examples. Employing real data from Montreal, an empirical case study is conducted to illustrate the application of the sustainable and personalized trip planning model. The analysis of the solution results demonstrates how this approach can assist tourists in achieving a harmonious balance between sustainability objectives and making well-informed decisions based on their individual preferences.

The ocean carbon sink enhances countries’ inclusive wealth and reduces the cost of national climate policies

Improving our understanding of future ocean carbon uptake requires a nuanced understanding of the value of the annual ocean sink. Here, we combine an abatement cost-based approach and a climate damage-based approach to assess the value of the annual ocean sink. The former shows that the aggregate cost of national climate policies could increase by up to USD 80 billion if the ocean carbon sink weakens by 10 percent. As a complementary perspective, the damage-based approach shows that the annual ocean carbon sink contributes between USD 300 billion and USD 2,332 billion to countries’ inclusive wealth. Despite the conceptual appeal of the damage-based approach for its potential insights into regional wealth redistribution, uncertainties in national social cost of carbon estimates make it less reliable than the abatement cost-based approach, which in turn provides more reliable estimates for a fiscal cost assessment of improved monitoring services of the ocean carbon sink.

Policy uncertainty, mergers, and acquisitions in the South African business environment

ABSTRACT This study examines policy uncertainty on mergers and acquisitions (M&A) in South Africa, emphasising the extensive regulatory review by the Competition Commission under the ‘public interest consideration’ criterion. It aims to identify the cost implications and uncertainties associated with M&A transactions to propose measures to reduce these uncertainties. Utilising qualitative methodologies, the study gathers empirical evidence through interviews with companies and competition lawyers involved in the M&A processes. The findings reveal significant concerns about economic uncertainty, merger control, and policy and regulation impacting investment decisions. Policy uncertainty, particularly in the context of merger regulation, imposes substantial cost implications and delays on M&A activities, negatively affecting investment, growth, and economic development. It emphasises the necessity for a regulatory framework that minimises disruptions and costs to business participants. The findings suggest that addressing policy uncertainty and streamlining regulatory processes are crucial steps towards enhancing South Africa's attractiveness as an investment destination and fostering economic growth and development.

An improved meta-heuristic method for optimal optimization of electric parking lots in distribution network

In this study, a stochastic multi-objective structure for optimization of the intelligent electric parking lots (EPLs) is implemented in the distribution network for minimizing the power losses annual costs, power purchased from the main grid, unsupplied energy of subscribers, cost of vehicles to the grid as well as minimizing the network voltage deviations considering battery degradation cost (BDC) and network load uncertainty (NLUn). In this research, the unscented transformation method (UTM) is used for NLUn modeling and this method is easily applicable and has a low computational cost. An improved meta-heuristic algorithm named improved fire hawks optimization (IFHO) is utilized for decision variables finding defined as the site and size of the EPLs in the distribution network. The conventional fire hawks optimization (FHO) algorithm is inspired by the fire hawks foraging behavior and in this research, the Taylor-based neighborhood technique (TBNT) is used to reduce the dependency and the possibility of becoming trapped in local optimal. To evaluate the proposed methodology, the simulations are implemented in three scenarios (1) EPLs optimization without BDC and NLUn based-UTM, (2) EPLs optimization with BDC and without NLUn, and (3) EPLs optimization with BDC and NLUn. The results of the third scenario considering BDC and NLUn showed that the EPLs optimization integrated with a multi-objective framework by finding the EPL's optimal size and capacity in the network via the IFHO has reduced the annual losses, voltage deviations, ENS cost, and substation cost by 21.06%, 12.15%, 70.82%, and 39.10%, respectively compared to the base distribution network. Additionally, the results demonstrated that incorporating the BDC and NLUn, the annual losses, voltage oscillations, ENS cost, grid cost, and EPLs have increased in comparison with the EPLs optimization without BDC and NLUn based-UTM. In addition, the TBNT based-IFHO superiority has been confirmed in different scenarios by achieving better values of the objectives and also obtaining the convergence process with lower convergence tolerance and higher convergence accuracy.

A real options-based framework for multi-generation liquid air energy storage investment decision under multiple uncertainties and policy incentives

Liquid Air Energy Storage (LAES) is a promising energy storage technology renowned for its advantages such as geographical flexibility and high energy density. Comprehensively assessing LAES investment value and timing remains challenging due to uncertainties in technology costs and market conditions. This study introduces a real options-based framework to evaluate investments in multi-generation LAES systems in China's power market by considering uncertain factors, such as investment cost and electricity price. Additionally, the impact of various incentives, including subsidies and preferential taxation policies, on LAES investment is investigated. The proposed investment decision framework is applied in a case study of a 10 MW-class multi-generation LAES system. Results show that the current economic environment is insufficient to trigger immediate LAES investment. The recommended optimal investment times are 2029 for Guangdong, 2031 for Jiangsu, and 2036 for Beijing and Qinghai without incentives. The levelized cost of storage at the optimal investment time is 0.105-0.174$/kWhe, and the optimal investment value is 882-9269k$. It is also found that preferential taxation policies can increase the LAES investment value. Increasing investment subsidies and technology learning effects have limited impacts on stimulating investments. In contrast, discharge subsidies are more favorable for promoting the deployment of LAES systems.

Achieving net-zero power supply in China needs better cost uncertainty quantification

Achieving net-zero power supply in China needs better cost uncertainty quantification

Capacity management in supply chains under risk of supply disruptions: a mathematical model for establishing capacity reservation contracts

ABSTRACT Capacity management and supply chain disruptions are the most challenging problems faced in high tech industries. This paper focuses on establishing a capacity reservation contract between a single supplier and two heterogeneous retailers in a two-stage supply chain, wherein the retailers purchase a product from the supplier and sell it to the customers. In this study, a mathematical model is built for all parties involved, incorporating numerous essential elements of a real contract. The proposed model aims to assist in determining the best solutions for the retailers’ reserved capacities to the supplier and the supplier’s constructed capacity. Analytical results and sensitivity analyses are presented to demonstrate how various cost elements, price, and uncertainty affect the optimal capacity decisions.

The Improvement of Logistics Management in China: A Study of the Risk Perspective

This paper identifies and empirically validates the potential risks in overseas third-party logistics services that support sustainable cross-border e-commerce logistics in China. This research addresses a significant gap in the current literature by conducting a comprehensive literature review and case study, primarily focusing on third-party logistics services’ benefits without adequately discussing the associated risks. Our study highlights the medium and high risks in forwarding and contracting processes, such as cost uncertainty, quality issues, and cultural and language differences. The findings contribute to academic research and practical applications by providing a theoretical foundation and practical guidance for enhancing logistics management in China’s sustainable cross-border e-commerce. This research promotes the resilience and sustainability of cross-border e-commerce supply chains and offers valuable insights for overseas 3PL service providers looking to expand their operations in China.

Systematic Review of Economic Evaluations of Systemic Treatments for Advanced and Metastatic Gastric Cancer.

Recent advances in the development of biomarker-directed therapy and immunotherapy, for advanced and metastatic gastric cancers, have the potential to improve survival and quality of life.Much attention has been directed towards second- and later-line treatments, and the landscape here is evolving rapidly. However, uncertainty in relative effectiveness, high costs and uncertainty in cost effectiveness represent challenges for decision makers. To identify economic evaluations for the second-line or later-line treatment of advanced and metastatic gastric cancer. Also, to assess key criteria (including model assumptions, inputs and outcomes), reporting completeness andmethodological quality to inform future cost-effectiveness evaluations. A systematic literature search (from database inception to 5 March 2023) of EconLit via EBSCOhost, Cochrane Library (restricted to National Health Service [NHS] Economic Evaluation Database and Health Technology Assessment [HTA] Database), Embase, MEDLINE and of grey literature was conducted. This aimed to identify systemic treatments that align with National Comprehensive Cancer Network (NCCN) and European Society for Medical Oncology (ESMO) Clinical Practice Guidelines. Data were collected on key criteria and on reporting completeness and methodological quality. A narrative synthesis focussed on cost-effectiveness and cost-of-illness studies. Outcomes of interest included total and incremental costs and outcomes (life-years and quality-adjusted life-years), ratios of incremental costs per unit outcome and other summary cost and outcome measures. Also, for cost-effectiveness studies, reporting completeness and the methodological quality were assessed using the Consolidated Health Economic Evaluation Reporting Standards (CHEERS) and the Philips Checklist, respectively. A total of 19 eligible economic evaluations were identified (cost-effectiveness studies [n = 15] and cost-of-illness studies [n = 4]). There was a general lack of consistency in the methodological approaches taken across studies. In the main, the cost-effectiveness studies indicated that the intervention under consideration was more effective and more costly than the comparator(s). However, most interventions were not cost effective. No studies were fully compliant with reporting-completeness and methodological-quality requirements. Given the lack of consistency in the approaches taken across cost-of-illness studies, outcomes could not be directly compared. To our knowledge, this is the first published systematic literature review that has qualitatively synthesised economic evaluations for advanced and metastatic gastric cancer. There were differences in the approaches taken across the cost-effectiveness studies and the cost-of-illness studies. The conclusions of most of the cost-effectiveness studies were consistent despite identified differences in approaches. In the main, the interventions under consideration were not cost effective, presenting challenges to sustainability and affordability. We highlight a requirement for cost-effectiveness evaluations and for second-line or later-line treatments of advanced and metastatic gastric cancer that consider all relevant comparators and that are compliant with reporting-completeness and methodological-quality requirements. By addressing the methodological gaps identified here, future healthcare decision-making, within the context of this rapidly changing treatment landscape, would be better informed. CRD42023405951.

Assessing Transition Pathways of Hydrogen Production in China with a Probabilistic Framework.

The transition of China's hydrogen production system to meeting carbon neutrality is considerably uncertain. This study uses a probabilistic framework to assess the transition pathways of hydrogen production in China to meet the goal of carbon neutrality and reveals the key technology selection mechanism. Three strategies for hydrogen production transition were considered: delayed, orderly, and radical, corresponding to the green hydrogen shares between 70 and 95% in 2060. More ambitious strategies tended to result in greater uncertainty of green hydrogen production and introduce higher system costs and cost uncertainty. The different strategies showed notable differences in carbon dioxide (CO2) reduction pathways. The cumulative CO2 emissions of the delayed strategy may reach 3 times that of the radical strategy, and the CO2 reduction uncertainty of the orderly strategy may be twice that of the other strategies. Alkaline electrolyzers were predicted to dominate green hydrogen production until being surpassed by proton exchange membrane electrolyzers (PEM) after 2060. The synergy of the solar-energy storage-PEM technology combination was notable because expensive electrolyzers tended to increase utilization, thereby diluting fixed costs. Our results underscore the importance of studying the impact of uncertainty and technology selection mechanisms on transition pathways.