A combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus

Quantifying uncertainty over technologies, costs, and prices that stem from site-specific conditions, technological particularities and future projections is an important element in the investment appraisal of desalination facilities. Yet, the majority of economic assessments in the field of desalin...

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Autores principales:	M. Skourtos, D. Damigos, A. Kontogianni, C. Tourkolias, A. Marafie, M. Zainal
Formato:	article
Lenguaje:	EN
Publicado:	IWA Publishing 2021
Materias:	desalination investment appraisal monte carlo simulation random walk models renewable energy Water supply for domestic and industrial purposes TD201-500 River, lake, and water-supply engineering (General) TC401-506
Acceso en línea:	https://doaj.org/article/e2314dda15304e1d95b76d1246164dec
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spelling	oai:doaj.org-article:e2314dda15304e1d95b76d1246164dec2021-11-06T07:05:46ZA combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus1606-97491607-079810.2166/ws.2020.278https://doaj.org/article/e2314dda15304e1d95b76d1246164dec2021-02-01T00:00:00Zhttp://ws.iwaponline.com/content/21/1/276https://doaj.org/toc/1606-9749https://doaj.org/toc/1607-0798Quantifying uncertainty over technologies, costs, and prices that stem from site-specific conditions, technological particularities and future projections is an important element in the investment appraisal of desalination facilities. Yet, the majority of economic assessments in the field of desalination plants, so far, use deterministic estimation methods based on ‘best guess’ estimates and ceteris paribus sensitivity analyses. Aiming to fill this gap, this paper introduces a new approach towards comparing alternative technological options for desalination facilities under uncertainty based on the Levelized Cost of Water (LCOW). The proposed framework combines Monte Carlo simulations with scenario analysis and random-walk-based models to account for the cone of uncertainty of the LCOW. For purely illustrative purposes, five alternative combinations of desalination technologies and energy sources are examined in the State of Kuwait. The findings show that the proposed framework, although it cannot eliminate uncertainty, can assist decision-makers in managing it by framing the range of possible outcomes of the LCOW. In this way, it offers an insight into the accuracy of the estimates and allows the validation of the impact of risks and uncertainties against the acceptable tolerance level. Yet, several issues need to be addressed in future research.M. SkourtosD. DamigosA. KontogianniC. TourkoliasA. MarafieM. ZainalIWA Publishingarticledesalinationinvestment appraisalmonte carlo simulationrandom walk modelsrenewable energyWater supply for domestic and industrial purposesTD201-500River, lake, and water-supply engineering (General)TC401-506ENWater Supply, Vol 21, Iss 1, Pp 276-288 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	desalination investment appraisal monte carlo simulation random walk models renewable energy Water supply for domestic and industrial purposes TD201-500 River, lake, and water-supply engineering (General) TC401-506
spellingShingle	desalination investment appraisal monte carlo simulation random walk models renewable energy Water supply for domestic and industrial purposes TD201-500 River, lake, and water-supply engineering (General) TC401-506 M. Skourtos D. Damigos A. Kontogianni C. Tourkolias A. Marafie M. Zainal A combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus
description	Quantifying uncertainty over technologies, costs, and prices that stem from site-specific conditions, technological particularities and future projections is an important element in the investment appraisal of desalination facilities. Yet, the majority of economic assessments in the field of desalination plants, so far, use deterministic estimation methods based on ‘best guess’ estimates and ceteris paribus sensitivity analyses. Aiming to fill this gap, this paper introduces a new approach towards comparing alternative technological options for desalination facilities under uncertainty based on the Levelized Cost of Water (LCOW). The proposed framework combines Monte Carlo simulations with scenario analysis and random-walk-based models to account for the cone of uncertainty of the LCOW. For purely illustrative purposes, five alternative combinations of desalination technologies and energy sources are examined in the State of Kuwait. The findings show that the proposed framework, although it cannot eliminate uncertainty, can assist decision-makers in managing it by framing the range of possible outcomes of the LCOW. In this way, it offers an insight into the accuracy of the estimates and allows the validation of the impact of risks and uncertainties against the acceptable tolerance level. Yet, several issues need to be addressed in future research.
format	article
author	M. Skourtos D. Damigos A. Kontogianni C. Tourkolias A. Marafie M. Zainal
author_facet	M. Skourtos D. Damigos A. Kontogianni C. Tourkolias A. Marafie M. Zainal
author_sort	M. Skourtos
title	A combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus
title_short	A combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus
title_full	A combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus
title_fullStr	A combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus
title_full_unstemmed	A combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus
title_sort	combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to kuwait's water/energy nexus
publisher	IWA Publishing
publishDate	2021
url	https://doaj.org/article/e2314dda15304e1d95b76d1246164dec
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A combined probabilistic framework to support investment appraisal under uncertainty in desalination projects: an application to Kuwait's water/energy nexus

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