Project Valuation in the Geothermal Power Plant Project: A Comparison of Expected Net Present Value and Static Net Present Value Approaches

11 Pages Posted: 18 Oct 2018

See all articles by Reza A Bilqist

Reza A Bilqist

University of Indonesia (UI) - Department of Industrial Engineering

M. Dachyar

University of Indonesia (UI)

Farizal Farizal

University of Indonesia (UI) - Department of Industrial Engineering

Date Written: September 12, 2018

Abstract

Geothermal energy is one of potential energy that needs development to find renewable and lower cost energy. This study aims to obtain better project valuation in the geothermal power plant. Primary data of the geothermal power plant project obtained from geothermal private company and government. Expected Net Present Value (ENPV) method is a technique for valuing a project where several scenarios were generated. The scenarios generations helped the company get the full overview and conditions of the project. Project value calculated based on Net Present Value (NPV). The Monte Carlo Simulation calculate NPV based on discount rate, production volume, and operation and maintenance (O&M) cost. The risk of the project used three scenarios to obtain NPV and calculate Expected Net Present Value (ENPV). This study demonstrates that the ENPV method can reduce wide variance with multiple uncertainties that related to the project, so the company will have the results of valuation more robust and easier to interpret.

Keywords: Project valuation, Net Present Value, Expected NPV, Geothermal

Suggested Citation

Bilqist, Reza A and Dachyar, M. and Farizal, Farizal, Project Valuation in the Geothermal Power Plant Project: A Comparison of Expected Net Present Value and Static Net Present Value Approaches (September 12, 2018). International Conference On Multidisciplinary Academic (ICMA) 2018. Available at SSRN: https://ssrn.com/abstract=3248120 or http://dx.doi.org/10.2139/ssrn.3248120

Reza A Bilqist (Contact Author)

University of Indonesia (UI) - Department of Industrial Engineering ( email )

Depok, West Java
Indonesia

M. Dachyar

University of Indonesia (UI) ( email )

Jl. Prof. Sumitro Djojohadikusumo
Depok, DKI 16424
Indonesia
+62811170926 (Phone)

Farizal Farizal

University of Indonesia (UI) - Department of Industrial Engineering ( email )

Depok, West Java
Indonesia

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