Using Monte Carlo simulation and multi-agent systems to estimate financial feasibility of hepp projects tendered on a bot basis: A case study from Turkey


Thesis Type: Doctorate

Institution Of The Thesis: Orta Doğu Teknik Üniversitesi, Faculty of Engineering, Department of Civil Engineering, Turkey

Approval Date: 2014

Student: EMRE CANER AKÇAY

Co-Supervisor: MUSTAFA TALAT BİRGÖNÜL, İREM DİKMEN TOKER

Abstract:

As a fast growing country, Turkey’s energy demand has been increasing every year and new investments are needed in the renewable energy sector. Turkish government uses the Build-Operate-Transfer (BOT) model to realize urgent investments in the hydroelectric energy sector. Given the government’s purchase guarantee of the generated electricity, hydroelectric power plant (HEPP) projects can be feasible options for investors. However, during the feasibility studies, risk factors stemming from the macro environment as well as project level risks should be considered. The objective of this thesis is to develop a methodology that can be used to predict the profitability of HEPP considering the risk factors. During the initial parts of this study, a checklist of risk factors has been prepared and Monte Carlo Simulation was proposed for risk analysis. However, another factor which is the “negotiation” between the broker and energy producer is important while estimating the energy price levels to be used during Monte Carlo Simulation. A Multi-Agent System (MAS) is proposed to be used in combination with the Monte Carlo Simulation for better estimation of energy prices and thus, profitability of an investment. Hence, in this thesis, a methodology to combine the risk assessment and negotiation process while determining the financial feasibility of HEPP projects is proposed. The methodology is tested on a real project. Expert judgement is used to compare the results of deterministic analysis, Monte Carlo Simulation and MAS integrated with Monte Carlo Simulation. Experts believe that MAS-enabled Monte Carlo Simulation gives more reliable results than the other two techniques. As a final remark, the results of the case study cannot be generalized, however the methodology offered in this thesis may be used for HEPP projects tendered on a BOT basis to predict financial feasibility considering risks and dynamics of the negotiation process.