Measuring risk and financial support for NPPs using Monte Carlo simulation

Hosein Piranfar and Omar Masood

Journal of Risk Finance, 2012, vol. 13, issue 2, 160-170

Abstract: Purpose - The purpose of this paper is to work out the risk of cost overruns in nuclear power plants (NPPs) and its mitigation through public financial support. Design/methodology/approach - The stochastic process of overruns is simulated and compared with the private company investment to work out the amount of subsidy. Findings - At higher levels of risk proportionately more public finance is sucked in. Research limitations/implications - International comparison would be valuable. Practical implications - The paper could provide useful guidance in developing countries regarding how to work out the public or international subsidy. Social implications - People may justifiably resist the public subsidy for a foreign investor. Originality/value - The original calculation using Matlab will certainly be of value.

Keywords: Nuclear energy industry; Costs; Risk analysis; Risk finance; Guarantee option; Financing construction; Government support; Monte Carlo methods (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jrfpps:15265941211203206

DOI: 10.1108/15265941211203206

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