Decision Analysis of Program Choices in Magnetic Fusion Energy Development

D. Warner North and Donald N. Stengel
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D. Warner North: Decision Focus Incorporated, Palo Alto
Donald N. Stengel: Decision Focus Incorporated, Palo Alto

Management Science, 1982, vol. 28, issue 3, 276-288

Abstract: This paper describes a methodology based on decision analysis for addressing major program decisions in the development of magnetic fusion energy. The development of this complex technology involves a sequence of funding choices over time among multiple technical approaches and under considerable performance uncertainty. The methodology focuses on the next major facility decision in the U.S magnetic fusion energy program. The decision alternatives include the construction and testing of a major experimental facility based on one of two leading technical approaches (reactor designs), an accelerated program where both approaches are pursued, or delaying another facility until more information is available. Subsequent decisions depend on the first decision and its outcome and involve either further development of the best technical approach or abandonment of the entire research and development program. Analysis of a particular sequence of program decisions takes account of the uncertainties in the ultimate economic performance (cents per kilowatt-hour) of the resulting commercial reactor, the time of commercial availability, and market penetration. Reactor performance is analyzed at a component level and explicitly considers the dependence of component performances based on one technical approach on the respective component performances of alternative approaches. The net benefits of magnetic fusion R&D are assessed by computing the discounted expected cost savings attributable to commercial magnetic fusion energy minus the discounted costs of the R&D program.

Keywords: research and development: project selection; decision analysis: applications; engineering: applications; government (search for similar items in EconPapers)
Date: 1982
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:28:y:1982:i:3:p:276-288

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