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Impact of the forecast price on economic results for methanol production from olive waste

2021; Elsevier BV; Volume: 295; Linguagem: Inglês

10.1016/j.fuel.2021.120631

1873-7153

M. Puig-Gamero, Juan R. Trapero, Diego J. Pedregal, Paula Sánchez, L. Sánchez-Silva,

Capital Investment and Risk Analysis

The development of circular economies due to the limitation of natural resources is becoming a common strategy of paramount importance among different countries. In Spain, given the strategic nature of its olive industry, trying to value one of its main residuals (olive pomace) alone or together with other residues through its chemical transformation in methanol is a promising research line. One of the key variables that would make the investment advisable or not is the future value of the methanol price. However, most of the literature do not consider its future price volatility on the economic evaluation of the chemical processes. This work bridges that gap by proposing three econometric models based on Unobserved Components to forecast the methanol price over the life cycle plant. Those probabilistic forecasts feed a Monte Carlo simulation that provides an exhaustive investment risk assessment in terms of Net Present Value, Internal Rate of Return and Value at Risk metrics. The results showed the relationship between forecasting models and the investment profitability with an average Internal Rate of Return ranging from 23% to 31%. Additionally, the previous analysis was completed by adding other variables subject to uncertainty (olive pomace feed, capital investment, feedstock price, labor costs and discount rate). In this case, assuming a potential underestimation error up to 100% of the capital cost, the probability of obtaining a profitable investment was significantly reduced ranging the Value at Risk from 48% to 98%.