Measuring risk and financial support for NPPs using Monte Carlo simulation

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.

Citation

Piranfar, H. and Masood, O. (2012), "Measuring risk and financial support for NPPs using Monte Carlo simulation", Journal of Risk Finance, Vol. 13 No. 2, pp. 160-170. https://doi.org/10.1108/15265941211203206