Investment and risk appraisal in Energy Storage Systems: a real options approach

The increasing penetration of variable renewable energy is becoming a key challenge for the management of the electrical grid. Electrical Energy Storage Systems (ESS) are one of the most suitable solutions to increase the flexibility and resilience of the electrical system. This paper presents an innovative methodology for the appraisal of the investment in ESS. The methodology is based on the Real Option Analysis and it is able to properly consider investment risks and uncertainties as well as the options available for the investor. The paper assesses the value of the option to wait for a change in the market conditions before investing and re-evaluates the profitability of the investment after each step of the development of the ESS project. In order to exemplify relevant results, this method is applied to the UK energy market and assesses the technical and economic feasibility of investing in ESS operating price arbitrage and Short Term Operating Reserves. The results show that the implementation of the Real Option Analysis increases the economic performance of ESS. Nevertheless, ESS still requires limited incentives to be economically viable

A methodology based on benchmarking to learn across megaprojects: the case of nuclear decommissioning

Purpose: The literature lacks a single and universally accepted definition of major and megaprojects: usually, these projects are described as projects with a budget above $1 billion and a high level of innovation, complexity & uniqueness both in terms of physical infrastructure and stakeholder network. Moreover, they often provide fewer benefits than what were originally expected and are affected by delays and cost overruns. Despite this techno-economic magnitude, it is still extremely hard to gather lessons learned from these projects in a systematic way. This paper presents an innovative methodology based on benchmarking to investigate good and bad practices and learn from a portfolio of unique megaprojects. Design/methodology/approach: The methodology combines quantitative & qualitative cross-comparison of case studies and statistical analysis into an iterative process. Findings: Indeed, benchmarking offers significant potential to identify good and bad practices and improve the performance of project selection, planning and delivery. Research limitations/implications: The methodology is exemplified in this paper using the case of Nuclear Decommissioning Projects and Programmes (NDPs). Originality/value: Indeed, due to their characteristics, NDPs can be addressed as megaprojects, and are a relevant example for the application of the methodology presented here that collects and investigates the characteristics that mostly impact the performance of (mega)projects, through a continuous learning process

Managing social challenges in the nuclear decommissioning industry: a responsible approach towards better performance

At the end of their lifecycle, several large infrastructure will have to be dismantled, presenting unfamiliar challenges. Therefore, project management will need to focus extensively on the delivery of successful decommissioning projects to meet stakeholders' expectations and funding constraints. While there is an extensive literature that investigates the techno-economic aspects of decommissioning, social aspects remain remarkably under-investigated. Even if stakeholder communication, involvement and engagement are widely believed to be key enablers for the success of a project, often the needs and preferences of local communities are neglected and a participatory-based form of dialogue averted. Consequently, decommissioning projects fail to meet their intended objectives. Focusing on the nuclear decommissioning industry, this paper addresses the literature gap concerning social responsibility. A deductive method to formulate and validate theories regarding the social challenges for decommissioning is developed through a review and analysis of salient case studies

Characterising nuclear decommissioning projects: an investigation of the project characteristics that affect the project performance

Historically, project management research on infrastructure has mostly focused on its planning, design and construction. However, globally, more and more infrastructure, such as nuclear power plants, bridges, dams or oil rigs, are reaching their end-of-life and will soon need to be decommissioned. Decommissioning projects are long, complex and range from small projects to multi-billion megaprojects. Their costs keep increasing, while there is a limited understanding of why this happens. Nuclear Decommissioning Projects and Programmes (NDPs) are the unit of analysis of this article, due to the relevance of this sector and the number of public information available. The aim is to identify the NDP characteristics that mostly affect the NDP performance in terms of cost and time. Findings from the application of content analysis on the information collected through 35 interviews with senior practitioners highlight the importance of several NDP characteristics, including the need to have detailed knowledge of the site conditions, a good relationship with the regulatory authorities, the availability of storage facilities and stable funding

The need to improve communication about scope changes: frustration as an indicator of operational inefficiencies

Early and timely sharing of information can provide a sustainable competitive advantage. However, even if lean information management aims to improve this information flow, it has mainly been investigated in ‘operations-based’ companies. This paper fills this gap, drawing upon the experience of the authors working within a large project-based company engaged in the ‘engineer and manufacture to order’ of a complex piece of equipment costing millions of dollars, for its strategic long-term client, both working in the same industrial field, i.e. nuclear decommissioning. This research investigates the information flow regarding scope changes between the project-based company and the long-term client adapting and applying a five-step framework to highlight operational inefficiencies, reduce the corresponding transaction costs and increase the overall company’s competitiveness. This is exemplified through a particular case, but can be applied to other project-based companies dealing with strategic clients involved in long-term relationships

Applying value management when it seems that there is no value to be managed: the case of nuclear decommissioning

The vast majority of project management literature relating to infrastructure focuses on the project lifecycle up to commissioning and handover. Conversely, little attention has been paid to the end-of-life of infrastructure, i.e. when decommissioning begins. Infrastructure decommissioning projects are long and complex projects, involving an extensive network of stakeholders. Moreover, their budgets can reach hundreds of billions of Euros and, for many of these projects, keep increasing. Since decommissioning projects do not generate direct revenues, they are often considered an expensive nuisance with limited value linked to their delivery. This paper explores the use of Value Management (VM), examining the constraints of decommissioning projects and the requirements for successful implementation of VM, focusing on the nuclear industry due to its techno-socio-economic relevance. Findings derived from the application of content analysis on semi-structured interviews with experienced decommissioning practitioners include suggestions on how to implement VM, ultimately contributing to increase the knowledge on how to deliver decommissioning projects with better performance

How benchmarking can support the selection, planning and delivery of nuclear decommissioning projects

Nuclear Decommissioning Projects and Programmes (NDPs) are jeopardized by several risks, long schedule and cost estimates that lay in the range of hundreds of billions of pounds. Moreover, in some countries, these estimates keep increasing and key stakeholders have a limited understanding of the determinants that engender this phenomena. Benchmarldng refers to the process of comparing projects in order to identify best practices and generate ideas for improvement. However, even if it is the envisaged approach to tackle the decommissioning challenges (and due to the NDPs' uniqueness), until now, benchmarking has been only partially used. This paper proposes an innovative methodology to benchmark decommissioning projects, both from the nuclear and non-nuclear industry, within the UK and worldwide. From this cross -sectorial and cross-country analysis, it is possible to gather a list of key NDPs' characteristic and statistically test their correlation with the project performance. The ultimate aim of the research underpinning this paper is to investigate the possible causation between the NDPs' characteristics and the NDPs' performance and to develop guidelines to improve the selection, planning and delivery of future NDPs. (C) 2017 Elsevier Ltd. All rights reserved