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http://dx.doi.org/10.6106/KJCEM.2015.16.4.070

Application of Real Option based Life Cycle Cost Analysis for Reflecting Operational Flexibility in Solar Heating Systems  

Choi, Ju-Yeong (School of Architecture and Architectural Engineering, University of Seoul)
Kim, Hyeong-Bin (School of Architecture and Architectural Engineering, University of Seoul)
Son, Myung-Jin (Department of Architectural Engineering, University of Seoul)
Hyun, Chang-Taek (Department of Architectural Engineering, University of Seoul)
Publication Information
Korean Journal of Construction Engineering and Management / v.16, no.4, 2015 , pp. 70-79 More about this Journal
Abstract
With the rise of the interest in a renewable system, the importance of the Life Cycle Cost Analysis(LCCA), an economic evaluation tool, has been increasing. However, there is an inevitable gap between a real cost and an estimation from LCCA because of the uncertainty of the external environment in real world. As the input variables in an analysis, such as a real discount rate and an energy cost, ares subject to change as time goes by, strategic decision on the current operating system is made depending on the real cost. Current economic evaluation approaches have treated only the fluctuation of input variables without consideration of the flexibility in operation, which has consequently led to the impairment on the reliability of LCCA. Therefore, new approach needs to be proposed to consider both the uncertainty of input variables and operational flexibility. To address this issue, the application of the Real Option to LCCA is presented in this study. Through a case analysis of LCCA of a solar heating system, the limits and current status of LCCA are identified. As a result, quantitative presentation of strategic decisions has been added in the new approach to implement the traditional approach.
Keywords
Environmental friendly; Life Cycle Cost Analysis; Solar heating System; Real Option; Strategic Decision;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
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