Decommissioning of a fuel oil-fired thermoelectric power plant in Brazil - Economic feasibility under certain and risk conditions

• Published in: Sustainable futures 2024-12, Vol.8, p.100332, Article 100332
• Main Authors: Fonseca, Amadeu Junior da Silva, Castro, Roberto, Ramos, Dorel Soares, Mello, João Carlos de Oliveira, Rocha, Luiz Célio Souza, Gehrke, Camila Seibel, Santos Júnior, Edvaldo Pereira, Sousa, Wilton Lima, Coelho Junior, Luiz Moreira
• Format: Article
• Language: English
• Subjects: Decision making; Decommissioning; Energy security; Energy transition
• ISSN: 2666-1888; 2666-1888
• DOI: 10.1016/j.sftr.2024.100332

•Deterministic and stochastic economic analysis of the demobilization process.•Even in the face of uncertainty, shareholders can expect a financial profit.•Policies must be aligned with the transition to renewable energy sources in Brazil. The strategic analysis for the decommissioning of thermoelectric plants is seen as a trend for the coming years. The search for renewable alternatives should stimulate investment in other energy sources, reducing the number of thermoelectric plants in the energy generation system. However, few studies have dealt with the decommissioning of oil-fired thermoelectric plants. In this work, the methodology was applied under deterministic and stochastic conditions using methods of net present value (NPV), internal rate of return (IRR), discounted payback, capital asset pricing model (CAPM) and weighted average cost of capital (WACC). The results showed that the deterministic NPV was positive, ranging from R$101.30 million (pessimistic scenario) to R$109.73 million (optimistic scenario). The IRR was higher than the WACC of 10.55 %, ranging from 13.50 % to 13.68 % per year. For the Monte Carlo simulation, NPV was observed with 100 % certainty of viability and the probabilities of occurrence allowed more analysis of the risks involved than those obtained by deterministic methods. this study contributes to future decommissioning projects in Brazil, considering the scenario of stimulating renewable sources and the energy transition, helping managers make decisions about their projects. In addition, it helps guide public policies that can optimize the decommissioning process and strengthen the national energy sector.