Diego García 2/4/2016

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Hi everyone,

I have a problem using LEAP when I introduce specific discount rates to the technologies -in this case the error appears in the electricity production branch- when I select "optimize: Yes" and the technology-specific discount rates are different than the general discount rate.

Is this a problem in LEAP or is just mine?

If mine, how could I enter the specific risks associated with a type of technology investment going beyond the social discounting?

Thanks in advance
Diego

Taylor Binnington 2/4/2016
 

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Hi Diego,

Actually this is by design: the Interest Rate variable for each generation technology must be the same as the Discount Rate (in Basic Params), when you're using the optimization routine.

Just a thought: since the Interest Rate variable is used only the annualize capital costs, could you get around this limitation by modifying the capital cost of each plant individually?

Suppose the capital cost per MW for a process is denoted C, and the interest rate is i. For a project-specific rate r, you could calculate the "effective" capital cost C' as:

C' = rC[1 - (1+i)^(-n)] / [i{1 - (1+r)^(-n)}]

where n is the technology's Lifetime.

Might this work?

Taylor