WSB Academy of Business in Dabrowa Gornicza

Dąbrowa Górnicza, Poland

WSB Academy of Business in Dabrowa Gornicza

Dąbrowa Górnicza, Poland
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Zamasz K.,WSB Academy of Business in Dabrowa Gornicza
Rynek Energii | Year: 2014

Large companies engaged in heat generation, distribution and marketing are often faced with the problem of arranging a cooperation with external combined-heat-And-power plants operating in the region, connected to their network. The dilemma is how to arrange this cooperation. The method used is the establishing of business relationship in the form of bilateral agreement governing the market share of operators and enabling the participation of the parent company in profits of the local combined-heat-And-power plant; another opportunity is to take over the competitor's market, or - ultimately - its assets. The classic method of economic evaluation of available investment opportunities is a discounted cash flow analysis -The outcomes obtained are often insufficient justification for appropriate decision making. Therefore, entrepreneurs often use advanced tools of economic evaluation. This paper presents an analysis of the project's decision making process establishing business relations between a large heating holding and an external CHP through analysing three investment opportunities with the use of simulation method. The paper shows that simple simulation may be a valuable tool for complementing a deterministic analysis of discounted cash flows, and supporting decision making under risk.

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