NROM – Nuclear Real Options Model

In a high-risk business environment, decision-making in the face of uncertainty becomes increasingly crucial. Such decision-making requires high performance financial cost/risk models to assess the value of different options over time, in order to optimise strategies and business development. NROM (Nuclear Real Options Model) assesses financial cost and risks in uncertain and risky market conditions.

Decision-making in nuclear energy spans long time frames which go hand-in-hand with intrinsic uncertainties. In addition, there are also various extrinsic risks which may impact on tomorrow’s nuclear energy performance. Two particular examples are:

• Investment uncertainties for nuclear new build in rapidly changing energy market conditions;
• Spent fuel management strategy decision-making in increasingly uncertain regulatory and technical-economic conditions, when utilities need to reduce their financial risk exposure to uncertain futures.

NROM uses a combination of the stochastic Net Present Value and Real Options Analysis methodologies in a hybridised modelling tool to address key questions, such as:

• What is the most robust decisional strategy in uncertain environments?
• What is the value of developments (e.g. R&D) in view of preparing future options to mitigate future risks?
• What is the decisional trade-off between cost and risk performance? For instance, in back-end fuel cycle decisions.
• How to minimise risk exposure with regard to uncertain market developments?
• When is the optimal time to decide on and execute a given investment or deployment option?

In addition to NROM, Nuclear-21 offers FCCM, the Fuel Cycle Costing Model, for financial comparison of options in the shorter-term.

Interested in using NROM? Contact us to discuss your needs.