The purpose of this note is twofold: (1) to study the feasibility of a project of providing a 24 over 24 hour electricity power to Lebanese households, and (2) to undertake a sensitivity analysis by varying the key parameters of the model. The note tackles only households because business and industry power demand is hard to ascertain. However, if such demand can be identified the model of this note can be easily expanded to incorporate the total electricity needs for Lebanon.
One point of contention is the available capacity of energy. The underlying assumption is that this actual capacity will be totally devoted to commercial usage, and hence total household energy supply starts from scratch. If this assumption is not imposed the effect on the dollar profitability of the project is to reduce it, contrary to intuition, but the effect on the pro rata profitability will remain the same. This is true because decreasing the required and purchased capacity will reduce the total dollar investment, the total revenues, the total dollar costs, and the total dollar profits in direct proportions, while keeping the average rate of return the same.
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Providing Electricity to Lebanese Households A Feasibility Study and A Sensitivity Analysis