The LNG price formula is one of the most critical factors in LNG contract negotiations. When buyers and sellers argue for different formulas during negotiations, there is no mutually agreeable way to compare these formulas with different shapes into the evaluation. Therefore, the establishment of a metric for valuing LNG formulas will lead to more efficient negotiations. In this paper, we suggest a financial engineering approach, proposing a methodology for valuing LNG price formulas utilizing the “market value” concept. We observed that LNG prices determined by formulas linked with crude oil prices can be replicated by crude oil derivatives and define the market value of these derivatives as the “market value of LNG price formulas”. Furthermore, we show that this methodology can also be applied to the formulas indexed to natural gas prices (e.g. Henry Hub). Our proposal would enable quantitative comparison of different price formulas according to a “market value” scale defined. It would also enable the generation of alternative price formulas that have equivalent “market value” but different shapes or indexes.

View full abstract

Recently, hot water supply systems using heat pump and cogeneration have been developed. Heat pump water heater is a device which can supply hot water in making use of heat of atmosphere, and its COP is more than 4.0 in normal operation. Heat pump water heaters have been introduced in many household. This study evaluates effects of reducing a tank capacity and daily storage volume of hot water for one and decreasing heat loss in tank using actual monitored daily-bases demand data of hot water by sharing with several households. And the authors assume a piping model which connects among several households, calculates heat loss in pipe as demerit, and comprehensively analyzes heat loss in the hot water supply system.

View full abstract

Japan's self-sufficiency rate of energy is a mere 4%, the lowest among the developed countries. In order to improve the low self-sufficiency rate, the development of renewable energy is recommended as a promising means to contribute to long-term energy supply. However, according to the government's forecasting its contribution to energy mix in 2030 is estimated about 11%. The other way to prevent economical risks from low self-sufficiency rate is to diversify import areas for supply sources. However, the market supplied by the lowest price does not always give security for stable supply. It is important to clarify quantitatively the minimum of economical risk by using past data of imported fossil fuels, especially crude oil which has the highest volatility of fuel price. In this paper, we focus on the economical risk of imported crude oil and propose the method to analyze the source distribution of imported fossil fuels by applying portfolio theory developed by Markowitz. We then apply the method to the past data sets of five high risk terms and three low risk terms and analyze the characteristics of the past crude oil markets in Japan.

View full abstract

The objective of this paper is to clarify attributes of residential customers who are willing to pay for ‘energy based green power programs’ and their attitudes toward program design by analyzing stated preference data collected through a questionnaire survey of 1041 respondents. Almost 70 percent of respondents indicate willingness to participate in energy based programs, though 88 percent of them care about environmental free riders. Household income is one of the most important indicators of those who are willing to participate in programs. The higher the household income, the more likely the respondents has intention of participation. Respondents who do not care about free riders prefer a ‘fixed quantity program’ in which supply of a fixed amount of green power is guaranteed to a ‘percent-of-use program’ in which the monthly amount of green power changes with monthly electricity consumption. We also show respondents’ attitudes toward energy sources, monthly minimum payments, and incentives to participation, such as fuel price stability benefits and locally sited generation facilities.

View full abstract

Development of hydrogen infrastructure will become an important issue at an early, introductory, stage of fuel cell vehicle. A steam reforming process of city gas is one of the strongest candidates of the hydrogen production since the urban area has the city gas network to be supplied to the reformer that will be built in hydrogen refueling station. Enhancement of hydrogen production efficiency at reforming process is the most important issue for accelerating the hydrogen use. To improve the conversion of methane to hydrogen and capture the CO₂ emission from product gas, non-equilibrium reforming process with CO₂ absorbent and regeneration under reduced pressure condition were proposed. The maximum efficiency in the non-equilibrium reforming process was expected to be achieved 75 % with the reduced pressure regeneration since the heat recovery at combustor and the sensible heat from regenerated CaO effectively used for the endothermic reaction in the hydrogen production process. The experiment with adsorbing and the regeneration in reduced pressure less than 0.006 atm shows possibility of the regeneration at 630℃.

View full abstract