Hello, everyone!
Today, I would like to continue and share with you about the techno-economic model - sensitivity analysis.
A sensitivity analysis is a systematic study of how an output result changes as the assumptions are varied. For the sensitivity analysis we use the tornado diagrams (graphical sensitivity analysis technique).
A tornado diagram provides a graphical display of the sensitivity of some system responses to uncertainties in the various inputs of that system. The diagrams show the effects of uncertainties in each input variables on the output of the analysis.
The following table shows the effect of these input variables (first column: coverage area, potential HH, etc.) on the output variables (Cost per subscriber, payback period, NPV, IRR, CAPEX, and OPEX).
Table 1. Sensitivity analysis for WiMAX technology
The tornado diagrams are a series of horizontal bars (one for each variable) around the base value result. The big bars mean high impact and are on the top of the diagram.
The bars decline in size to the smallest at the bottom, representing the parameter that causes least change to the base value. The red bars represent the Output for Low Value (negative variation in parameter), and the blue bars represents the Output for High Value (positive variation in parameter).
Fig. 1. Sensitivity analysis for WiMAX technology: Cost per subsc. And payback period
As we can see in graph 1 (Above Fig. 1), the three input variables which influence more the cost per subscriber are the required downstream bandwidth; equipment costs and housing costs.
The three more critical variables that affect the payback period (graph 2) are bandwidth(The increase of 60% in bandwidth implies an increase of 264% in payback period), households month fee (a decrease of 40% in this fee implies an increase of 264%), and housing costs (an increase of 50% of this feature leads to an increase of 257% in the payback period).
Fig. 2. Sensitivity analysis for WiMAX technology: NPV and IRR
For NPV and IRR (Above Fig. 2), the three most critical input variables remain the same as cost per subscriber and payback period (bandwidth, housing and equipment costs, and month fee).
Fig. 3. Sensitivity analysis for WiMAX technology: CAPEX and OPEX
In conclusion, the sensitivity analysis here shows the effect of the input parameters (Coverage Area, Potential HH/SMEs, Take Rate, Required Downstream Bandwidth, Required Upstream Bandwidth, Activation Fee, Month Fee, etc.) on the output parameters (Cost per subscriber, Cost per Homes Passed, End cash balance, Payback period NPV, IRR, CAPEX, and OPEX.) and also identifies the critical parameters for several technologies.
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