I already checked about Straight line method, Sum of the years digits depreciation method, Double Declining Balance Depreciation Method , Units of Production Depreciation Method , Diminishing value method, Sinking fund method; however I am not sure which method is used now a days in a real practice.
How the Salvage value is to be calculated?
I want to use it in an investment model for optimizing investment decision.
As you know, each depreciation method has its own best usage. Meanwhile, each organization uses what it sees the best method to depreciate its assets. Therefore, most likely the units of production depreciation method could be the best to use for the calculation of power plant depreciation taking into consideration that this is a normal case scenario (i.e., all other factors remain constant).
You may also want to read the following paper which could help you in this regard:
Model predictive control and the optimization of power plant load while considering lifetime consumption
E Gallestey, A Stothert, M Antoine… - … Transactions on Power …, 2002 - ieeexplore.ieee.org
I don't know the current method being used but if the life expectancy of the power plants are known and their intensity of usage are monitored and recorded overtime and their maintenance records, one can just make use of that.
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