1)Please show how to explain steps in creating monte carlos simulation,

2)Calculate the average price MWh of electricity and gas for 5 simulation runs and most total average saving for this project.

A food processing plant is planning to reduce it energy consumption by installing a Combined Heat and Power (CHP) system. The plant consumes an average of 40MWh of electrical and 90MWh of thermal energy operating over 2760hrs per year. The CHP system is to be powered with biogas produced by the plant's anaerobic digestion system which was installed to reduce waste. Table B.11 summarises: the annual energy inputs/output, to/from the CHP system, the cost of supplying the biogas, and the current retail price of electricity and natural gas. Table B.11 Energy input/output of CHP system, and current energy prices Table Q B.12 shows a summary of the financial cash flow for the project over a 5-year payback period. The summary assumes constant annual cashflows and discount rate of 3% i.e., 4.58 Year 1 values. Table B.12 Cash flow summary The two of the key variables in the proposal are the savings in not having to purchase electricity and natural gas on the retail market. However, there is uncertainty around the average prices over these commodities over the 5-year pay-back period. The company has assessed the variability in the average price of gas and electricity over the 5 -year period and summarised the probabilities in Table B.13 Table B.13 Probability of the 5-year average price of electricity and gas i) Explain the steps in creating a Monte Carlo simulation [6 marks] ii) Using the random numbers in Table B.14. calculate the average price per Mh of electricity and gas for 5 simulation runs and the estimate most likely total average savings for the project. Discuss the significance of the results. [9 marks] Table B.14