An optimization methodology for identifying robust process integration investments under uncertainty

Uncertainties in future energy prices and policies strongly affect decisions on investments in process integration measures in industry. In this paper, we present a five-step methodology for the identification of robust investment alternatives incorporating explicitly such uncertainties in the optim...

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Bibliographic Details
Published in:Energy policy Vol. 37; no. 2; pp. 680 - 685
Main Authors: Svensson, Elin, Berntsson, Thore, Strömberg, Ann-Brith, Patriksson, Michael
Format: Journal Article
Language:English
Published: Kidlington Elsevier Ltd 01.02.2009
Elsevier
Elsevier Science Ltd
Series:Energy Policy
Subjects:
Annan maskinteknik
Applied sciences
Beräkningsmatematik
Computational Mathematics
Decision makers
Decision making
Efficiency
Energiteknik
Energy
Energy economics
Energy efficiency
Energy Engineering
Energy policy
Energy prices
Environmental objective
Exact sciences and technology
General, economic and professional studies
Identification
Investment planning
Investments
Measures
Methodology. Modelling
Modelling
Optimization
Other Mechanical Engineering
Policy making
Present value
Price levels
Prices
Pricing policies
Process integration
Research methodology
Stochastic processes
Stochastic programming
Stochastic programming Process integration Investment planning
Studies
Uncertainty
Investment planning
Process integration
Stochastic programming
Uncertainty
Energy conservation
Energy economy
Economic optimization
Energy savings
Investment
ISSN:0301-4215, 1873-6777
Online Access:Get full text
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Description
Summary:Uncertainties in future energy prices and policies strongly affect decisions on investments in process integration measures in industry. In this paper, we present a five-step methodology for the identification of robust investment alternatives incorporating explicitly such uncertainties in the optimization model. Methods for optimization under uncertainty (or, stochastic programming) are thus combined with a deep understanding of process integration and process technology in order to achieve a framework for decision-making concerning the investment planning of process integration measures under uncertainty. The proposed methodology enables the optimization of investments in energy efficiency with respect to their net present value or an environmental objective. In particular, as a result of the optimization approach, complex investment alternatives, allowing for combinations of energy efficiency measures, can be analyzed. Uncertainties as well as time-dependent parameters, such as energy prices and policies, are modelled using a scenario-based approach, enabling the identification of robust investment solutions. The methodology is primarily an aid for decision-makers in industry, but it will also provide insight for policy-makers into how uncertainties regarding future price levels and policy instruments affect the decisions on investments in energy efficiency measures.
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ISSN:0301-4215
1873-6777
DOI:10.1016/j.enpol.2008.10.023