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ID:
109320
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| Publication |
2011.
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| Summary/Abstract |
Efficient management of the natural gas business chain - based on pipeline transmission networks and taking into consideration the interaction among the main players (e.g., shippers, suppliers, transmission companies and local distribution companies) - requires the use of decision-making support systems. These support systems maximise resources and mitigate contingencies due to gas supply shortfalls, operational contingencies from scheduled and non-scheduled equipment outages and market demand shortfalls. This study presents a practical use for technologies, such as a thermohydraulic simulation of gas flow through pipelines, a Monte Carlo simulation for compressor station availability studies, an economic risk evaluation related to potential revenue losses and contractual penalties and linear programming for the maximisation of income and the minimisation of contractual penalties. The proposed system allows the optimum availability level to be defined and maintained by the Transporter (by installing reserve capacity) to mitigate losses related to revenue and contractual penalties. It also economically identifies, quantifies and justifies the installation of stand-by compressor units that can mitigate the Transporter's exposure to losses caused by capacity shortfalls as a consequence of scheduled and non-scheduled outages.
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| 2 |
ID:
171431
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| Summary/Abstract |
Although innovation and support schemes are among the main forces that drive investment in renewable energy (RE) technologies, both involve considerable uncertainty. We develop a real options framework to analyse the impact of technological, policy and electricity price uncertainty on the decision to invest sequentially in successively improved versions of a RE technology. Technological uncertainty is reflected in the random arrival of innovations, and policy uncertainty in the likely provision or retraction of a subsidy that takes the form of a fixed premium on top of the electricity price. We show that greater likelihood of subsidy retraction (provision) lowers (raises) the incentive to invest, and, by comparing a stepwise to a lumpy investment strategy, we show how an embedded option to adopt an improved technology version mitigates the impact of subsidy retraction on investment timing. Specifically, we show how stepwise investment facilitates earlier technology adoption compared to lumpy investment, and that, under stepwise investment, technological uncertainty accelerates technology adoption, thus further offsetting the incentive to delay investment in the light of subsidy retraction.
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