The decision dilemma

Industrial investments in the energy sector, the important ones that look at horizons of ten to thirty years, have always been evaluated very carefully. The period we are going through is characterized by substantial uncertainty of supply sources, high and very volatile energy prices, ambiguous political actions and dubious results. Investments have always been carefully evaluated and planned, but if a spreadsheet was enough before, it is advisable to adopt now analytical, data-driven approaches and decision-making algorithms.

What investments are we talking about? Two specific examples can help.

The first concerns the production of electricity from renewable sources. The need for zero-carbon production processes is pushing large consumers to invest in the installation and management of wind and photovoltaic plants. A large consumer, such as steel mills, rail transport, data centers, or those who for a specific business can consume up to 5 TWh a year, can decide to activate a path of portfolio diversification first and then self-production.

The second example concerns the safeguarding of investments made in the natural gas transmission and distribution sector. Always with a view to supporting an economy with zero carbon dioxide emissions, many operators in the sector are looking at alternative gases: bio-methane, synthetic methane, or hydrogen. It seems evident that the need to store large amounts of energy for long periods of time is a necessity to cope with the volatility of renewable production.

In both the previous examples, the strategies are different and choosing the one to adopt is not a simple thing. But how to make a decision? With what tools?

To find a good answer follow this path: data -> data analysis -> scenario generation -> mathematical optimization. Feel free to contact me to share our points of view.