Abstract
Energy and industrial networks such as pipeline-based carbon capture and storage infrastructures and (bio)gas infrastructures are designed and developed in the presence of major uncertainties. Conventional design methods are based on deterministic forecasts of most likely scenarios and produce networks that are optimal under those scenarios. However, future design requirements and operational environments are uncertain and networks designed based on deterministic forecasts provide sub-optimal performance. This study introduces a method based on the flexible design approach and the concept of real options to deal with uncertainties during conceptual design of networks. The proposed method uses a graph theoretical network model and Monte Carlo simulations to explore candidate designs, and identify and integrate flexibility enablers to pro-actively deal with uncertainties. Applying the method on a hypothetical network, it is found that integrating flexibility enablers (real options) such as redundant capacity and length can help to enhance the long term performance of networks. When compared to deterministic rigid designs, the flexible design enables cost effective expansions as uncertainty unfolds in the future.
Highlights
Networked energy and industrial infrastructures, such as district heating systems, pipeline-based carbon capture and storage infrastructures and LNG distribution networks, are often characterized by their long life span and huge societal impact as they are intended to provide essential goods and services for society
This paper introduces a method to enhance the value of networks by identifying and integrating flexibility enablers under uncertainty
We argued that one way to design flexible networks is to adopt a real options-based design approach
Summary
Networked energy and industrial infrastructures, such as district heating systems, pipeline-based carbon capture and storage infrastructures and LNG distribution networks, are often characterized by their long life span and huge societal impact as they are intended to provide essential goods and services for society They transport a commodity (in this case liquid and/or gas) from one or several sources to one or several sinks. The robust design approach is a set of design methods intended to improve the consistency of an engineering system function across a wide range of conditions One of these methods is robust optimization which aims at finding a solution that is robust or insensitive to the uncertainty considered and is an efficient solution practice (Mulvey et al 1995; Ordóñez and Zhao 2007; Chung et al 2011). If the future turns out to be unfavorable, point-optimized solutions cannot be reduced in scale, which will amount to a waste of capital
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