Long-term Investment Planning Research Articles

Balancing the Service Benefits and Mainline Delay Disbenefits of Operating Shorter Freight Trains

Advanced train control systems enabling single-person crews or driverless trains promise to significantly reduce the fixed costs of operating a train, removing a strong incentive for longer trains. For carload freight traffic, operating a given number of railcars in shorter trains enables railroads to improve service quality and revenue through increased train frequencies or more direct trains bypassing intermediate classification yards. However, operating shorter trains increases the total number of trains on existing rail corridors, exacerbating congestion and decreasing network fluidity. Rail Traffic Controller simulation software is used to quantify the potential mainline delay impacts and relative capacity consumption of shorter trains. Different combinations of train length and train type heterogeneity are tested on representative single-track freight corridors. Results indicate that train control systems with moving blocks can mitigate some of the mainline delay impacts of shorter trains, particularly at a high traffic volume, with a mix of train types and a greater proportion of railcars traveling on short trains. Mid-siding crossovers can further boost the effectiveness of moving blocks in managing complex train conflicts caused by train type heterogeneity. Simulation results are used to perform an example railcar transit time estimation illustrating the trade-off between yard connection time benefits and mainline delay disbenefits, and the thresholds at which different operating strategies produce a net transit time benefit. Understanding the mainline delay impacts of shorter trains can assist railroad practitioners formulating long-term capital investment plans, developing future operating strategies, and improving service quality and market share through a short train philosophy.

Long-term investment planning for the electricity sector in Small Island Developing States: Case study for Jamaica

Long term infrastructure investment planning for the electricity sector in Small Island Developing States typically optimizes generation and transmission investments sequentially. Compared to a simultaneous planning method, the current practice may result in a misallocation of scarce resources. To address this, this paper makes two contributions. First, it presents a framework for assessing two features of long-term planning models while accounting for economic and geographic idiosyncrasies of small island states. These are: i) the simultaneous vs sequential treatment of generation and transmission investments and ii) the impact of loop flow (a phenomenon intrinsic to electricity transmission networks) on long-term investment planning. Second, it quantifies the magnitude of omitting these model features using Jamaica as a test case. Depending on the initial conditions of the network, a simultaneous planning approach yields cost-efficiency gains in the order of 3.3%–3.6%. This is substantial when converted to financial costs and excess infrastructure investments. Importantly, energy modelers may want to think carefully about whether or not their results are liable to suffer from omitting these features and by making data and program codes publicly available, this paper broadens the scope for energy economic research in small island states.

Framework for optimization of long-term, multi-period investment planning of integrated urban energy systems

In order to achieve stringent greenhouse gas emission reductions, a transition of our entire energy system from fossil to renewable resources needs to be designed. Such an energy transition brings two main challenges: most renewables generate variable electric energy, yet most demand is currently not electric (carrier mismatch) and does not always manifest at the same time as supply (temporal mismatch). Integrating multiple energy infrastructures can address both challenges by using the synergy between different energy carriers; building on existing infrastructure, while allowing a robust and flexible integration of the new.This paper proposes an optimization framework for long-term, multi-period investment planning of urban energy systems in an integrated manner. We formulate it as a mixed-integer linear program, combining a capacitated facility location with a multi-dimensional, capacitated network design problem. It includes generation and network expansion planning as well as interconnections between networks and storage infrastructure for each energy system. It can incorporate pathway effects like techno-economic developments, policy measures, and weather variations. The intended use is to support urban decision makers with long-term investment planning, though it can be tailored to fit other geographical or temporal scales.We demonstrate the model using two cases based on an average city in The Netherlands, which wants to reduce its CO2-emissions with 95% by 2050. In the first case, we include explicit carbon-emission constraints to study the effects of the carrier mismatch. In the second case, we implement interannual weather variations to analyze the temporal mismatch. The results give valuable insights into the energy transition design strategy for urban decision makers. They also show the future potential, as well as the computational challenges of the optimization framework.

Strategic design optimisation of multi-energy-storage-technology micro-grids considering a two-stage game-theoretic market for demand response aggregation

While industrial demand response programmes have long been valued to support the power grid, recent advances in information and communications technology have enabled new opportunities to leverage the potential of responsive loads in less energy-dense end-use sectors. This brings to light the importance of accurately projecting flexible demand-side resources in the long-term investment planning process of micro-grids. This paper introduces a customer comfort-aware, demand response-integrated long-term micro-grid planning optimisation model. The model (1) draws on non-cooperative game theory and the Stackelberg leadership principles to understand and reflect the strategic behaviour of energy utilities, demand response aggregators, and end-consumers, (2) produces optimal trade-offs between power imported from the main grid and available demand response resources, (3) determines the cost-optimal resource allocation for energy infrastructure, including multiple energy storage systems, and (4) provides a level playing field for emerging technologies, such as power-to-gas and vehicle-to-grid interventions. The multi-energy-storage-technology test-case was effectively applied to achieve 100%-renewable energy generation for the town of Ohakune, New Zealand. Numerical simulation results suggest that the proposed incentive-compatible demand-side management market-clearing mechanism is able to estimate the cost-optimal solution for the provision of renewable energy during the planning phase. The cost-optimal system saves ~21% (equating to around US$5.5 m) compared to a business-as-usual approach, where the participation of end-users in demand response programmes is projected by running uniform price demand response auctions. The most salient distinction of the proposed two-stage (wholesale and retail) demand-side management market model is the continual process of trading, with incentive prices unique to each transaction.

Stochastic simulation of restoration outcomes for a dry afromontane forest landscape in northern Ethiopia

Forest and Landscape Restoration (FLR) is carried out with the objective of regaining ecological functions and enhancing human well-being through intervention in degrading ecosystems. However, uncertainties and risks related to FLR make it difficult to predict long-term outcomes and inform investment plans. We applied a Stochastic Impact Evaluation framework (SIE) to simulate returns on investment in the case of FLR interventions in a degraded dry Afromontane forest while accounting for uncertainties. We ran 10,000 iterations of a Monte Carlo simulation that projected FLR outcomes over a period of 25 years. Our simulations show that investments in assisted natural regeneration, enrichment planting, exclosure establishment and soil-water conservation structures all have a greater than 77% chance of positive returns. Sensitivity analysis of these outcomes indicated that the greatest threat to positive cashflows is the time required to achieve the targeted ecological outcomes. Value of Information (VOI) analysis indicated that the biggest priority for further measurement in this case is the maturity age of exclosures at which maximum biomass accumulation is achieved. The SIE framework was effective in providing forecasts of the distribution of outcomes and highlighting critical uncertainties where further measurements can help support decision-making. This approach can be useful for informing the management and planning of similar FLR interventions.

Piloting Industry 4.0 in SMEs with RAMI 4.0: an enterprise architecture approach

Reference Architectural Model Industrie 4.0 (RAMI 4.0) is an influential guide to the ongoing digital transformation in industry. However, the adoption of RAMI 4.0 in small and medium-sized enterprises (SMEs) is still emerging. This paper describes how to deploy pilot projects in the era of Industry 4.0 following an enterprise architecture (EA) approach. The field intervention presents the design of an app for manufacturing that adheres to RAMI 4.0 in the context of SMEs. ArchiMate language is used to model the Industry 4.0 vision in the case company and identify specific requirements for technology developments. Our work presents (1) EA models for the six main RAMI 4.0 layers: business, functional, information, communication, integration, and asset, and (2) the instantiation of a pilot project adopting mobile technologies in manufacturing and quick response (QR) code identification for product traceability. For theory, our study confirms recent research suggesting the suitability of ArchiMate to help in Industry 4.0 initiatives, providing examples of layered models for RAMI 4.0. For practice, the study can be helpful to increase the adoption of RAMI 4.0 in SMEs and exemplify how to deploy specific industry developments starting with a high-level description of the Industry 4.0 architecture. Enterprise architecture approaches to Industry 4.0 can assist companies in their long-term investment plans and ensure technology integration and strategic alignment of Industry 4.0 projects.

A mathematical programming formulation for long-term infrastructure investment planning in Small Island Developing States

Mixed-integer programming is a common method used in electricity generation and transmission optimization models. However, the size of the problem can result in extraordinarily long run times. Solve time also increases exponentially with the number of variables to optimize. There is therefore a constant trade-off between a realistic representation of the network and computational tractability. Additionally, actual data and publicly available, real-world application are scare. This is particularly true for Small Island Developing States. This paper bridges these gaps by describing a customized mathematical formulation for co-optimizing generation and transmission infrastructure investments. Data from the island of Jamaica and program scripts are available for reproduction. Key customizations to a mixed-integer programming model for long-term generation and transmission infrastructure investment planning include:•Hours are treated as representative hour categories and multiplied by the number of hour types within a given period.•Simulated construction is limited to every other year.•While fossil fuel plants are treated as discrete variables, renewable energy plants are treated as continuous variables.

The impact of neighboring markets on renewable locations, transmission expansion, and generation investment

Many long-term investment planning models for liberalized electricity markets either optimize for the entire electricity system or focus on confined jurisdictions, abstracting from adjacent markets. In this paper, we provide models for analyzing the impact of the interdependencies between a core electricity market and its neighboring markets on key long-run decisions. This we do both for zonal and nodal pricing schemes. The identification of welfare optimal investments in transmission lines and renewable capacity within a core electricity market requires a spatially restricted objective function, which also accounts for benefits from cross-border electricity trading. This leads to mixed-integer nonlinear multilevel optimization problems with bilinear nonconvexities for which we adapt a Benders-like decomposition approach from the literature. In a case study, we use a stylized six-node network to disentangle different effects of optimal regional (as compared to supra-regional) investment planning. Regional planning alters investment in transmission and renewable capacity in the core region, which affects private investment in generation capacity also in adjacent regions and increases welfare in the core region at the cost of system welfare. Depending on the congestion-pricing scheme, the regulator of the core region follows different strategies to increase welfare causing distributional effects among stakeholders.

The near-optimal feasible space of a renewable power system model

Models for long-term investment planning of the power system typically return a single optimal solution per set of cost assumptions. However, typically there are many near-optimal alternatives that stand out due to other attractive properties like social acceptance. Understanding features that persist across many cost-efficient alternatives enhances policy advice and acknowledges structural model uncertainties. We apply the modeling-to-generate-alternatives (MGA) methodology to systematically explore the near-optimal feasible space of a completely renewable European electricity system model. While accounting for complex spatio-temporal patterns, we allow simultaneous capacity expansion of generation, storage and transmission infrastructure subject to linearized multi-period optimal power flow. Many similarly costly, but technologically diverse solutions exist. Already a cost deviation of 0.5% offers a large range of possible investments. However, either offshore or onshore wind energy along with some hydrogen storage and transmission network reinforcement appear essential to keep costs within 10% of the optimum.

Long-term investment and maintenance planning for heat exchanger network retrofit

Process Optimisation has been the core topic in chemical process industries for decades. However, the performance of the asset strongly influences the production efficiency as well. In the case of Heat Exchanger Network (HEN), the retrofit decisions are often aimed to maximise energy savings and minimise the associated cost. However, the age and performance of heat exchangers have a great influence on the HEN efficiency as well. This study brings innovative retrofit algorithms, integrating exchangers’ lifetime and reliability functions to visualise the benefits of the hybrid process and asset optimisation. The HEN retrofit structures are optimised, considering various heat intensification methods. The model is formulated based on the novel concept of Shifted Retrofit Thermodynamic Grid Diagram (SRTGD). A Mixed Integer Linear Programming (MILP) model is formulated for the investment and maintenance planning. The operating life of the network is discretised into multiple periods, and a decision is made within each period: whether to upgrade the heat exchangers, purchase new heat exchangers – for replacement or adding to the network, maintain the heat exchangers or perform nothing. Two realistic case studies are used to elucidate the application of the method. Under a 20 y planning horizon, the Net Present Value (NPV) obtained are higher than the previous works, i.e. 17% higher for case study 1 with 51% utility savings, and 14% higher for case study 2 with 74% utility savings. The proposed HEN retrofit decisions are proven to be cost-effective. A graphical tool has been developed to track the reliability and maintenance status of the exchangers to provide a significant guide to the economically optimum decisions.

An integrated framework for municipal capital investment planning

Resilient and sustainable municipal organisations develop long-term capital investment plans to balance capital investment needs with organisational financial capacity in the most optimum way to ensure services are provided at the acceptable level of service. Currently, capital investment planning frameworks and methodologies exist to develop the capital investment plans, but these lack a service-centric and integrated approach to identify, coordinate, prioritise and plan capital investment needs – capital projects. The development of a service-centric and integrated framework for municipal capital investment planning will address these issues. A three-step methodology is used to develop the framework, including; desktop discovery, field discovery and framework development. The paper discusses the development of the capital investment planning framework comprised of three main components; identify, coordinate and plan and manage capital projects. The paper further explains the implementation challenges and their solutions.

Value-based optimisation for cross-asset maintenance in a Canadian municipality

Most municipalities have a disconnection between the effective usage of their budget and their ability to preserve the value of their network of assets. Long-term planning for cross-asset infrastructures is always a challenge for municipalities. This paper proposes a decision-making platform which optimises municipal assets by integrating cross-asset models with asset value to achieve an optimal solution for the maximum returns of investment over a long-term period. The method was compared with the classical condition-based optimisation approach by implementing it on a case study of the Municipality of Kindersley, Canada. It was found that the value-based optimisation model demonstrated meaningful results by integrating engineering concepts with the value of the assets to determine the optimal long-term investment planning. For the same available budget, the value-based model achieved a similar overall condition while increasing the total value relative to that of the condition-based approach. The life-cycle analysis showed that for 20 years’ investment in the case study, the value-based model obtained Can$18 million (US$13·5 million) more return, which validates the higher efficiency of the proposed model. The developed value-based optimisation technique enables municipalities to apply a multi-asset decision-making process that balances engineering and economic approaches to delivering better value for money.

Efficiency versus satisfaction in public transport: Practices in Brazilian cities

Considering that travel times are generally high in large cities in developing countries such as Brazil, this study proposes a methodology based on data envelopment analysis (DEA) and the Malmquist Index to evaluate urban public transportation systems that combine two conflicting perspectives: the economic, represented by an efficiency index, and the social, represented by a satisfaction index. The performance of urban public transportation systems is measured by an efficiency/satisfaction ratio (ESR), which can aid public municipal authorities (PMAs) to develop better transport strategies and improve long-term investment planning. ESR < 1 indicates that the transport policy favors the passengers and ESR = 1 represents an equilibrium. The application of the methodology to 17 Brazilian municipalities over six years reveals how each municipality is located in the efficiency x satisfaction space, and how the transport authorities could balance economic and social indices. Our methodology integrates a set of effective analysis tools that can assist PMAs in the important task of balancing between interests of service providers and passengers.

Future-proofing and monitoring capital investments needs throughout the life cycle of building projects

It is increasingly important justify not only the initial capital investments needed at an early stage of a building project, but also all other subsequent costs throughout the building life-cycle. These involve an understanding of the running costs in the use stage and also appropriate long-term capital investment planning of future rehabilitation investments needs. To achieve this, several research efforts have been made to increase the understanding of complex building system and subsystems degradation processes in the post-construction period and to develop life-cycle-cost databases. But there is a lack of expedite decision support tools that can assist the future-proofing of design decisions at early stage of the building life-cycle and link those to the economic life-cycle performance. This paper presents an indicator-based approach (Building Investment Index, BII), which also allows the monitoring of the economic life-cycle performance of building projects at any moment in time. BII is applied in a case study of 166 public school building constructed in Portugal since 1942 and totally refurbished in 2009. Post-construction investment costs are estimated until 2071. It is show and proven how to use BII to future-proof decisions and to monitor and optimize long-term investment plans for building systems, subsystems and elements.

Long-term real dynamic investment planning

When long-term savers plan for retirement they need to know their investment prospects in terms of real income (Merton, 2014). While inflation has traditionally been considered as a complication in financial analysis and financial practise, we obtain enhanced predictability and model fit if the real returns are targeted in conjunction with earnings-by-price minus inflation as predictor. For this latter case, we propose an investment strategy of updating the simple classical Merton proportion as we go along. This simple strategy is very close to the complicated theoretically optimal solution but has comparably much lower parameter uncertainty.

Novel methodology for efficiency-based long-term investment planning in water infrastructures

Uncertainties are a key issue for long-term capital investment planning in asset intensive organizations. Amongst the sources of uncertainty are the quality and accuracy of readily available data and the assumptions underlying the several estimations involved in capital investment plans, namely those related to renewals, replacements and expansion costs and the useful lives of the assets. This article proposes a novel methodology for efficiency-based long-term investment planning in water infrastructures and discusses the effect of uncertainties in the investment strategies. An industrial water supply system of the Industrial and Logistics Zone of Sines (ILZS), installed in the Portuguese seacoast around 40 years ago, is used as a case study to demonstrate the proposed methodology. The study includes stochastic and deterministic approaches to an asset management key-performance indicator (KPI) that is currently being tested in the Portuguese water sector—the Infrastructure Value Index (IVI).

Evaluation of selected practices in the field of urban logistics in Poland

Dynamic growth of automotive indicator and increasing level of freight being carried in the Polish cities are causing serious transport problems. Migration to the cities is a trend observed still in Poland that is expected to continue. Bottlenecks, delivery obstacles, congestion, traffic jams and air pollutions require prompt organizational and technological intervention. The article starts a discussion about the condition of the urban logistics in Poland, comparing various models from the local government authorities point of view and inhabitants. The author outlines the barriers and obstacles in the planning and implementing of the modern urban logistical solutions. The majority of municipal and local government authorities, despite the declared enthusiasm for the smart city concept, prefer traditional infrastructure investments, instead of joint and interdisciplinary planning of the combined organizational and technological solutions tailored to the needs of a specific city. There is an urgent need to introduce regulations limiting freight traffic in the Polish cities, road tolls depending on emissivity, payloads, parking infrastructure. There should be rules planned determining time windows in the urban transport, organizing in-city consolidation centers, etc. The paper includes recommendations for creating Urban Vehicle Access Regulation Schemes for the Polish cities. The article includes also the findings and recommendation for the Polish cities in the field of urban logistics. The author emphasizes, however, that there is still a lack of long-term investment plans in the field of logistics and freight transport in so-called smart cities. The paper demonstrates that the efficiency of the functioning of Po-land’s urban logistics network does not necessarily imply cost-intensive infrastructural development. The optimization of logistics activities should be brought about in urbanized areas primarily based on the organisational changes in the transportation system, customs, habits and behavioral patterns of its users as well as the altered functions of selected. Such an approach is the closest to the views expressed by the inhabitants; however, it all too often proves contradictory to the interests of the other stakeholders of the system. Any changes to the city’s transport layouts or systems, or mobility policies (as a broader concept), call for a broad public contribution when it comes to consulting projects and designing the improvements. Organisational and financial support is likewise indispensable, along with the development of an incentives system. The author also pointed out a need to monitor comprehensively the solutions in the field of urban logistics and urban freight transport of the Polish cities using socio-economic analysis tools. The selected methods of evaluating the urban logistics solutions, incl. comparative best practices analysis, have been discussed.

Future of Oil in a Low-Carbon World

Our world faces a dual challenge: meeting growing demand for energy while reducing environmental impacts, including the risks of climate change. This is a global issue that requires the collaboration of governments, industries, consumers and other stakeholders.From reducing the environmental impact of our operations, to developing advanced products that help our customers reduce their emissions, ExxonMobil is committed to doing our part. We are investing in next-generation technologies such as carbon capture and storage and advanced biofuels from algae. We have been vocal in our support for the Paris Agreement, an important framework for addressing the risks of climate change.Each year we produce an Outlook for Energy, our view of energy demand and supply through 2040. We use the Outlook to help inform our long-term business strategies and investment plans. The below highlights some of the key takeaways from our most recent Outlook, and the actions we are taking as the world shifts toward a lower-carbon energy system.

Representation of Balancing Options for Variable Renewables in Long-Term Energy System Models: An Application to OSeMOSYS

The growing complexity and the many challenges related to fast-changing and highly de-carbonised electricity systems require reliable and robust open source energy modelling frameworks. Their reliability may be tested on a series of well-posed benchmarks that can be used and shared by the modelling community. This paper describes and integrates stand-alone, independent modules to compute the costs and benefits of flexible generation options in the open source energy investment modelling framework OSeMOSYS. The modules are applied to a case study that may work as a benchmark. The whole documentation of the modules and the test case study are retrievable, reproducible, reusable, interoperable, and auditable. They create a case to help establish a FAIR-compliant, user-friendly, and low-threshold model and data standards in modelling practices. As is well known, one of the options for balancing high shares of variable renewables is flexible power generation by dispatchable units. The associated costs need to be considered for short-term operational analyses and for long-term investment plans. The added modules contribute to extending the modelling capacity by introducing (a) costs of ramping, (b) non-linear decrease of efficiency at partial load operation, and (c) refurbishment of existing units in the cost minimisation objective function of OSeMOSYS. From application to the test case study, two main insights are drawn: costs of ramping and decreased partial load efficiency may influence the competitiveness of generation technologies in the provision of reserve capacity; and refurbishment of existing units may represent attractive investment options for increasing flexibility. Both effects are also seen in the long-term and may impact infrastructure investment decisions to meet decarbonisation targets. These effects would not be captured without the introduction of the modules.

ТЕОРЕТИЧНІ АСПЕКТИ КОРПОРАТИВНОГО УПРАВЛІННЯ ПРИ ОБСЛУГОВУВАННІ КОРПОРАТИВНИХ КЛІЄНТІВ

The theoretical aspects of corporate governance principles that underpin the corporate governance code of the Organization for Economic Co-operation and Development (OECD) have been highlighted in the article. International models of corporate governance are analyzed, their advantages and disadvantages for integration and modernization into the Ukrainian model of corporate governance. It is noted that the modernization of corporate governance at the national level is now the top priority of most countries. The emergence of generally accepted standards of corporate governance is due, first of all, to an increase in attention to corporate governance in the conditions of globalization of financial markets, liberalization of the movement of capital. It is revealed that the international standards of corporate governance are also a response of society to the global financial crises and the desire for stability of financial markets. The central instrument that enables this goal to be achieved is the implementation of national principles (codes) for corporate governance. It has been proved that the main task of corporate governance is to create a system of relationships between owners, managers and third parties. Forming a clear structure for these bodies allows all interests to be taken into account and ensures their balance and sound performance, especially for large institutional investors, since many of them have long-term investment plans, and therefore such investors focus on effective corporate governance. First of all, it concerns the transparency and adequate protection of the rights of small shareholders in order to achieve sufficient long-term profitability growth. It has been found that corporate governance standards are important in making investment decisions and affecting investment attractiveness. Improving corporate governance will allow domestic and foreign investors to be assured of reliable protection of property rights, and will provide enterprises with resources for further development, which will contribute to the development and strengthening of the national economy of Ukraine.