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A Decision Analysis Approach to Energy System Expansion Planning

Capacity expansion decisions are critically important to both public and private-sector energy suppliers as well as regional and national energy planning agencies. Simplistically stated, planning for the expansion of an energy supply system involves determining when and where new energy production facilities of various types and sizes should be deployed to meet projected demands. As with most energy-related decision problems, several factors complicate capacity expansion planning. These factors include the involvement of multiple decisionmakers and interest groups, uncertainties about technology costs and demand projections, varying degrees of risk associated with alternative energy technologies, the need to consider costs and effects over long time horizons, and the difficulty of quantifying key impacts and concerns.

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Energy Specializations: Energy Modeling – Integrated Assessment Modeling; Energy Modeling – Other

JEL Codes:
Q43 - Energy and the Macroeconomy
C59 - Econometric Modeling: Other

Keywords: Energy supply, Energy system expansion planning, Decision analysis approach, Uncertainty, technology costs

DOI: 10.5547/ISSN0195-6574-EJ-Vol6-No3-2

Published in Volume 6, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.