Decision analysis in the energy sector

An optimization model has been developed primarily for the planning of the national energy system. It is also shown, however, that the model can be used as a tool for decision analysis.

The dynamic linear programming mini-model includes four primary energy sources and three forms of secondary energy. Decision variables include investment as well as production activities in the refining, conversion, and transmission of energy. The model contains 186 columns and 226 rows. The objective function is the discounted sum of costs of fuels, investments, operating costs, and under-utilized capacity. The model has been used to analyse decisions in the Turkish energy sector for the years 1960-1975, and possible developments for the period 1980-1995.

Through the use of this model, the underlying assumptions concerning the import prices of petroleum have been analysed, as well as the impact of a delay in the construction of a large hydro project. Furthermore, the effect of the shadow costs of foreign currency, the consequences of rapid industrialization, rapid economic growth, and substitution among fuels have been investigated. The model is currently being used for the analysis of possible nuclear strategies for Turkey.