From engineering to economics

Employing simulation tools to appraise network investments

In network industries, investment planning has traditionally been driven by technical objectives: for example, to relieve constraints, to maintain a capacity reserve margin, or to replace assets at the end of their deemed life. In the new regulatory environment, however, operators need new tools based on economics to help them assess the impact of investments on profitability and shareholder value. In this bulletin, we describe a practical application to electricity network planning.