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Flexible asset management for the transition to multigas network

How real option analysis can contribute to assets management in the gas distribution system, in sight of the diversification of the gas quality?

Kees Pulles (Photo: EDGaR/Jan Buwalda)

The gas supply system will have to accommodate more and more the injection of bio-methane from various but fixed flow sources. The adaptations offer opportunities for further preparation to predictable developments, such as the increase in injection sites, the stabilization of the supply and the variation of the demand. These development will require larger investments that those to cover the immediate situation of demand and supply. Nonetheless, they offer the opportunity to invest with higher cost effectiveness, from the society’s viewpoint, although these investments carry perhaps somewhat more risks. Real option analysis has been developed for the evaluation of investments in physical assets in the presence of uncertainty. It has been used successfully in various industries, but, at least not formally and consciously, in the planning and extension of gas supply systems. In this project, participants will develop further the real option analysis. They will make it suitable for the case of a gas supply system with changing locations and amounts of demand and supply patterns, whereby recognizing the associated uncertainties. The possible extensions of the gas supply system consist, not only of pipes and regulations stations, but also of innovative components such as active pressure regulation and compressor stations in use in distribution and transport grids. Participants are developing the software prototype to demonstrate real option analysis. It uses a Monte Carlo technique and can analyze several gas supply development strategies. The method will be illustrated with case studies taken from and with relevance to the Dutch gas grids.

Theme: Changing gas markets 
Leader: Kees Pulles (Kiwa)
Partners: Kiwa, Delft University of Technology, Enexis, Liander, Stedin
Budget: 1.3 million euros
Duration: January 2011 / December 2014

Participants

Adriana Diaz Arias (Delft University of Technology)
Kristen van Gorkum (Enexis)
Paulien Herder (Delft University of Technology)
Anton Janssen (Alliander)
Ben Lambregts (Alliander)
Albert van der Molen (Stedin)
Bas Peppelman (Alliander)
Kees Pulles (Kiwa)
Ernst van der Stok (Kiwa)

Thesis

Geerlings, Lisanne. “A decision model on grid replacement strategies for an energy distribution system operator.” MSc. thesis, Delft University of Technology, 2014.

Proceedings

Herder, Paulien M., Cees J.A. Pulles. “Flexible gas infrastructures.” In Engineering Asset Management 2011: Lecture Notes in Mechanical Engineering 2014. Proceedings of the Sixth World Congress on Engineering Asset Management, ed. Jay Lee, Jun Ni and Jagnathan Sarangapani, pp. 655–663. London: Springer, 2014. 

Conference paper

Janssen, A.L.J, B.M.J. Lambregts, L. van der Sluis, M.C.A.M. Peters, C.F.M. Bos. ‘Enhancement of the environmental performance of power and heat supply by the combined use of wind driven energy, natural gas and district.’ 25th World Gas Conference, Kuala Lumpur, June 2012.

Herder, Paulien, Kees Pulles. ‘Flexible asset management for the transition to multigas networks.’ International Gas Union Research Conference, Seoul, October 2011.

Lambregts, Ben. “Smart gas grid today.” Gas without Frontiers: EDGaR-DVGW First Joint Conference, Arnhem, February 2013.

Hermkens, René. "Experiments prove, the distribution grid is able to transport sustainable gas — provided that humidity is controlled." Enabling Sustainability with Gas: Closing Conference of the Energy Delta Gas Research, Amsterdam, March 2015.

Pulles, Kees. “Van maaiveld tot de hemel.” Presentation EDGaR symposium for network operators, Apeldoorn, 4 December 2014.

Pulles, Kees. “Real option analysis, tactical maneuvers in the fog.” Sixth Research Day of the Energy Delta Gas Research, Nunspeet, April 2014.

Poster

Janssen, A.L.J, B.M.J. Lambregts, L. van der Sluis, M.C.A.M. Peters, C.F.M. Bos. ‘Enhancement of the environmental performance of power and heat supply by the combined use of wind driven energy, natural gas and district.’ Poster at the 25th World Gas Conference, Kuala Lumpur, June 2012.

Pulles, C. “Investments in the distribution network.” Enabling Sustainability with Gas: Closing Conference of the Energy Delta Gas Research, Amsterdam, March 2015.