Optimal Investment Strategy for a Sustainable Energy Future in Pakistan /

Abstract

Rising energy demand, global warming and climate change have collectively increased attention towards more effective utilization of the energy resources at our disposal. The scenario for Pakistan is no different if not worse. In light of this ongoing dilemma, renewable energy sources are looked upon as the fundamental pillars of this new energy paradigm. However, this transition from a heavy reliance on conventional sources of energy such as fossil fuels is easier said than done. Attracting investments to sustainable sources of energy is among the biggest challenges as these are often evaluated as more risky and costly alternatives compared to the commonly labeled ‘black gold’. Bearing in mind the complexities of modern energy systems, the way investors evaluate their options calls for a more sophisticated methodology. This research delved into the domain of investment evaluations from a different perspective and has merged two research areas, namely energy modeling and decision analysis, to introduce a new methodology for making investment decisions in the energy sector. The Integrated MARKAL-EFOM System (TIMES) modeling framework has been utilized, whereby optimization mathematics leads to the determination of a least cost energy system. The results from TIMES were further explored using the multiple criteria analysis approach to incorporate the impact of uncertainties and risks revolving around investment decision making. More specifically, a PESTLE analysis is implemented upon the energy sector to analyze the results from TIMES with greater scrutiny. As a result of this amalgamation, the author strives to present a comprehensive energy planning tool which allows the formulation of accurate decision making regarding investments in the energy market. Such tools can empower key stakeholders by enhancing their insights and allowing them to smartly allocate funds in order to fulfill the energy demands in their respective areas of interest.