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Conventional methods of cost-benefit analysis (CBA) under-value investment in ‘smart’ technologies. To overcome this challenge the Real Options CBA model (RO CBA), a new decision-making process and supporting software, were developed in collaboration with Electricity North West Ltd (ENWL), the electricity distribution network for north-west England. RO CBA adds a stochastic process framework based on Real Options Analysis to a set of long-term forecast scenarios, enabling competing conventional and smart technologies to be compared on a common basis. ENWL has integrated RO CBA into its regular business practice, directly benefitting over 100,000 customers across fourteen different investment projects. This change has enabled the network to provide better-value electricity for its 5 million customers, and has also informed the UK National Grid’s best practices on the use of Real Options in cost-benefit analyses.

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Bringing Cost Savings and Customer Benefits at Electricity North West Ltd

  • 章节

  • 发表日期：

    2025年

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  • John Moriarty

摘要

Conventional methods of cost-benefit analysis (CBA) under-value investment in ‘smart’ technologies. To overcome this challenge the Real Options CBA model (RO CBA), a new decision-making process and supporting software, were developed in collaboration with Electricity North West Ltd (ENWL), the electricity distribution network for north-west England. RO CBA adds a stochastic process framework based on Real Options Analysis to a set of long-term forecast scenarios, enabling competing conventional and smart technologies to be compared on a common basis. ENWL has integrated RO CBA into its regular business practice, directly benefitting over 100,000 customers across fourteen different investment projects. This change has enabled the network to provide better-value electricity for its 5 million customers, and has also informed the UK National Grid’s best practices on the use of Real Options in cost-benefit analyses.