Integrated investment, retrofit and abandonment energy system planning with multi-timescale uncertainty using stabilised adaptive Benders decomposition

Hongyu Zhang, Ignacio E. Grossmann, Ken McKinnon, Brage Rugstad Knudsen, Rodrigo Garcia Nava and Asgeir Tomasgard

European Journal of Operational Research, 2025, vol. 325, issue 2, 261-280

Abstract: We propose the REORIENT (REnewable resOuRce Investment for the ENergy Transition) model for energy systems planning with the following novelties: (1) integrating capacity expansion, retrofit and abandonment planning, and (2) using multi-horizon stochastic mixed-integer linear programming with multi-timescale uncertainty. We apply the model to the European energy system considering: (a) investment in new hydrogen infrastructures, (b) capacity expansion of the European power system, (c) retrofitting oil and gas infrastructures in the North Sea region for hydrogen production and distribution, and abandoning existing infrastructures, and (d) long-term uncertainty in oil and gas prices and short-term uncertainty in time series parameters. We utilise the structure of multi-horizon stochastic programming and propose a stabilised adaptive Benders decomposition to solve the model efficiently. We first conduct a sensitivity analysis on retrofitting costs of oil and gas infrastructures. We then compare the REORIENT model with a conventional investment planning model regarding costs and investment decisions. Finally, the computational performance of the algorithm is presented. The results show that: (1) when the retrofitting cost is below 20% of the cost of building new ones, retrofitting is economical for most of the existing pipelines, (2) platform clusters keep producing oil due to the massive profit, and the clusters are abandoned in the last investment stage, (3) compared with a traditional investment planning model, the REORIENT model yields 24% lower investment cost in the North Sea region, and (4) the enhanced Benders algorithm is up to 6.8 times faster than the level method stabilised adaptive Benders.

Keywords: OR in energy; Stochastic programming; Multi-horizon stochastic programming; Large-scale mixed-integer linear programming; Retrofit of energy systems (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:325:y:2025:i:2:p:261-280

DOI: 10.1016/j.ejor.2025.04.005

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