A Framework for Sustainable Strategic Energy Company Investment Analysis and Decision-support: Towards the Operationalisation of Sustainable Energy Systems

University dissertation from Pepukaye Bardouille, Environmental- and Energy Systems Studies, Gerdagatan 13, 223 62 Lund, Sweden

Abstract: In addition to being a key criterion of the sustainable development proviso, for business, the integration of social- and ecological considerations into decision-making is of growing importance for minimising future environmentally-related risk and associated economic costs, as well as gaining a share in growing markets favouring products and companies focusing upon social responsibility and ecological protection. The study focuses upon addressing the research question: how can socio-ecological considerations be incorporated into energy companies' formal strategic investment analysis and decision-making processes, so as to facilitate the development of sustainable energy systems?. To this end, the research methodology builds upon four elements: (i) normative- or prescriptive theory on strategic decision-making, derived from the literature; (ii) principles for sustainable- development; -energy systems; and -strategic energy company investment decision-making, derived from primary- and secondary data collection; (iii) opportunities for improvement in and lessons learned from current decision-making procedures, based upon two Swedish energy sector case studies; and (iv) the needs of energy company strategic decision-makers aiming to make sustainable power plant investments, established through interviews. The tangible output of the study is a framework for sustainable strategic energy company investment analysis and decision-support, which draws from the array of available environmentally-oriented decision aids-notably total cost assessment-, full cost accounting-, and multi-attribute decision analysis models. The decision-support framework comprises ten steps, namely: (i) decision problem definition; (ii) objectives-, decision criteria-, and evaluation measures development; (iii) investment alternatives identification; (iv) alternatives modelling in terms of risks and uncertainties; (v) systems characterisation in social-, ecological-, and economic terms; (vi) identification of immediate internal environmental costs; (vii) valuation of externalities; (viii) identification of likely future internalised environmental costs; (ix) ranking of each investment option vis à vis stakeholder sustainability preferences; and (x) evaluation of hard-to-quantify environmental impacts of each alternative in qualitative terms. Initial evaluation by energy company managers reveals that the Framework emerging from the research has several useful characteristics which could be applied to future decision processes, both in terms of its overall structure, and specific components. However, in order to determine its practical applicability in facilitating sustainable decision-making, the Framework should be assessed using a real decision case.

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