Techno-economic modelling

Whether your intention is to buy an asset, refurbish an asset or you already own an asset, you’ll be wanting to make an informed decision of ‘next steps’ by knowing to what extent it will deliver a return on your investment.

In simple terms that means looking at the supply and demand. On the supply side is the asset itself and its condition, resilience (fit for purpose) and whole-life operating costs (including hidden costs): everything from maintenance to insurance; regulatory costs to energy consumption; environmental conditions to unexpected breakdowns and any subsequent consequential losses.

A transparent business model of costs is only one half of the techno-economic appraisal equation. The other half is demand: the need, frequency of need and how much will customers pay,­ in turn often determined by the cost of alternatives.

Take commodity markets like energy. Here pricing is critical; of all the marketing levers it’s the most potent. Despite the market fundamentals of demand modelling, risk management and statistical analysis, get the commodity price forecast wrong and the demand and supply balance could shift expensively out of phase.

Techno-economic modelling isn’t a guaranteed saviour (no supplier operates in a vacuum) but, along with feasibility studies, it enables clients to better manage their data and help avoid short term risks and more reliably harness policies for long term future developments. The process can also be used where a matrix of variables between output and revenue exists.

At KGAL we understand the differences in simulation models and methodologies, we know how to asses and weight the influencing factors (including environmental factors) and - with our existing knowledge of the sector as a whole - we're able to provide forecasts for various time periods for each configuration of the variables.