Abstract:

The transition to low-carbon economies will require substantial investment and financing for scalable deployment of new technologies for energy production, transportation, storage and consumption. Power-to-X as a Multi-Commodity Theory of Electricity Storage, Transmission and Transport addresses the critical role of multi-scale/multi-resolution statistics for real options analysis of thermodynamics underlying weather conditions coupled with energy and power capacity across industrial sectors, highlighting implications for mesoscale economics of supply and demand. Practical application of compound real options analysis and numerical optimization in this context will entail temporal and spatial models from industrial economics (e.g., locational and agglomerative models, capacitated market models) for storage and transmission in the context of binding technical constraints related to comparative conversion rate efficiencies. As demonstrated by incumbent supply chains, common factors underlying cross-product volatility across inherently coupled markets and production technologies will determine the economic viability of hedging cost structures for risk immunization and mitigation of deadweight loss in the scalable deployment of low-carbon stochastic production.