Identifying opportunities for flexible design of infrastructure : case studies of a space launch complex and LNG for Sardinia

Abstract

This thesis presents an approach for the identification of opportunities to improve the value of new infrastructures through flexibility. This approach applies to the very early design phase of a new system, where architectural decisions have to be taken under the highest amount of uncertainty. Because the value of optionality increases with uncertainty, it is in this phase that flexibility has the highest potential to positively impact the value of a project. The proposed approach is centered around a list of decisions, common to almost every infrastructure, that can lead to flexible or inflexible systems, and a set of criteria that allows us to make an informed guess of which flexible design opportunities are likely to be valuable by looking at characteristics of the uncertainties. The identified flexible design opportunities are quantified using spreadsheet-based Monte Carlo simulations and optimization. Two case studies demonstrate by example this approach: a European high-latitude space launch complex for satellite constellations in polar orbits, and the Italian strategy to provide natural gas to Sardinia via Small-Scale Liquefied Natural Gas (LNG) infrastructure. The space launch complex case shows that, in presence of market uncertainty, a flexible infrastructure that can support the implementation of different launchers (solid, liquid, or hybrid-motor rockets) lead to a project with higher Expected Net Present Value (ENPV) than an inflexible infrastructure committing upfront to one launcher technology, with the additional benefit of aligning the interests of a hypothetical public-private partnership. The LNG for Sardinia case demonstrates how the combination of the flexibility of capacity expansion in small increments and the flexibility of networking the island with the mainland using a gas power plant leads to a higher ENPV and better Value at Risk than an optimized inflexible infrastructure. This case also introduces a view of the flexibility of networking systems (or sites within a system) to divert excess capacity as an alternative to a reversible capacity expansion, which is rarely available for infrastructures. Both the approach for the identification of flexible design opportunities and the new perspective offered here on the flexibility of networking should be investigated further in a promising domain excluded from the scope of this work: decentralized infrastructures.