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arXiv · 2504.21709

Discounting Approaches in Multi-Year Investment Modelling for Energy Systems

Ni Wang·Diego A. Tejada-Arango
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Abstract

This paper reviews discounting approaches for modeling multi-year energy investments, focusing on total versus annualised cost formulations. We discuss how time value of money is handled, and how salvage value and milestone-year weighting can address mismatches between asset lifetimes and model horizons. These methods are implemented in the open-source TulipaEnergyModel to support transparent and tractable long-term energy system planning.

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Ni Wang, Diego A. Tejada-Arango. 2025-04-30. Discounting Approaches in Multi-Year Investment Modelling for Energy Systems. https://arxiv.org/abs/2504.21709

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