Thermal generation investment analysis using decision tools

In this paper we present an investment problem where a decision maker from a company has to decide on the best among four possible alternatives of power supply. Two of these alternatives are related to investment in a thermal generator to produce electricity for the company own use. In this framework there are many uncertainties that have strong influence on the net present values of each alternative. Some of these uncertainties are identified and modeled for the purposes of this work. It is important to mention that electricity is an important input to the production process and represents considerable costs for the company. In order to avoid unnecessary expenses a solid analysis is necessary. This work combines decision analysis tools, as the influence diagram and decision tree, with investment analysis to help the decision maker to select the best supply alternative for the company.