Revisit Cost-Benefit Analysis in Energy Infrastructure: Current Methodology, Practice, and Limitations Toward Digital Investment

Driven by current decarbonization and decentralization trends, digitalization is attracting the attention of decision-makers in the energy industry. The energy paradigm is evolving rapidly due to the emergence of disruptive digital technologies such as artificial intelligence and cyber-physical systems, which can drive new efficiencies and enable innovative business models. Such swift development is bringing new uncertainties and complexities associated with technology acceptance, profitability, and expected benefits, hindering the further development of digital investments. Thus, decision-makers require supporting tools and methods capable of overcoming these complexities. This is to identify the tangible and intangible impacts of digital technologies in a quantitative and robust manner. For this purpose, cost-benefit analysis is one of the predominant appraisal tools employed by decision-makers in the energy industry. This review provides a comprehensive review of cost-benefit analysis in the energy industry, covering various energy domains such as the oil and gas sector and the electricity sector. Leveraging the insights obtained from the latter survey, this research studies the hallmarks of investments in digitalization and proposes a preliminary framework for the appraisal of digital applications. Untapping the opportunities of digitalization demands further work to (i) extend the scope in current frames of financial analysis in energy companies and (ii) expand the variety and number of digital technologies considered in current guidelines for socio-economic appraisal.