Integration of Regression Analysis and Monte Carlo Simulation for Probabilistic Energy Policy Guidelines in Pakistan

Abstract

Forecasting energy demand and supply is the most crucial concern for energy policymakers. However, forecasting may introduce uncertainty in the energy model, and an energy policy based on an uncertain model could be misleading. Without certainty in energy data, investors cannot quantify risk and trade-offs, which are compulsory for investments in energy projects. In this work, the energy policies of Pakistan are taken as a case study, and flaws in its energy policymaking are identified. A novel probabilistic model integrated with curve fitting methods was proposed and was applied to 17 different energy demand and supply variables. Monte Carlo simulation (MCS) was performed to develop probabilistic energy profiles for each year from 2017 to 2050. Results show that the forecasted energy supply of Pakistan in the years 2025 and 2050 would be 70.69 MTOE and 131.65 MTOE, respectively. The probabilistic analysis showed that there is 14% and 6% uncertainty in achieving these targets. The research shows the expected energy consumption of 70.33 MTOE and 189.48 MTOE in 2025 and 2050, respectively, indicating uncertainties of 65% and 31%. Based on the results, eight energy policy guidelines and recommendations are provided for sustainable energy resource management. This study recommends developing a robust and sustainable energy policy for Pakistan with the help of transparent governance.