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.
@article{arxiv.2504.21709,
title = {Discounting Approaches in Multi-Year Investment Modelling for Energy Systems},
author = {Ni Wang and Diego A. Tejada-Arango},
journal= {arXiv preprint arXiv:2504.21709},
year = {2025}
}