“Managing uncertainty: stochastic optimization in the energy industry”

“Making decisions despite uncertainty thanks to stochastic optimization

Stochastic? Borrowed from ancient Greek, this word comes from the Greek stokhastikos, which means “conjectural.” In mathematics, it refers to anything based on chance or probability.

Everyone makes decisions under uncertainty. Should we take an umbrella, invest our savings, or plan a long trip? These choices are made without knowing for sure what the future holds. In industry, and particularly in the energy sector, these uncertainties are multiplied. Fluctuating demand, volatile prices, irregular production linked to renewable energies…

Operators must constantly adapt. This is where stochastic optimization comes in, a mathematical discipline that models complex problems in which some data is not known in advance but is described by probability laws.

In other words, no one tries to predict exactly what will happen: the aim is to make the best decision on average, or to control risks to an acceptable level, given what could happen.”