THE NECESSITY OF INVESTMENT DRIVEN BY OPERATIONAL CHANGES: THE CASE OF THE MUNICIPAL SECTOR

Abstract

The green transformation promoted by the European Union (EU) affects not only infrastructure, but also managerial work organization decisions. By 2050, the EU has set a goal to decarbonize the environment and use only clean technologies for energy production. Changing legal regulations encourage investment development, which affects the work of both business entities and other organizations. The need for management skills and the change of competencies is becoming one of the most serious challenges in implementing important infrastructure projects. When it comes to the municipal energy production sector, not only the need to evaluate investment decisions, but also aspects of ensuring security of supply are highlighted. The article presents an example of the transformation of the municipal heating sector at the municipal level in Lithuania, while emphasizing the need for management changes. The possibilities of replacing worn-out heat production infrastructure are assessed, considering the goals set by the EU. Both traditional investment payback methods and innovative approaches, such as Response Surface Methodology, were employed for this purpose. The research conducted in the article showed that investments in new-generation infrastructure are inseparable from a comprehensive assessment, taking into account the future prospects of the region. The results of the article showed that it makes the most sense to undertake investments that are related to the application of new and innovative technologies, while ensuring operational flexibility. Nevertheless, it is important to consider the specific context of the location, as the most efficient solution may prove economically unviable due to site-specific characteristics and long-term prospects. The necessity of investments highlights the importance of managerial decisions – decisions on attracting investments, searching for optimization opportunities and maintaining operational competitiveness. When assessing investments, it is very important to consider the regional context and development prospects, thus finding the most favorable production technology in the long term.