DG-PFF: Parity and Fragility Framework

---

Foundational Claim

Parity without fragility analysis is incomplete. Cost competitiveness that does not account for fragility thresholds cannot be relied upon under real operating and policy conditions.

DG-PFF (Decision-Grade Parity-Fragility Framework) is developed and formalized by Insight Quantix.

---

Purpose

The DG-PFF (Decision-Grade Parity and Fragility Framework) is the formal methodology developed by Insight Quantix for assessing whether a clean energy pathway achieves cost parity with its incumbent alternative, and how durable that parity is under realistic assumption variation.

It is the operational standard used in commissioned TEA engagements, analytical notes, and decision screening where parity claims are central to the decision question. It is not a marketing construct.

---

First-Principles Position

Traditional techno-economic analysis evaluates whether cost parity can be achieved. DG-PFF extends this by identifying the conditions under which that parity fails.

This framework defines where parity appears and where it breaks.

---

Core Principle

Parity analysis defines where a system appears viable under assumed conditions. Fragility analysis determines whether that viability survives real operating and market constraints.

Analyses that include parity without fragility evaluate feasibility but not survivability. As a result, they are not decision-grade.

---

Problem the Framework Addresses

Parity analysis without fragility analysis is incomplete. A modeled cost that achieves parity under a single scenario may be structurally fragile: small, plausible shifts in one or two key variables can eliminate parity entirely.

Presenting a fragile parity conclusion as though it were a robust one misinforms decisions. The DG-PFF addresses both dimensions.

Parity: The conditions under which a clean pathway’s levelized cost meets or falls below its displacement target (conventional fuel price, incumbent process cost, or stated willingness-to-pay threshold).

Fragility: The structural stability of that parity across realistic input variation. A parity conclusion is classified as fragile if small changes in a small number of dominant variables eliminate it within plausible ranges.

---

Minimum Compliance Requirements (Mandatory)

An analysis qualifies under the Insight Quantix Analytical Standard (DG-PFF) only if it:

• Defines at least one explicit parity threshold
• Defines at least one explicit fragility or collapse threshold
• Identifies at least one region where previously viable conditions become non-viable
• States at least two quotable threshold conditions using explicit boundary language
• Includes one explicit kill sentence declaring non-viability under stated conditions
• Includes a structured Go/No-Go decision output
• Ranks dominant sensitivities by impact
• Specifies decision owner and decision timing
• Reports the five Comparative Assessment Metrics defined in this standard

If any mandatory requirement is missing, the analysis is non-conformant and must not be labeled decision-grade under DG-PFF.

---

DG-PFF Application Protocol (v1.0)

DG-PFF application is valid only if all five protocol steps are completed and the minimum output package is produced.

1. Define Parity Condition Set the displacement benchmark and cost metric, then state the explicit parity condition (for example, MSP <= benchmark).
2. Map Viability Region Map the input region where parity holds and display the viability boundary as a required visual.
3. Quantify Fragility Quantify how parity degrades under perturbation using at least one explicit proxy (for example, slope, boundary shift, or parity probability response).
4. Identify Collapse Threshold Identify at least one threshold where viability transitions to non-viable, specify the invalidated region, and quantify invalidation share (for example, % parity area or % scenarios invalidated).
5. Produce Decision Output Provide structured Go/No-Go handling with ranked sensitivities, decision owner, decision timing, and a board-level directive statement.

Minimum output package (required):

• One parity map or collapse map with labeled thresholds
• One threshold curve tied to decision handling
• One fragility representation (slope, boundary contraction, or probability response)
• One structured Go/No-Go table
• One quantified invalidation metric linking Product B back to Product A

Interpretation rule: Parity without persistence is not viability.

---

Portfolio Consistency Standard (Mandatory)

All DG-PFF applications must follow a consistent decision architecture:

1. Kill Conditions Lead with hard failure conditions that can invalidate approval before full interpretation.
2. Decision Rules Present threshold rules in explicit boundary language with units.
3. Executive Intelligence State viability posture and immediate decision meaning.
4. Guided Application Show how to apply the boundary conditions to a live decision case.
5. Technical Traceability Provide assumptions, methods, and reproducibility artifacts.

This sequence is mandatory for portfolio-level comparability across notes.

---

Comparative Assessment Metrics (Required for Portfolio Comparability)

Each DG-PFF application must publish the five metrics below in both the Decision Summary and Methods section. These metrics replace subjective score-only comparisons.

Metric	Required Definition	Required Output
Dominant-variable share (%)	Share of parity-gap movement attributable to the top driver over the stated stress range, relative to all reported primary drivers.	Top-driver share in percent, plus named variable and stress range.
Base-case distance to collapse threshold	Absolute and percent distance between base-case value and the nearest collapse threshold for the binding variable.	X units and Y% to collapse, plus direction (fails above or fails below).
Independent collapse-threshold count	Count of distinct variables that individually trigger non-viability under otherwise favorable assumptions.	Integer count and list of variables with units.
Policy durability risk class	Classification of how strongly viability depends on policy instruments with eligibility, sunset, or reform risk.	One of: Low, Medium, High, Severe, with one-sentence justification.
Standalone-use warning level	Warning level for using Product A without Product B in capital decision contexts.	One of: Green, Amber, Red, with explicit decision-use constraint sentence.

Required interpretation rules:

• High or Severe policy durability risk requires explicit transaction-diligence caveat in the Decision Summary.
• Red standalone warning requires an explicit sentence that Product A is not sufficient for pre-FID capital decisions.
• If base-case distance to collapse threshold is less than 5%, the note must state that base-case viability is near-degenerate.

---

Parity vs Fragility Enforcement

Parity product (Product A):

• Must evaluate structural feasibility under stated steady-state assumptions
• Must present explicit parity boundaries
• Must not rely on operational degradation variables to claim feasibility

Fragility product (Product B):

• Must evaluate survivability under real-world constraints
• Must include at least one of: utilization constraint, volatility mechanism, or realization risk
• Must identify at least one collapse threshold where viability fails
• Must explicitly quantify how much of the Product A viability region is invalidated
• Must use binary failure language when collapse conditions are breached

If parity and fragility are reported in a single note, each section must independently satisfy the requirements above.

---

Collapse Threshold Requirement

Every DG-PFF fragility analysis must identify at least one collapse threshold.

A collapse threshold is defined as a condition under which the system transitions from viable to non-viable regardless of favorable assumptions in other variables.

Required disclosure:

• The threshold variable and units
• The transition condition (for example, viable at/above X, invalid below X)
• The decision implication after threshold breach

---

Parity-Fragility Relationship

Fragility analysis must evaluate and explicitly invalidate portions of the parity-defined viable region under realistic operating or market conditions.

This relationship is mandatory because DG-PFF is a two-stage decision engine: Product A defines where parity is structurally possible, and Product B defines where that region fails in practice.

Required disclosure:

• Quantified invalidation share (for example, % of parity region invalidated)
• One explicit sentence declaring what does not proceed after invalidation

---

Figure Standard (Required Decision Visual)

Each DG-PFF application must include one primary decision figure:

• Parity Map for Product A, or
• Collapse Map for Product B

The primary decision figure must:

• Show a boundary line
• Distinguish viable and non-viable regions
• Include labeled thresholds
• Include a decision relevance statement tied to Go/No-Go handling
• Include explicit labels for Viable region, Non-viable region, and Parity boundary (Product A) or Collapse boundary (Product B)
• Be the dominant figure in the note and appear before secondary sensitivity visuals

---

Language Standard (Decision Verbs)

DG-PFF documentation must prioritize threshold language over generic directional language:

• Use: fails below, requires at least, invalid under
• Avoid as primary decision language: increases, sensitive to, impacts

This ensures results are interpreted as decision constraints rather than descriptive trends.

Required language elements per note:

• At least two quotable threshold statements with units
• One kill sentence (single-line non-viability declaration)
• One board-level directive statement (proceed / conditional proceed / defer / no-go)

---

DG-PFF is not an enhancement to techno-economic analysis. It defines the minimum structure required for evaluating real-world viability.

Framework Components

Component 1: Parity Surface

The parity surface maps the input space under which parity holds. It identifies:

• The dominant cost driver(s) for the pathway
• The threshold values required for parity at the displacement target
• The feasibility of those thresholds given current and near-term market conditions

Outputs: Levelized cost estimate, displacement target, parity conditions, dominant variable identification (maximum of three).

---

Component 2: Fragility Classification

Each parity conclusion is assigned one of three classifications:

The classification is based on threshold analysis, not probabilistic Monte Carlo. Each dominant variable is shifted independently to the boundary of its plausible range, and parity persistence is assessed.

---

Component 3: Decision Relevance

Parity and fragility results are interpreted in context of the decision question:

• What decision is being made?
• What parity threshold is decision-relevant, not just theoretically achievable?
• Does the fragility classification change the recommended course of action?

This step prevents parity conclusions from being cited as standalone claims detached from the decision they were meant to support.

---

Public Compliance Thresholds (DG-PFF v1.0 Summary)

DG-PFF reports a parity compliance gap: the absolute percent difference between a headline parity claim and the DG-PFF-constrained parity result under operational and policy constraints.

Compliance Band	Threshold	Decision Handling
PASS	<= 10%	Suitable for investment committee and technical diligence use.
ACCEPTABLE	11-15%	Usable for preliminary screening with explicit mitigation and sensitivity disclosure.
REVIEW REQUIRED	> 15%	Not decision-grade for approval. Redesign, defer, or rerun with corrected assumptions.

Automatic review triggers: unmodeled policy cliff exposure, missing utilization constraints, or parity loss in the constrained base case.

---

Application Scope

DG-PFF is applied in:

• Commissioned TEA engagements where parity is the central claim or a required threshold
• Analytical notes presenting parity findings for a specific pathway and policy condition
• Early-stage decision screening where the fragility classification helps determine whether a full engagement is warranted

It is not applied to exploratory or speculative modeling where a clear decision context is absent.

---

Documentation Standard

All engagements applying DG-PFF must include documentation that includes:

• An explicit statement of the displacement target used and its basis
• Identification of dominant variables (maximum of three per analysis)
• Fragility classification with supporting rationale
• The version of the DG-PFF framework applied

Outputs are labeled with the framework version to allow future review against updated standards.

---