PPA Investments of Minimal Variability

Fred Espen Benth ()
Additional contact information
Fred Espen Benth: University of Oslo, Department of Mathematics

A chapter in Quantitative Energy Finance, 2024, pp 221-244 from Springer

Abstract: Abstract We analyse how to use power purchase agreements (PPA) as a spatial hedge to reduce the variability of production less demand from intermittent power sources such as wind and solar. An idealised continuous spatial hedging problem is used as benchmark, providing the minimal possible variability that can be achieved by spreading production locations geographically. It is demonstrated that the variability is reduced with the number of locations included in the portfolio. The analysis rests on modelling capacity factors, which describes the possible production from a power plant of 1MW installed capacity of renewable solar or wind, as a square-integrable random field in Hilbert space with an associated covariance operator. A case study of a PPA portfolio of solar power plants in Germany illustrates how the variability of production less demand can be reduced significantly by a geographical hedge. The analysis in this chapter also has applications to energy systems planning.

Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-50597-3_6

Ordering information: This item can be ordered from
http://www.springer.com/9783031505973

DOI: 10.1007/978-3-031-50597-3_6

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().