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What is the optimal power generation mix of China? An empirical analysis using portfolio theory

Shuang Zhang, Tao Zhao and Bai-Chen Xie

Applied Energy, 2018, vol. 229, issue C, 522-536

Abstract: This paper employs portfolio theory to explore China’s optimal power generation mix in 2030, which considers the possibilities of technological developments, and the government’s non-fossil generation and non-hydro renewable generation policy targets. The aim of this paper is to investigate China’s efficient generation portfolios by comparing the portfolio costs, risks, efficient frontiers, and diversification levels under different cases and scenarios. The results show that fossil fuel generation technologies have no advantages when considering the technological restrictions. In addition, various preferences for non-fossil generation technologies are influenced greatly by the goals of pursuing cost or risk minimization and different policy targets. Positive effects exist for a non-fossil generation goal or a policy target package from the perspectives of minimizing cost and risk, as well as for improving the diversification level.

Keywords: Power generation mix; Portfolio theory; Fossil fuel generation; Non-fossil generation; Non-hydro renewable generation; Policy target (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:appene:v:229:y:2018:i:c:p:522-536