Valuing fuel diversification in power generation capacity planning

Malte Sunderkötter and Christoph Weber

Energy Economics, 2012, vol. 34, issue 5, 1664-1674

Abstract: Deterministic capacity planning problems in electricity systems can be solved by comparing technology specific long-term and short-term marginal costs. In an uncertain market environment, Mean-Variance Portfolio (MVP) theory provides a consistent framework to balance risk and return in power generation portfolios. Focusing on fuel price risks, MVP theory can be adopted to determine the welfare efficient system generation technology mix.

Keywords: Power plant investments; Capacity planning; Mean-Variance Portfolio theory; Fuel mix diversification (search for similar items in EconPapers)
JEL-codes: C44 G11 L94 Q43 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:34:y:2012:i:5:p:1664-1674

DOI: 10.1016/j.eneco.2012.02.003

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