Analyzing the suitability and role of modern portfolio theory for renewable energy planning

Fernando de Llano Paz, Javier Eduardo Afonso Arévalo and Guillermo Iglesias Gómez

Chapter 14 in Handbook on the Economics of Renewable Energy, 2023, pp 308-339 from Edward Elgar Publishing

Abstract: In this chapter, modern portfolio theory (MPT) (Markowitz, 1952) is presented as a valid and proven methodology for the evaluation of investment projects in electricity generation plants, in the field of energy planning. The MPT, based on the trade-off between the cost/risk of technologies, offers a quadratic optimisation model useful for designing the portfolio of technologies and associated energy resources in the medium to long term for any territory. Renewable energy sources for electricity (RES-E) are interesting options from the point of view of reducing portfolio risk, due to the absence of the cost of fossil fuels, characterised by high volatility. This is combined with the indigenous character and energy independence-security goal offered by RES-E, considering the uncertain context of the geo-strategy of each territory. A practical application of MPT to the German and Spanish mixes for 2030, 2040 and 2050 is also proposed in this chapter.

Keywords: Economics and Finance; Environment; Law - Academic; Politics and Public Policy (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/doi/10.4337/9781800379022.00023 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

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:elg:eechap:20354_14

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().