The regional electricity generation mix in Scotland: A portfolio selection approach

Grant Allan, Igor Eromenko, Peter McGregor and John Swales ()

No 1010, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: Standalone levelised cost assessments of electricity supply options miss an important contribution that renewable and non-fossil fuel technologies can make to the electricity portfolio: that of reducing the variability of electricity costs, and their potentially damaging impact upon economic activity. Portfolio theory applications to the electricity generation mix have shown that renewable technologies, their costs being largely uncorrelated with non-renewable technologies, can offer such benefits. We look at the existing Scottish generation mix and examine drivers of changes out to 2020. We assess recent scenarios for the Scottish generation mix in 2020 against mean-variance efficient portfolios of electricity-generating technologies. Each of the scenarios studied implies a portfolio cost of electricity that is between 22% and 38% higher than the portfolio cost of electricity in 2007. These scenarios prove to be “inefficient†in the sense that, for example, lower variance portfolios can be obtained without increasing portfolio costs, typically by expanding the share of renewables. As part of extensive sensitivity analysis, we find that Wave and Tidal technologies can contribute to lower risk electricity portfolios, while not increasing portfolio cost.

Keywords: Electricity generation mix; portfolio theory; regional energy policy (search for similar items in EconPapers)
JEL-codes: D81 L94 R15 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2010-03
New Economics Papers: this item is included in nep-ene and nep-env
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.strath.ac.uk/media/1newwebsite/departme ... 2010/10-10_final.pdf (application/pdf)

Related works:
Working Paper: The regional electricity generation mix in Scotland: A portfolio selection approach (2010)
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:str:wpaper:1010

Access Statistics for this paper

More papers in Working Papers from University of Strathclyde Business School, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Kirsty Hall ().