Risk-Return Incentives in Liberalised Electricity Markets

Richard Tol, Muireann Lynch, Aonghus Shortt and Mark O’Malley
Additional contact information
Aonghus Shortt: Electricity Research Centre, University College, Dublin, Ireland
Mark O’Malley: Electricity Research Centre, University College, Dublin, Ireland

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: We employ Monte Carlo analysis to determine the distribution of returns for various electricity generation technologies. Costs and revenues for each technology are arrived by means of a sophisticated unit commitment and economic dispatch algorithm. The results show that small amounts of coal investment along with high investment in advanced CCGT can reduce the risk of baseload-only portfolios, while flexible generation technologies appear on the efficient frontier when all technology types are considered. Diversification incentives regarding operational considerations dominate over incentives to diversify between fuel types

Keywords: Power generation; mean-variance portfolio (search for similar items in EconPapers)
JEL-codes: Q40 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sussex.ac.uk/economics/documents/wps-40-2012.pdf (application/pdf)

Related works:
Journal Article: Risk–return incentives in liberalised electricity markets (2013)
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:sus:susewp:4012

Access Statistics for this paper

More papers in Working Paper Series from Department of Economics, University of Sussex Business School Contact information at EDIRC.
Bibliographic data for series maintained by University of Sussex Business School Communications Team ().