Diversification of wind and solar energy portfolio risk : an explorative analysis for Germany 2010 - 2012
by Valerie Speth
Although high investments need to be leveraged to increase the share of wind and solar energy generation, investment risk has not yet been integrated into commonly used approaches of renewable energy scenario development. However, to evaluate and reduce technological risk and associated balancing and capacity costs of increased renewable energy generation, such an integration of risk is a necessary step to take. This dissertation uses wind and solar generation and forecast data of Germany from three consecutive years and applies mean-variance portfolio theory to construct four optimal wind and solar portfolios. The aim is to create portfolios that either minimize the predictability errors, volatility or levelized cost of energy or maximize the contribution to peak demand for a given level of risk. The methodology aligns the political, the technological and the investor perspective to drive towards political renewable energy goals. Furthermore, it broadens the levelized cost of energy approach by integrating wind and solar balancing and capacity costs. The results of the analysis show that: (1) a higher share of solar compared to wind energy decreases the risk associated with predictability errors, contribution to peak demand and levelized cost of energy. (2) a portfolio that holds a higher share of wind decreases risk related to volatility. (3) system security costs, here defined as balancing and capacity costs, impede the estimation of long-term levelized cost of energy. (4) using a dataset over several years seems to enhance the reliability of results leveling out high variations of individual years. The paper has important implications. Policy makers should determine the long-term efficiency of wind and solar portfolios by evaluating return and risk. In order to design efficient support schemes which include technological risk and associates costs, policy should jointly consider technological and investor requirements. Therefore, balancing and capacity should be incorporated to the level of their cost impact on long-term wind and solar portfolios. To create an investor friendly environment which might lead to additional wind and solar investments, policy makers could introduce a feed-in tariff with a component providing incentives for balancing or capacity properties of wind and solar portfolios. Germany ; Levelized cost of energy ; balancing ; capacity ; risk ; energy ; diversification ; wind ; solar ; portfolio theory
Year of publication: |
2013
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Authors: | Speth, Valerie |
Publisher: |
St. Gallen : Univ. |
Subject: | Windenergie | Wind energy | Sonnenenergie | Solar energy | Risiko | Risk | Energiewirtschaft | Energy sector | Deutschland | Germany |
Saved in:
freely available
Extent: | Online-Ressource (XII, 116 S.) graph. Darst. |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Hochschulschrift ; Thesis ; Graue Literatur ; Non-commercial literature |
Language: | English |
Thesis: | St. Gallen, Univ., Diss., 2013 |
Notes: | Zsfassung in dt. und engl. Sprache Systemvoraussetzungen: Acrobat Reader |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10010209110
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