Assessing Renewable Energy Sources for Electricity (RES-E) Potential Using a CAPM-Analogous Multi-Stage Model

Martinez-Fernandez Martinez-Fernandez,Calvo-Silvosa Calvo-Silvosa,Dellano-Paz Dellano-Paz,Soares Soares

doi:10.3390/en12193599

Abstract

Carbon mitigation is a major aim of the power-generation regulation. Renewable energy sources for electricity are essential to design a future low-carbon mix. In this work, financial Modern Portfolio Theory (MPT) is implemented to optimize the power-generation technologies portfolio. We include technological and environmental restrictions in the model. The optimization is carried out in two stages. Firstly, we minimize the cost and risk of the generation portfolio, and afterwards, we minimize its emission factor and risk. By combining these two results, we are able to draw an area which can be considered analogous to the Capital Market Line (CML) used by the Capital Asset Pricing model (CAPM). This area delimits the set of long-term power-generation portfolios that can be selected to achieve a progressive decarbonisation of the mix. This work confirms the relevant role of small hydro, offshore wind, and large hydro as preferential technologies in efficient portfolios. It is necessary to include all available renewable technologies in order to reduce the cost and the risk of the portfolio, benefiting from the diversification effect. Additionally, carbon capture and storage technologies must be available and deployed if fossil fuel technologies remain in the portfolio in a low-carbon approach.

Highlights

Energy planning fosters decision-making from the political, social, and environmental dimensions [1]
We present our main results related to cross-drawing the instrumental model and the pollutant-technology model
When we compare the non-pollutant-technology efficient frontier with the efficient frontier of the instrumental model, we are able to generate at a lower cost but at a higher risk using only non-pollutant technologies

Summary

Introduction

Energy planning fosters decision-making from the political, social, and environmental dimensions [1]. In addition to these dimensions, physical and technical variables complete a picture characterized by the uncertainties, risks, and complexities around them [2,3,4]. In the core of this problem, we find some questions such as how to satisfy the demand, how to minimize the generation cost, and how to meet the emission objectives [5].

Methods

Results

Conclusion