Environmental Engineering Reference
In-Depth Information
Capacity vs. generation: CB
50
45
40
35
30
25
20
Capacity
Generation
15
10
5
0
Coal Nat. Gas Nuclear Wind
Hydro
Pmp.
Sto.
Power technology
Fig. 10 Installed capacity relative to power production by technology under CB
reaches a higher share in terms of power delivered than installed capacity. The gap is
most pronounced in the CB scenario. As for wind, the gap remains basically steady in
all the portfolios other than CB, around seven percentage points. In the CB portfolio,
the gap is almost zero with generation reaching its maximum share (30 %).
3.5 The Results in a Mean-Variance Context
It is well known that the various generation technologies display different risk-
return pro
les. Since each scenario puts a different emphasis on the competing
technologies, the scenarios themselves show different risk-return pro
les despite
sharing a common demand pattern.
As already mentioned, the model minimizes costs by solving a dispatch problem
one period after another. Each period the model determines an electricity price at
which supply meets demand (this price is set by the marginal technology to enter
the pool). 12 Thus there are as many electricity prices as periods or optimization
problems. First these prices are discounted so as to get their present-value equiv-
alents. Then we calculate the average or expected value alongside the standard
deviation. Figure 11 displays the results under each scenario.
As Fig. 11 shows, GG and SP turn out to be almost indistinguishable from each
other in terms of both average electricity price (
/MWh) and price risk. 13 They
perform slightly worse than the AG scenario. The best performer is CB since it lies
furthest to the left and to the south. Prices in this setting are so low because of the
high share of zero-cost technologies entering the pool. Now, would nuclear plants
12 These prices can be substantially lower than actual prices under market power [ 22 ].
13 This overlap is by no means new in the related literature. Even radically different mixes can
have nearly identical risk-return characteristics. As Awerbuch and Yang [ 5 ] put it: There are
many ways to combine ingredients to produce a given quantity of salad at a given price .
 
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