Measuring Performance of Long-Term Power Generating Portfolios - Green Energy and Efficiency: An Economic Perspective - page 411

Table 3 Diversity and concentration indexes of GB installed capacity from 2012 to 2032
Index Gone

Green

Slow
progression

Accelerated
growth

Contracted
background

SW: Capacity 1.494 1.412 1.510 1.511

SW: Generation 1.422 1.322 1.431 1.242

HH: Capacity 2,634 3,070 2,588 2,477

HH: Generation 2,508 3,057 2,463 3,336

power technologies will show load factors lower than usual. Table 3 displays the
results (based on yearly averages of installed capacities and generation levels).
The SW index surpasses the threshold 1.0 which suggests that the underlying
generation portfolio (and hence primary energy sources) is reasonably diversi

ed.
A higher SW index means a more diverse system. As before, CB happens to be the
most diversied scenario in terms of average capacity while SP scenario is the least
so. However, in terms of average production the AG portfolio is the most diver-
si ed.

The HH index takes on values higher than 1,800 which implies that all gener-
ation portfolios are concentrated. Now, a higher HH means a system further away
from perfect competition. The CB portfolio is the least concentrated in terms of
installed capacity. Conversely, it is the most concentrated portfolio in terms of
power generation; more competition among suppliers of primary energy would thus
be particularly bene

ed whereas CB is the least diversi

cial. In all, the preeminence of CB portfolio according to MVP
analysis comes at a price in terms of the lowest diversi

cation and highest con-
centration regarding power generation. On the other hand, note that GG and SP
overlap in the MVP gure but this is not the case when it comes to the diversity

index or the concentration index.

3.8 Sensitivity Analysis: Portfolio Performance Without
a Floor Carbon Price

This section shows similar gures as before, under the alternative assumption of an

unconstrained carbon allowance price. The standard assumption in the literature is
that carbon price follows a GBM, which is a non-stationary process (thus adding
signi

cantly to price risk). Figure 16 displays the results under each scenario.
First, comparison with Fig. 11 shows that the average electricity price decreases
while the standard deviation increases signi cantly in the absence of the carbon

price oor. The previously overlapping GG and SP portfolios no longer overlap, yet

they continue to be close to each other. They do not perform as well as the scenario
AG in terms of expected price, but they are relatively less risky. The clear winner
again is CB since it lies furthest to the left and to the south.
Regarding carbon emissions, not surprisingly they are higher now than in
Fig. 14 , since carbon prices can fall more when there is no support; see Fig. 17 .