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The Portfolio Perspective in Electricity Generation and Market Operations

Abstract

Selecting portfolios of electricity production assets, energy sources and market participation strategies facilitates usage and management of complementary resources. It helps also power producers to address uncertainties and to balance profit contributions, costs and risks. Therefore, portfolios should be composed wisely. Our paper will bring concepts of portfolio optimization closer to private energy producers. We highlight important aspects to be considered and outline key value drivers. However, we call also for critical thinking if portfolios of physical assets should be considered a panacea to address uncertainty in power generation and market operations. An example demonstrates that, sometimes, financial instruments rather than diversification into renewables may prove more efficient to hedge risk. In addition to the possibility of hedging through the portfolios, portfolio management can yield benefits for internal physical balancing and market access - but the value in terms of additional profit and risk reduction depends on market conditions.
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Category

Academic chapter

Language

English

Author(s)

Affiliation

  • SINTEF Industry / Sustainable Energy Technology
  • SINTEF Energy Research / Energisystemer
  • Norwegian University of Science and Technology

Year

2018

Publisher

IEEE (Institute of Electrical and Electronics Engineers)

Book

2018 15th International Conference on the European Energy Market - EEM

ISBN

9781538614884

View this publication at Norwegian Research Information Repository