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The Portfolio Perspective in Electricity Generation and Market Operations

The Portfolio Perspective in Electricity Generation and Market Operations

Category
Part of a book/report
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.
Client
  • Norges forskningsråd / 245284
Language
English
Author(s)
  • Fleten Stein-Erik
  • Midthun Kjetil Trovik
  • Bjørkvoll Thor
  • Werner Adrian
  • Fodstad Marte
Affiliation
  • Norwegian University of Science and Technology
  • SINTEF Industry / Sustainable Energy Technology
  • SINTEF Energy Research / Energisystemer
Year
2018
Published in
International Conference on the European Energy Market
ISSN
2165-4093
Publisher
IEEE conference proceedings
Book
2018 15th International Conference on the European Energy Market - EEM
Booklet
2018
ISBN
978-1-5386-1488-4