There is an unprecedented focus and interest in the energy sector. High and volatile fuel prices and threats to energy security have revived businesses and policy makers' interest in fuel mix diversity. However, these are complex issues and not easy to assimilate into the policy making process. What is required is the use of rigorous analysis to inform the design and implementation of appropriate policies and strategies.
This tribute book explores different facets of fuel mix diversity and its impact on security of supply and technology choices in the power sector. It describes how new tools borrowed from financial economic theory can provide insights on the costs and benefits of diversity. Influenced by the groundbreaking research of Dr. Shimon Awerbuch, the various contributions explore the potential of such analytical techniques when applied to electric utility planning.
Given the uncertain environment in which utilities make investment decisions, it is useful to consider not only alternative technologies, but also alternative electricity generating portfolios and strategies. The relevant analytical tools are rooted in modern finance theory - in particular mean-variance portfolio theory, based on the pioneering work of Nobel Laureate Harry Markowitz fifty years ago.
Part I Assessing Risks, Costs and Fuel ix Diversity for Electric Utilities
Part II Applying Porfolio Theory to Identify Optimal Power Generation Portfolios