Large and small baseload power plants: drivers to define the optimal portfolios

Locatelli, Giorgio and Mancini, Mauro (2011) Large and small baseload power plants: drivers to define the optimal portfolios. Energy Policy, 39 (12). pp. 7762-7775. ISSN 0301-4215

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Official URL: http://dx.doi.org/10.1016/j.enpol.2011.09.022

Abstract

Despite the growing interest in Small Medium sized Power Plants (SMPP) international literature provides only studies related to portfolios of large plants in infinite markets/grids with no particular attention given to base load SMPP. This paper aims to fill this gap, investigating the attractiveness of SMPP portfolios respect to large power plant portfolios. The analysis includes Nuclear, Coal and Combined Cycle Gas Turbines (CCGT) of different plant sizes. The Mean Variance Portfolio theory (MVP) is used to define the best portfolio according to IRR (Internal Rate of Return) and LUEC (Levelised Unit Electricity Cost) considering the life cycle costs of each power plant, Carbon Tax, Electricity Price and grid dimension.
The results show how large plants are the best option for large grids, while SMPP are as competitive as large plants in small grids. In fact, in order to achieve the highest profitability with the lowest risk it is necessary to build several types of different plants and, in case of small grids, this is possible only with SMPP. A further result is the application of the framework to European OECD countries and the United States assessing their portfolios.

Item Type:Article
Additional Information:Despite the growing interest in Small Medium sized Power Plants (SMPP) international literature provides only studies related to portfolios of large plants in infinite markets/grids with no particular attention given to base load SMPP. This paper aims to fill this gap, investigating the attractiveness of SMPP portfolios respect to large power plant portfolios. The analysis includes Nuclear, Coal and Combined Cycle Gas Turbines (CCGT) of different plant sizes. The Mean Variance Portfolio theory (MVP) is used to define the best portfolio according to IRR (Internal Rate of Return) and LUEC (Levelised Unit Electricity Cost) considering the life cycle costs of each power plant, Carbon Tax, Electricity Price and grid dimension. The results show how large plants are the best option for large grids, while SMPP are as competitive as large plants in small grids. In fact, in order to achieve the highest profitability with the lowest risk it is necessary to build several types of different plants and, in case of small grids, this is possible only with SMPP. A further result is the application of the framework to European OECD countries and the United States assessing their portfolios.
Keywords:Grid dimension, Small power plants, Portfolio analysis
Subjects:H Engineering > H821 Nuclear Engineering
J Technologies > J910 Energy Technologies
H Engineering > H221 Energy Resources
Divisions:College of Science > School of Engineering
ID Code:5093
Deposited By: Giorgio Locatelli
Deposited On:25 Apr 2012 10:15
Last Modified:04 Dec 2013 21:29

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