Integrating renewable energy technologies in the electric supply industry: A risk management approach

Technical Report · Tue Jul 01 04:00:00 EDT 1997

DOI:https://doi.org/10.2172/572737· OSTI ID:572737

Hoff, T E ^[1]

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1. Pacific Energy Group, Walnut Creek, CA (United States)

Regulatory and technical forces are causing electric utilities to move from a natural monopoly to a more competitive environment. Associated with this movement is an increasing concern about how to manage the risks associated with the electric supply business. One approach to managing risks is to purchase financial instruments such as options and futures contracts. Another approach is to own physical assets that have low risk attributes or characteristics. This research evaluates how investments in renewable energy technologies can mitigate risks in the electric supply industry. It identifies risks that are known to be of concern to utilities and other power producers. These risks include uncertainty in fuel prices, demand, environmental regulations, capital cost, supply, and market structure. The research then determines how investments in renewables can mitigate these risks. Methods are developed to calculate the value of renewables in terms of their attributes of fuel costs, environmental costs, lead-time, modularity, availability, initial capital costs, and investment reversibility. Examples illustrate how to apply the methods.

• Research Organization: National Renewable Energy Lab., Golden, CO (United States)
• Sponsoring Organization: USDOE Assistant Secretary for Energy Efficiency and Renewable Energy, Washington, DC (United States)
• DOE Contract Number: AC36-83CH10093
• OSTI ID: 572737
• Report Number(s): NREL/SR--520-23089; ON: DE98004342
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
CAPITALIZED COST
COMPETITION
ELECTRIC POWER INDUSTRY
PRICES
REGULATIONS
RENEWABLE ENERGY SOURCES
RISK ASSESSMENT