Electricity generation cost in isolated system: the complementarities of natural gas and renewables in the Canary Islands
AbstractThe Canary Islands offer an example of an isolated electric grid of relative important size within the EU. Due to its peculiarities, the role of renewable energies and their complementarity with fossil fuels offers a solid path to achieving the main energy policy goals of the Islands. The purpose of this paper is to assess the current situation and the energy objectives proposed in the Energy Plan of the Canaries (PECAN 2006) for the electricity industry, taking into account the average cost and the risk associated with the different alternatives for generating electricity by means of the Mean-Variance Portfolio Theory. Our analysis highlights the inefficiency of the current electricity generating mix in terms of cost, risk and lack of diversification. Shifting toward an efficient system would involve optimizing the use of endogenous energy sources and introducing natural gas to generate electricity. This scenario would mean reducing both cost and risk by almost 30% each, as well as atmospheric CO2 emissions. Our results agree with the PECAN philosophy.
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Bibliographic InfoPaper provided by FEDEA in its series Working Papers with number 2010-17.
Date of creation: Jun 2010
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- Marrero, Gustavo A. & Ramos-Real, Francisco Javier, 2010. "Electricity generation cost in isolated system: The complementarities of natural gas and renewables in the Canary Islands," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(9), pages 2808-2818, December.
- NEP-ALL-2010-07-24 (All new papers)
- NEP-ENE-2010-07-24 (Energy Economics)
- NEP-ENV-2010-07-24 (Environmental Economics)
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- Perez, Yannick & Ramos-Real, Francisco Javier, 2009. "The public promotion of wind energy in Spain from the transaction costs perspective 1986-2007," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(5), pages 1058-1066, June.
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