IDEAS home Printed from https://ideas.repec.org/a/aen/journl/1997si-a04.html
   My bibliography  Save this article

Using Distributed Resources to Manage Risks Caused by Demand Uncertainty

Author

Listed:
  • Thomas E. Hoff

Abstract

This paper presents a method to calculate the cost of satisfying transmission and distribution (T&D) system capacity needs as a function of investment modularity and lead-time. It accounts for the dynamic nature of demand uncertainty, the decision-maker's risk attitude, and the correlation between costs and firm profits. Results indicate that the modularity and short lead-times associated with the distributed resources can increase their attractiveness in comparison to long lead-time, large-scale T&D investments. Results also suggest that distributed resources can operate as a type of "load growth insurance" if demand growth is positively correlated with profits (so that costs are incurred when profits are high) and if the distributed resource costs are part of a larger portfolio that cannot be diversified.

Suggested Citation

  • Thomas E. Hoff, 1997. "Using Distributed Resources to Manage Risks Caused by Demand Uncertainty," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 63-84.
  • Handle: RePEc:aen:journl:1997si-a04
    as

    Download full text from publisher

    File URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=1034
    Download Restriction: Access to full text is restricted to IAEE members and subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Perrels, Adriaan, 2003. "Reconciling competitiveness and environmental objectives," Applied Energy, Elsevier, vol. 76(1-3), pages 75-87, September.
    2. Fleten, S.-E. & Maribu, K.M. & Wangensteen, I., 2007. "Optimal investment strategies in decentralized renewable power generation under uncertainty," Energy, Elsevier, vol. 32(5), pages 803-815.
    3. Kemppi, Heikki & Perrels, Adriaan, 2003. "Liberalised Electricity Markets - Strengths and Weaknesses in Finland and Nordpool," Research Reports 97, VATT Institute for Economic Research.

    More about this item

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aen:journl:1997si-a04. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Williams). General contact details of provider: http://edirc.repec.org/data/iaeeeea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.