IDEAS home Printed from
   My bibliography  Save this article

The regional electricity generation mix in Scotland: A portfolio selection approach incorporating marine technologies


  • Allan, Grant
  • Eromenko, Igor
  • McGregor, Peter
  • Swales, Kim


Standalone levelised cost assessments of electricity supply options miss an important contribution that renewable and non-fossil fuel technologies can make to the electricity portfolio: that of reducing the variability of electricity costs, and their potentially damaging impact upon economic activity. Portfolio theory applications to the electricity generation mix have shown that renewable technologies, their costs being largely uncorrelated with non-renewable technologies, can offer such benefits. We look at the existing Scottish generation mix and examine drivers of changes out to 2020. We assess recent scenarios for the Scottish generation mix in 2020 against mean-variance efficient portfolios of electricity-generating technologies. Each of the scenarios studied implies a portfolio cost of electricity that is between 22% and 38% higher than the portfolio cost of electricity in 2007. These scenarios prove to be mean-variance "inefficient" in the sense that, for example, lower variance portfolios can be obtained without increasing portfolio costs, typically by expanding the share of renewables. As part of extensive sensitivity analysis, we find that Wave and Tidal technologies can contribute to lower risk electricity portfolios, while not increasing portfolio cost.

Suggested Citation

  • Allan, Grant & Eromenko, Igor & McGregor, Peter & Swales, Kim, 2011. "The regional electricity generation mix in Scotland: A portfolio selection approach incorporating marine technologies," Energy Policy, Elsevier, vol. 39(1), pages 6-22, January.
  • Handle: RePEc:eee:enepol:v:39:y:2011:i:1:p:6-22

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

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

    References listed on IDEAS

    1. Bar-Lev, Dan & Katz, Steven, 1976. "A Portfolio Approach to Fossil Fuel Procurement in the Electric Utility Industry," Journal of Finance, American Finance Association, vol. 31(3), pages 933-947, June.
    2. Mark Rubinstein, 2002. "Markowitz's "Portfolio Selection": A Fifty-Year Retrospective," Journal of Finance, American Finance Association, vol. 57(3), pages 1041-1045, June.
    3. Siddharth Chandra, 2002. "A Test of the Regional Growth-Instability Frontier Using State Data," Land Economics, University of Wisconsin Press, vol. 78(3), pages 442-462.
    4. Roques, Fabien & Hiroux, Céline & Saguan, Marcelo, 2010. "Optimal wind power deployment in Europe--A portfolio approach," Energy Policy, Elsevier, vol. 38(7), pages 3245-3256, July.
    5. Saunders, Harry D., 1984. "On the inevitable return of higher oil prices," Energy Policy, Elsevier, vol. 12(3), pages 310-320, September.
    6. de Almeida, Pedro & Silva, Pedro D., 2009. "The peak of oil production--Timings and market recognition," Energy Policy, Elsevier, vol. 37(4), pages 1267-1276, April.
    7. Allan, Grant & Gilmartin, Michelle & McGregor, Peter & Swales, Kim, 2011. "Levelised costs of Wave and Tidal energy in the UK: Cost competitiveness and the importance of "banded" Renewables Obligation Certificates," Energy Policy, Elsevier, vol. 39(1), pages 23-39, January.
    8. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    9. H. Brett Humphreys & Katherine T. McClain, 1998. "Reducing the Impacts of Energy Price Volatility Through Dynamic Portfolio Selection," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 107-131.
    10. Roques, Fabien A. & Newbery, David M. & Nuttall, William J., 2008. "Fuel mix diversification incentives in liberalized electricity markets: A Mean-Variance Portfolio theory approach," Energy Economics, Elsevier, vol. 30(4), pages 1831-1849, July.
    Full references (including those not matched with items on IDEAS)


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

    Cited by:

    1. Kim, Dong Wook & Chang, Hyun Joon, 2012. "Experience curve analysis on South Korean nuclear technology and comparative analysis with South Korean renewable technologies," Energy Policy, Elsevier, vol. 40(C), pages 361-373.
    2. repec:eee:rensus:v:74:y:2017:i:c:p:602-615 is not listed on IDEAS
    3. repec:eee:rensus:v:81:y:2018:i:p1:p:192-204 is not listed on IDEAS
    4. Matthew Dornan & Frank Jotzo, 2012. "Renewable Technologies and Risk Mitigation in Small Island Developing States (SIDS): Fiji’s Electricity Sector," Development Policy Centre Discussion Papers 1213, Development Policy Centre, Crawford School of Public Policy, The Australian National University.
    5. deLlano-Paz, Fernando & Martínez Fernandez, Paulino & Soares, Isabel, 2016. "Addressing 2030 EU policy framework for energy and climate: Cost, risk and energy security issues," Energy, Elsevier, vol. 115(P2), pages 1347-1360.
    6. deLlano-Paz, Fernando & Calvo-Silvosa, Anxo & Iglesias Antelo, Susana & Soares, Isabel, 2015. "The European low-carbon mix for 2030: The role of renewable energy sources in an environmentally and socially efficient approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 49-61.
    7. Federica Cucchiella & Idiano D’Adamo & Massimo Gastaldi, 2016. "Optimizing plant size in the planning of renewable energy portfolios," Letters in Spatial and Resource Sciences, Springer, vol. 9(2), pages 169-187, July.
    8. repec:eee:rensus:v:77:y:2017:i:c:p:636-651 is not listed on IDEAS
    9. Fernando deLlano-Paz & Paulino Martinez Fernandez & Isabel Soares, 2016. "The effects of different CCS technological scenarios on EU low-carbon generation mix," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 18(5), pages 1477-1500, October.
    10. Wu, Jung-Hua & Huang, Yun-Hsun, 2014. "Electricity portfolio planning model incorporating renewable energy characteristics," Applied Energy, Elsevier, vol. 119(C), pages 278-287.
    11. Dornan, Matthew & Jotzo, Frank, 2015. "Renewable technologies and risk mitigation in small island developing states: Fiji’s electricity sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 35-48.
    12. Niall Farrell, 2014. "Chapter 06: Wind Energy in Ireland," Chapters from Rural Economic Development in Ireland,in: Rural Economic Development in Ireland, edition 1, chapter 6 Rural Economy and Development Programme,Teagasc.
    13. repec:eee:rensus:v:82:y:2018:i:p3:p:3808-3823 is not listed on IDEAS


    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:eee:enepol:v:39:y:2011:i:1:p:6-22. 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: (Dana Niculescu). General contact details of provider: .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.