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Electricity generation cost in isolated system: The complementarities of natural gas and renewables in the Canary Islands

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  • Marrero, Gustavo A.
  • Ramos-Real, Francisco Javier

Abstract

The 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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  • 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.
  • Handle: RePEc:eee:rensus:v:14:y:2010:i:9:p:2808-2818
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    Cited by:

    1. Alfredo Ramírez Díaz & Francisco J. Ramos-Real & Gustavo A. Marrero & Yannick Perez, 2015. "Impact of Electric Vehicles as Distributed Energy Storage in Isolated Systems: The Case of Tenerife," Sustainability, MDPI, Open Access Journal, vol. 7(11), pages 1-27, November.
    2. Guerrero-Lemus, Ricardo & Marrero, Gustavo A. & Puch, Luis A., 2012. "Costs for conventional and renewable fuels and electricity in the worldwide transport sector: A mean–variance portfolio approach," Energy, Elsevier, vol. 44(1), pages 178-188.
    3. repec:eee:energy:v:134:y:2017:i:c:p:311-322 is not listed on IDEAS
    4. Alonso, Patricia Martínez & Hewitt, Richard & Pacheco, Jaime Díaz & Bermejo, Lara Román & Jiménez, Verónica Hernández & Guillén, Jara Vicente & Bressers, Hans & de Boer, Cheryl, 2016. "Losing the roadmap: Renewable energy paralysis in Spain and its implications for the EU low carbon economy," Renewable Energy, Elsevier, vol. 89(C), pages 680-694.
    5. Guerrero-Lemus, Ricardo & González-Díaz, Benjamín & Ríos, Gerardo & Dib, Ramzi N., 2015. "Study of the new Spanish legislation applied to an insular system that has achieved grid parity on PV and wind energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 426-436.
    6. 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.
    7. 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.
    8. Losekann, Luciano & Marrero, Gustavo A. & Ramos-Real, Francisco J. & de Almeida, Edmar Luiz Fagundes, 2013. "Efficient power generating portfolio in Brazil: Conciliating cost, emissions and risk," Energy Policy, Elsevier, vol. 62(C), pages 301-314.
    9. 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.
    10. repec:eee:energy:v:128:y:2017:i:c:p:86-100 is not listed on IDEAS
    11. Gustavo A. Marrero & Luis A. Puch & Francisco Javier Ramos-Real, 2010. "Riesgo y costes medios en la generación de electricidad: diversificación e implicaciones de política energética," Economic Reports 13-2010, FEDEA.
    12. Tichavska, Miluše & Tovar, Beatriz, 2015. "Port-city exhaust emission model: An application to cruise and ferry operations in Las Palmas Port," Transportation Research Part A: Policy and Practice, Elsevier, vol. 78(C), pages 347-360.
    13. Gils, Hans Christian & Simon, Sonja, 2017. "Carbon neutral archipelago – 100% renewable energy supply for the Canary Islands," Applied Energy, Elsevier, vol. 188(C), pages 342-355.
    14. Rodrigues, E.M.G. & Godina, R. & Santos, S.F. & Bizuayehu, A.W. & Contreras, J. & Catalão, J.P.S., 2014. "Energy storage systems supporting increased penetration of renewables in islanded systems," Energy, Elsevier, vol. 75(C), pages 265-280.
    15. Colmenar-Santos, Antonio & Linares-Mena, Ana-Rosa & Borge-Diez, David & Quinto-Alemany, Carlos-Domingo, 2017. "Impact assessment of electric vehicles on islands grids: A case study for Tenerife (Spain)," Energy, Elsevier, vol. 120(C), pages 385-396.
    16. Rious, Vincent & Perez, Yannick, 2014. "Review of supporting scheme for island powersystem storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 754-765.
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    19. repec:eee:eneeco:v:64:y:2017:i:c:p:158-169 is not listed on IDEAS
    20. Vincent Rious & Yannick Perez, 2012. "What type(s) of support schemes for storage in island power systems?," RSCAS Working Papers 2012/70, European University Institute.
    21. Vithayasrichareon, Peerapat & MacGill, Iain F., 2012. "A Monte Carlo based decision-support tool for assessing generation portfolios in future carbon constrained electricity industries," Energy Policy, Elsevier, vol. 41(C), pages 374-392.
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