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Applying Load Factors to the Mean-Variance Analysis for Fuel Diversification
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posted on 2023-06-08, 11:56 authored by Suriya Ruangpattana, Douglas J Gotham, Kumar Muthuraman, Paul V Preckel, Ronald L RardinFuel diversification implies the selection of a mix of generation technologies for long-term electricity generation. The goal is to strike a good balance between reduced costs and reduced risk. The method of analysis that has been advocated and adopted for such studies is the mean-variance portfolio analysis pioneered by Markowitz (1952). However the standard meanvariance methodology, does not account for the ability of various fuels/technologies to adapt to varying loads. Such analysis often provides results that are easily dismissed by regulators and practitioners as unacceptable, since load cycles play critical roles in fuel selection. To account for such issues and still retain the convenience and elegance of the mean-variance approach, we propose a variant of the mean-variance analysis using the decomposition of the load into various types and utilizing the load factors of each load type. We also present examples using real data for the state of Indiana and demonstrate the ability of the model in providing useful insights.
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Publication status
- Published
Presentation Type
- paper
Event name
10th International Conference on Probabilistic Methods Applied to Power SystemsEvent location
Rincon, PR, USAEvent type
conferenceEvent date
25-29th May, 2009Department affiliated with
- SPRU - Science Policy Research Unit Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2012-07-03Usage metrics
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