Fuel Price Risk & Power Systems Planning

The activity developed an operational method for dealing with fuel price risk in the economic analysis of selection of generating sources in power systems planning using financial portfolio planning methods. The method will presumably be most beneficial for assessing and appropriately analyzing larger market penetration of free-fuel renewables such as geothermal, hydro, solar and wind energy, where current analyses either disregard fuel price risk for conventional power generation or do not provide a rigorous quantitative assessment of the economic benefits of less volatile electricity prices. A higher share of renewables in the primary energy mix for power generation will also increase energy security, make countries less economically vulnerable to energy price shocks, and contribute to environmentally sustainable development.