Establishing the role that wind generation may have in future generation portfolios

Assessing the correct future mix in generation portfolios has become more difficult given the introduction of emission trading schemes, the recent fuel price rises, and the increasing competitiveness of wind energy. This paper combines analysis of generation economics, load and wind generation characteristics, generation adequacy, and plant utilization to gain insight into the role of wind generation in desirable generation portfolios. The unique characteristics of wind generation are accounted for in the analysis, and sensitivity analysis is carried out with respect to discount rates, carbon taxes, and various fuel price scenarios. Results show that for a large range of future scenarios, wind generation has a significant role to play in future generation portfolios in Ireland. Mean-variance portfolio theory is applied to examine the benefits of portfolio diversification in terms of avoiding exposure to volatile fuel prices. Analysis shows that wind generation has a further role to play in generation portfolios in this respect.