Investigation of the Benefits of Resource Diversification with an Energy Portfolio Dominated by Storage Hydro

This project will investigate the relative financial benefit of adding different types of power generating resources to the BC Hydro energy portfolio over time. The analysis will consider various drivers of financial risk that influence this evaluation such as commodity prices, energy demand, and water inflows. Appropriate measures of risk will be considered to aid in evaluating the comparison of alternate resource additions. A spreadsheet model will be constructed to complete the analysis. This tool will be used in the future for communicating portfolio strategies to BC Hydro management and interest groups with little knowledge of portfolio theory and energy planning. A recommendation of the most appropriate risk measure(s) for a regulated utility such as BC Hydro will be provided. If time permits, an analysis of the utility function will be considered. This analysis would provide a methodology, based on current research in this area, for choosing the preferred portfolio from the set of portfolios that have different costs and risk characteristics.

Faculty Supervisor:

Dr. Ulrich Horst

Student:

Felix Kan

Partner:

BC Hydro

Discipline:

Mathematics

Sector:

Energy

University:

University of British Columbia