Print Email Facebook Twitter Potential effects of risk aversion on technology choices and security of supply: Researched with an agent-based model of a liberalised electricity market Title Potential effects of risk aversion on technology choices and security of supply: Researched with an agent-based model of a liberalised electricity market Author Gielis, F. Contributor De Vries, L.J. (mentor) Faculty Technology, Policy and Management Department Engineering Systems and Services Programme Energy & Industry Date 2016-03-10 Abstract Given the current vulnerability of the profitability of power plants to price volatilities and government policy changes, the role of risk considerations in power plant investment decisions becomes increasingly important. However, when we look at simulation studies that look into the long-term impact of different policy designs on electricity markets, most researchers still tend to rely on risk neutral investment logic. A plausible reason for this is that a common approach to include risk aversion in investment logic does not yet exist. Therefore I have included three different concepts on risk aversion in investment decisions in EMLab-Generation for my Master Thesis research, in order to look into the potential effects of risk aversion on technology choices and security of supply: conditional value-at-risk (CVAR), constant absolute risk aversion (CARA) and constant relative risk aversion (CRRA). The results show mainly that each of the concepts make agents move more towards generating technologies higher in the merit order, however in a different way. Where CVAR makes agents switch in technology choice mostly in times where electricity prices are low, CARA and CRRA make agents switch in technology choice where prices are volatile. This shows that the choice of risk aversion concept matters. On top of that it raises questions regarding how different policy designs could interact with risk-averse investment behavior through their effect on electricity prices. Subject power plant investment decisionsconstant absolute risk aversionCARAconstant relative risk aversionCRRAconditional value-at-riskCVARsecurity of supplygeneration mix developmentagent-based modellingEMLab-Generation To reference this document use: http://resolver.tudelft.nl/uuid:5b46f060-cef5-4268-83fc-7b301f7d9c6b Part of collection Student theses Document type master thesis Rights (c) 2016 Gielis, F. Files PDF MasterThesis_FreekGielis_Final.pdf 4.36 MB PDF ScientificArticle_FreekGielis.pdf 849.66 KB Close viewer /islandora/object/uuid:5b46f060-cef5-4268-83fc-7b301f7d9c6b/datastream/OBJ1/view