Renewable Technologies for Risk Mitigation: Fiji's Electricity Sector

Arndt-Corden Department of Economics

Event details


Date & time

Tuesday 12 June 2012


Seminar Room B, Coombs Building, Fellows Road, ANU


Matthew Dornan
Abstract: In recent years, renewable energy technologies have been advocated in Small Island Developing States (SIDS) as a risk mitigation measure against oil price volatility. Despite this, there have been no rigorous attempts to measure the impact of renewable technologies on financial risk in these countries. This paper develops and applies a stochastic simulation model, based on portfolio theory, in order to assess the effect of renewable technologies on the financial risk and cost of electricity supply in Fiji. Empirical data on generation costs and electricity output support investments in some, although not all, renewable technologies. Investments in low-cost, low-risk technologies such as energy efficiency, geothermal, biomass and bagasse technologies are found to lower both portfolio generation costs and financial risk. This suggests the Government of Fiji should be encouraging further investment in these technologies, commensurate with increases in total electricity supply, and that such investment should be prioritised over planned investment in hydro-power capacity. Renewable technology investments in other SIDS are likely to involve similar risk mitigation benefits

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