Time Span does Matter for Offshore Wind Plant Allocation with Modern Portfolio Theory

Authors

  • Lana V. L. Costa-Silva Federal University of Rio Grande do Norte
  • Vinicio S. Almeida Federal University of Rio Grande do Norte
  • Felipe M. Pimenta Federal University of Santa Catarina
  • Giovanna T. Segantini Federal University of Rio Grande do Norte

Abstract

Allocating wind farms across different locations may reduce the problematic intermittency of wind. The objective of this research was to analyze the optimal allocation of offshore wind farms in the U.S. East Coast through Modern Portfolio Theory (MPT). The research was conducted with 25.934 secondary observations of offshore wind energy produced by 11 hypothetical offshore wind farms. We calculated six minimum variance portfolios, each referring to a distinct time period. Four rebalancing strategies were settled in order to assess the performance of the portfolios we estimated. The results indicate that MPT can be used to calculate the diversification of offshore wind farms locations, which may reduce the individual variability of hourly wind power changes.

Keywords: Modern Portfolio Theory; Optimal allocation; Offshore wind power

JEL Classifications: C61, C53, L94, Q42, Q47. 

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Published

2017-07-18

How to Cite

Costa-Silva, L. V. L., Almeida, V. S., Pimenta, F. M., & Segantini, G. T. (2017). Time Span does Matter for Offshore Wind Plant Allocation with Modern Portfolio Theory. International Journal of Energy Economics and Policy, 7(3), 188–193. Retrieved from https://econjournals.com/index.php/ijeep/article/view/4533

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