Strategic Planning in Electric Utilities: Using Wind Technologies as Risk Management Tools

This report highlights research investigating the ownership of renewable energy technologies to mitigate risks faced by the electric utility industry. Renewable energy technology attributes of fuel costs, environmental costs, lead time, modularity, and investment reversibility are discussed. Incorporating some of these attributes into an economic evaluation is illustrated using a municipalutility's decision to invest in either wind generation or natural gas based generation. The research concludes that wind and other modular renewable energy technologies, such as photovoltaics, have the potential to provide decision makers with physical risk-management investments.