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Investing in Power Generation

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Abstract

In light of considerable political and market risk emanating from energy market liberalization, global warming, and rapid technological change, adequate investment in power generation capacity is of paramount importance for ensuring the security of electricity supply and a smooth transition to a more decentralized, energy-efficient and renewable energy system. Consequently, investors have to use more sophisticated approaches to determine optimal investment levels and technology choices than in regulated markets. In this chapter, we provide a discussion of relevant topics and issues in this context and some of the key literature. We also discuss the expected paradigm shift from centralized to more decentralized electricity generation, and the possible (re-)emergence of direct current grids, in light of the history of electrical engineering. Both phenomena, once manifested, would radically reshape the electricity system, with potentially severe economic consequences for existing real assets and new challenges for investment decision-makers, technical system operators, policy-makers, and regulatory bodies alike.

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Author information

Authors and Affiliations

  1. Energy Economics and Management and Director of the Institute for Future Energy Consumer Needs and Behavior (FCN), Faculty of Business Administration and Economics / E.ON Energy Research Center, RWTH Aachen University, , Germany

    Reinhard Madlener

  2. E.ON Energy Research Center, Institute for Power Electronics and Electrical Drives (ISEA), Faculty of Electrical Engineering and Information Technology at the RWTH Aachen University, , Germany

    Rik W. De Doncker

Authors
  1. Reinhard Madlener
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  2. Rik W. De Doncker
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Editor information

Editors and Affiliations

  1. School of Humanities and Social Sc., Dept. Strategic Management and, International University of Bremen, Campus Ring 1, Bremen, 28759, Germany

    Andreas Bausch

  2. Roland Berger Strategy Consultants GmbH, Am Sandtorkai 41, Hamburg, 20457, Germany

    Burkhard Schwenker

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Madlener, R., De Doncker, R.W. (2008). Investing in Power Generation. In: Bausch, A., Schwenker, B. (eds) Handbook Utility Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-79349-6_17

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