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Investing in Power Generation

  • Reinhard Madlener
  • Rik W. De Doncker
Chapter

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.

Keywords

risk management paradigm shift distributed generation 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2008

Authors and Affiliations

  • Reinhard Madlener
    • 1
  • Rik W. De Doncker
    • 2
  1. 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 CenterRWTH Aachen UniversityGermany
  2. 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 UniversityGermany

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