The impacts of climate change on natural and human systems will be substantial, especially in energy systems. Among renewable technologies, hydropower would be one of the most affected due to its reliance of hydroclimatic conditions. Many developing countries have turned to this technology due to its ready availability and are considering ambitious expansion plans towards having a hydro-based power matrix. Such is the case of Ecuador, where current participation of climate-sensitive hydropower in the matrix was 51% in 2015 and governmental intentions are to triple installed capacity by 2020 expecting to reach more than 90% of hydropower participation in the grid. The largest of the eight new emblematic hydropower projects being built in Ecuador is Coca Codo Sinclair, a 1500MW run-of-the-river dam located in the Coca River of the Amazon Watershed (See Fig.1).
Traditional optimization techniques when modeling energy systems seek to minimize cost and/or GHG emissions. However investment decisions from an investor’s perspective not only rely on the least-cost option but on the trade-off between costs and risk that the considered asset brings to an existent portfolio. Thus meaning that a generation technology must not only be assessed by its cost, but on how it helps to mitigate risk to the overall generation portfolio.
I began my PhD at the Energy Institute University College London last year in March 2015. My research focus is including climate change uncertainty as an additional proxy for assessing optimised electricity generation portfolios with mean-variance portfolio theory, an approach developed by financial markets to deal with price volatility. This would lead to having not only one or a deterministic set of optimal scenarios but a whole range of cost-risk Pareto efficient portfolios that allows the policy maker to choose according to his/her risk seeking characteristics. I will use a statistical model to assess hydrological uncertainty soft-linked to a TIMES energy system model to represent Ecuador’s power sector and develop least-cost power development pathways that are robust to climate change.