Optimal investment portfolio in renewable energy: the Spanish case

J.I. Muñoz, A.A. Sánchez de la Nieta, J. Contreras, J.L. Bernal-Agustín

Research output: Contribution to journalArticleAcademicpeer-review

68 Citations (Scopus)


This article presents a model for investing in renewable energies in the framework of the Spanish electricity market in a way that risk is minimised for the investor while returns are maximised. The model outlined here is based on an economic model for calculating cash flows intended to obtain the internal rate of return (IRR) of the different energies being studied: wind, photovoltaic, mini hydro and thermo electrical. The IRRs obtained are considered the returns on investments, while their standard deviations are considered associated risks. In order to minimise risk, a comprehensive portfolio of investments is created that includes all of the available energies by means of a system of linear equations. The solution of the linear system is graphically checked using the efficient frontier method for the different financing options. Several case studies within the Renewable Energies Plan (PER is its Spanish abbreviation) that is in force in Spain in the period 2005-2010 are analysed in order to illustrate the method, as are other case studies using different types of financing, helping us to reach the pertinent conclusions.

Original languageEnglish
Pages (from-to)5273-5284
Number of pages12
JournalEnergy Policy
Issue number12
Publication statusPublished - Dec 2009
Externally publishedYes


  • Efficient frontier
  • Renewable energy portfolio
  • Return/Risk Optimisation

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