Development of cogeneration in Germany: A mean-variance portfolio analysis of individual technology's prospects in view of the new regulatory framework

► This study focuses on the 2009 promotion scheme for combined heat and power (CHP) generation in Germany. ► We evaluate the economics of various CHP technologies with a financial model and special emphasis on return-risk considerations. ► By applying mean-variance portfolio theory, we identify efficient CHP portfolios consisting of various CHP technologies. ► Our analysis shows that CCGT-CHP and engine-CHP are the most attractive CHP technologies from a return perspective. ► Portfolio diversification with different kinds of CHP technologies is found to help stabilizing portfolio returns.