Large and small baseload power plants: Drivers to define the optimal portfolios

Despite the growing interest in Small Medium sized Power Plants (SMPP) international literature provides only studies related to portfolios of large plants in infinite markets/grids with no particular attention given to base load SMPP. This paper aims to fill this gap, investigating the attractiveness of SMPP portfolios respect to large power plant portfolios. The analysis includes nuclear, coal and combined cycle gas turbines (CCGT) of different plant sizes. The Mean Variance Portfolio theory (MVP) is used to define the best portfolio according to Internal Rate of Return (IRR) and Levelised Unit Electricity Cost (LUEC) considering the life cycle costs of each power plant, Carbon Tax, Electricity Price and grid dimension.The results show how large plants are the best option for large grids, while SMPP are as competitive as large plants in small grids. In fact, in order to achieve the highest profitability with the lowest risk it is necessary to build several types of different plants and, in case of small grids, this is possible only with SMPP. A further result is the application of the framework to European OECD countries and the United States assessing their portfolios.

► The literature about power plant portfolios does not consider small grids and IRR. ► We evaluated Base load portfolios respect to IRR and LUEC. ► We assessed the influence of grid and plant size, CO2 cost and Electricity Price. ► Large plants are optimal for large markets even if small plants have similar IRR. ► Small plants are suitable to diversify portfolios in small grids reducing the risk.