Assessing the costs and risks of the South African electricity portfolio: A portfolio theory approach

Abstract

Portfolio theory is used to evaluate the cost and risk of the South African electricity generation portfolio in a bid to find out how the costs and risks of the South African electricity generation portfolio were managed following the 2007 and 2008 load-shedding events. The costs considered are fuel, environmental levy and operating and maintenance costs, for the Eskom power stations from 2008/09 to 2013/14. The results show that the current electricity generation mix is not efficient, due to high cost and risk; and following the 2007 and 2008 load shedding events the entire portfolio capacity was increased marginally and the open cycle gas turbine stations' fuel costs increased substantially. Future work would be to apply this study to the period following load-shedding in 2014 and 2015.