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Real Green Costs

Valuing risk reduction for renewables and DSM.

Fortnightly Magazine - February 2010

net costs can result in completely different interpretations of the value of each respective resource plan.

Green resource options have substantial latent value over traditional supply resources to reduce risk. Converting risk to an economic measure that can be directly included into the evaluation of future resource options removes a common bias of traditional cost analysis. Further, by quantifying the value of risk reduction as part of the supply costs, resource valuation adheres to the higher standards of prudency by utilizing all available information along with the application of current modeling techniques. The analytic foundation necessary to adequately calculate the value of risk requires detailed modeling of market dynamics, load, and resource characteristics to reflect the full economic attributes of each resource. By getting the details right, resource evaluation can remove systemic biases that preclude a balanced valuation of energy resource options.