A business model to incentivize hydro companies inversions in wind and biomass power plants

The complementarity among renewables power plants is an important issue in the Brazilian Energy Market. Wind and biomass generators have increased their market share and typical hydro companies are investing in such projects to obtain gain of scale. We developed a support decision model that allows complementarity analysis and evaluate the financial benefits that investments in wind and biomass power plants can bring to a hydro company. These benefits result from risk control due to a hedge effect that comes from generation synergy between such power plants, as well as gains in the return over capital expenditure. The model searches for an optimized solution with the aid of Genetic Algorithmic and uses CVaR as risk metric. A business model is suggested and applied in a case study. The performance results confirmed that complementarity effect brings financial benefits for the hydro company when such sources are part of the generation Portfolio.