The optimal generation mix for an electricity producer: the case of Italy

In this work we extend the model of Roques et al. (2008) for the construction of the optimal electricity generation portfolio. In our analysis we consider an electricity producer, who can choose to invest both in renewable and conventional sources. We build portfolios based on the Net Present Value generated by the investment in a particular technology. We use Monte Carlo simulations in order to compute the NPV distributions. As an extension to Roques et al. (2008), we consider the presence of incentives for renewable technologies. We apply our model to Italian data.