Portfolio problems are decision problems in which alternatives need to be designed to meet specified constraints or targets.
In the development of BC Hydro’s 2006 Integrated Electricity Plan, or IEP, a valid alternative had to meet the following constraints:
- Describe a portfolio of resource options (e.g., wind, small hydro etc.) that could be deployed in the next 20 years to meet forecasted demand
- Meet targets for total energy supply (20,000 GWh) and capacity (the amount of energy that can be reliably deployed at any give time: 2,600 MW)
- Use only quantities of each resource option that are known to exist in BC
A spreadsheet tool allowed stakeholders to build alternatives by assembling ‘building blocks’ of energy from a variety of resource options. For most of the resource options the block size used was 500 GWh, but for others, such as geothermal and large hydro, the block size represented the actual projects available in BC. For example, since there was only one potential large hydro site in the province under consideration at the time, participants could choose whether to use the one block of 5,000 GWh hours of large hydro in an alternative or not.
Each time an energy block of a particular resource option was added to an alternative, the user was presented with a running tally of the implications of the alternative in terms of various indicators of interest to participants. These included the cost of the alternative, GHG gas emissions, local air emissions, jobs, the proportion of ‘clean energy’ (an indicator important to provincial energy policy), and the area of land affected.
Supply curves for each resource option were built into the tool, providing both the marginal cost of the next block of energy available of each type, and preventing adding quantities of a particular resource option that did not exist. A simple lookup table built into the tool contained emission factors etc. required to calculate other impacts. An illustration of the tool in action is shown below: