An investigation of the impact of time of generation on carbon savings from PV systems in Great Britain

PV only generates electricity during daylight hours and primarily generates over summer. In the UK, the carbon intensity of grid electricity is higher during the daytime and over winter. This work investigates whether the grid electricity displaced by PV is high or low carbon compared to the annual mean carbon intensity using carbon factors at higher temporal resolutions (half-hourly and daily). UK policy for carbon reporting requires savings to be calculated using the annual mean carbon intensity of grid electricity. This work offers an insight into whether this technique is appropriate. Using half hourly data on the generating plant supplying the grid from November 2008 to May 2010, carbon factors for grid electricity at half-hourly and daily resolution have been derived using technology specific generation emission factors. Applying these factors to generation data from PV systems installed on schools, it is possible to assess the variation in the carbon savings from displacing grid electricity with PV generation using carbon factors with different time resolutions. The data has been analyzed for a period of 363 to 370 days and so cannot account for inter-year variations in the relationship between PV generation and carbon intensity of the electricity grid. This analysis suggests that PV displaces more carbon intensive electricity using half-hourly carbon factors than using daily factors but less compared with annual ones. A similar methodology could provide useful insights on other variable renewable and demand-side technologies and in other countries where PV performance and grid behavior are different.

Stress testing credit risk: the Great Depression scenario

By employing Moody’s corporate default and rating transition data spanning the last 90 years we explore how much capital banks should hold against their corporate loan portfolios to withstand historical stress scenarios. Specifically, we will focus on the worst case scenario over the observation period, the Great Depression. We find that migration risk and the length of the investment horizon are critical factors when determining bank capital needs in a crisis. We show that capital may need to rise more than three times when the horizon is increased from 1 year, as required by current and future regulation, to 3 years. Increases are still important but of a lower magnitude when migration risk is introduced in the analysis. Further, we find that the new bank capital requirements under the so-called Basel 3 agreement would enable banks to absorb Great Depression-style losses. But, such losses would dent regulatory capital considerably and far beyond the capital buffers that have been proposed to ensure that banks survive crisis periods without government support.

Sector, region or function? A MAD reassessment of real estate diversification in Great Britain

This paper re-examines whether it is more advantageous in terms of risk reduction to diversify by sector or region by comparing the performance of the ‘conventional’ regional classification of the UK with one based on modern socio-economic criteria using a much larger real estate data set than any previous study and the MAD portfolio approach. The general conclusion of this analysis is that property market sectors still dominate regions, however defined and so should be the first level of analysis when developing a portfolio diversification strategy. This is in line with previous research. When the performance of Functional groups is compared with the ‘conventional’ administrative regions the results here show that, when functionally based, groupings can in some cases provide greater risk reduction. In addition the underlying characteristics of these functional groups may be much more insightful and acceptable to real estate portfolio managers in considering the assets that a portfolio might contain.