Valuing investment decisions of renewable energy projects considering changing volatility

Volatility is an important parameter when evaluating investments using the real options method. For renewable energy investments, the volatility of cash flow continuously changes, because as new information and knowledge are gathered, there is less foreseen variation. This paper proposes an extended recombining trinomial tree model, where the changing volatility is used to generate transition probabilities. The changing volatility is generated using a consolidation process where multiple random variables, including the market price of electricity, carbon price, and lending rate, are integrated into a low-dimension stochastic process. A two-factor learning curve is used to model the changes of investment cost. We apply the proposed model to analyze solar photovoltaic (PV) power generation investment in China. The results show volatility with changing feature. Compared with constant volatility, changing volatility may advance investment decisions and change the project value. Complete grid parity policy in the solar PV industry is infeasible because the opportunity cost brought by the option of delaying cannot be offset. The changing volatility may produce a lower and equally effective subsidy level compared with constant volatility. A carbon emission trading scheme is helpful in advancing investments in renewable energy, which is reflected in improvements in project value, advancements in investment decisions, and reductions in the required subsidy level.     

Joint electricity and carbon market for Northeast Asia energy interconnection

Decarbonization of the electricity sector is crucial to mitigate the impacts of climate change and global warming over the coming decades. The key challenges for achieving this goal are carbon emission trading and electricity sector regulation, which are also the major components of the carbon and electricity markets, respectively. In this paper, a joint electricity and carbon market model is proposed to investigate the relationships between electricity price, carbon price, and electricity generation capacity, thereby identifying pathways toward a renewable energy transition under the transactional energy interconnection framework. The proposed model is a dynamically iterative optimization model consisting of upper- level and lower-level models. The upper-level model optimizes power generation and obtains the electricity price, which drives the lower-level model to update the carbon price and electricity generation capacity. The proposed model is verified using the Northeast Asia power grid. The results show that increasing carbon price will result in increased electricity price, along with further increases in renewable energy generation capacity in the following period. This increase in renewable energy generation will reduce reliance on carbon-emitting energy sources, and hence the carbon price will decline. Moreover, the interconnection among zones in the Northeast Asia power grid will enable reasonable allocation of zonal power generation. Carbon capture and storage (CCS) will be an effective technology to reduce the carbon emissions and further realize the emission reduction targets in 2030-2050. It eases the stress of realizing the energy transition because of the less urgency to install additional renewable energy capacity.     

氢储能调峰站发展路径探索研究

氢储能是解决可再生能源消纳和缓解峰谷电差的有效方式之一,通过电转氢技术可以实现规模化、长期、广域的储能。借助我国电网基建优势,谷电时段将可再生能源丰富地区电能输送到高纯氢需求中心,在用户端电解制氢,提高输电通道利用率,解决氢气远距离运输成本、安全等关键问题。本文介绍了氢储能现状,给出了氢储能调峰站典型设计方案,分析了在高纯氢需求中心建设氢储能调峰站的技术和经济可行性。同时提出氢储能调峰站潜在的风险与挑战,并给出发展建议。     

Economic analysis of hydrogen-powered data center

The data center needs more and more electricity due to the explosive growth of IT servers and it could cause electricity power shortage and huge carbon emission. It is an attractive and promising solution to power the data center with hydrogen energy source. The present work aims to conduct an economic analysis on the hydrogen-powered data center. Configurations of hydrogen-powered and traditional data centers are compared and the differences focus on backup power system, converter/inverter, fuel cell subsystem, carbon emission, hydrogen and electricity consumptions. Economic analysis is conducted to evaluate the feasibility to power the data center with hydrogen energy source. Results show that electricity price increasing rate and hydrogen cost are the main factors to influence economic feasibility of hydrogen-powered data center. When the electricity price keeps constant in the coming two decades, the critical hydrogen price is about 2.8 U.S. dollar per kilogram. If the electricity price could increase 5% annually due to explosive growth of electric vehicles and economy, critical hydrogen price will become 6.4 U.S. dollar per kilogram. Hydrogen sources and transportation determine the hydrogen price together. Hydrogen production cost varies greatly with hydrogen sources and production technologies. Hydrogen transport cost is greatly influenced by distances and H₂ consumptions to consumers. It could be summarized that the hydrogen-powered data center is economic if hydrogen could be produced from natural gas or H₂-rich industrial waste streams in chemical plant and data center could not be built too far away from hydrogen sources. In addition, large-scale hydrogen-powered data center is more likely to be economic. Solar hydrogen powered data center has entered into a critical stage in the economic feasibility. Solar hydrogen production cost has restrained the H₂ utilization in data center power systems now, since it could be competitive only when more strict carbon emission regulation is employed, hydrogen production cost reduces greatly and electricity price is increasing greatly in the future. However, it could be expected solar hydrogen-powered system will be adopted as the power source of data centers in the next few years.     

Heating Characteristics and Economic Analysis of a Controllable On-Demand Heating System Based on Off-Peak Electricity Energy Storage

The working principle of a controllable on-demand heating system based on off-peak electricity energy storage(COHSBOEES) is as follows: the cheap off-peak electricity energy is converted into heat energy for storage in the evening, and the heat energy can be extracted on demand for heating during daytime peak or flat electricity periods. This technology can promote the smooth operation of the power grid, solve the problem of peak regulation for the electrical network, and promote renewable energy consumption. Based on the controllable on-demand heating strategy, a COHSBOEES for a heating area of 1000 m^2 was designed and built. Variations in the energy consumption and operating cost of the COHSBOEES in different heating situations were analyzed. The results showed that, off-peak electricity energy storage for heating was energy saving in comparison with central heating when the heating intensity of the COHSBOEES was 70 W/m^2 and the on-demand heating rate was less than 73.0%, and the off-peak electricity energy storage for heating was energy saving at any on-demand heating rate when the COHSBOEES had a heating intensity of 50 W/m^2. After the COHSBOEES has been running for three complete heating seasons, when the off-peak electricity price was 0.25 yuan/kW·h, the energy consumption cost of the COHSBOEES can be saved by 77.6% in comparison with central heating.     

Multi-objective optimization of large-scale grid-connected photovoltaic-hydrogen-natural gas integrated energy power station based on carbon emission priority

Establishing integrated energy systems is conducive for improving renewable energy utilization and promoting decarbonization. In this study, a grid-connected photovoltaic-hydrogen-natural gas integrated energy system is established to explore the effects of the configuration of the integrated energy system on its environment and economy. A multi-objective hierarchical optimization allocation model is developed, and an optimization strategy with carbon emission superior to total cost is established for the first time. Additionally, the economy, environment, and energy efficiency of the system are analyzed. A comparative study is performed using a strategy considering that the total cost is superior to carbon emission. A case study reveals that the levelized cost of electricity increases by 62.24%, levelized carbon emission of power decreases by 74.19%, and energy efficiency increases by 8.51%, as compared with those of the comparison strategy. Thus, the carbon emission of the system is reduced considerably, and the energy efficiency is improved. Although the cost of the system optimized by the proposed strategy is higher, it is economically feasible. Further analyses indicate that extending the grid-connected period would be infeasible, as it might increase the total cost and carbon emission of the system. Moreover, sensitivity analyses show that increasing the natural gas price or carbon tax base price will not reduce the carbon emission of the system.     

Feasibility study on hydrogen refueling infrastructure for fuel cell vehicles using the off-peak power in Japan

It is examined that the technical feasibility, economics of hydrogen, improvement of the load factor and reduction of the carbon dioxide emission in the case where a hydrogen-refueling infrastructure is developed using the off-peak power in the existing electrical power grid in Japan. Hydrogen could be supplied to the fuel cell vehicles, of which cost would be almost the same as the current retail cost of gasoline exclusive of tax. Annual average load factor of 0.72% could be increased in 2020 to meet the hydrogen demand for the fuel cell vehicles in Japan by water electrolysis. The infrastructure cost of 0.12 trillion yen/year in 2020 would be necessary to be invested, which is almost the same as the reduction of annual expenses in the case where the increase of 1% in load factor could attain. Fuel cell vehicles using the electrolysis, hydrogen generated by the off-peak electricity could attain the 37% reduction of carbon dioxide emission compared with middle-sized internal gasoline combustion passenger cars.     

Recognizing the role of uncertainties in the transition to renewable hydrogen

Achieving the goal of net zero emissions targeted by many governments and businesses around the world will require an economical zero-emissions fuel, such as hydrogen. Currently, the high production cost of zero emission ‘renewable’ hydrogen, produced from electrolysis powered by renewable electricity, is hindering its adoption. In this paper, we examine the role of uncertainties in projections of techno-economic factors on the transition from hydrogen produced from fossil fuels to renewable hydrogen. We propose an integrated framework, linking techno-economic and Monte-Carlo based uncertainty analysis with quantitative hydrogen supply-demand modelling, to examine hydrogen production by different technologies, and the associated greenhouse gas (GHG) emissions from both the feedstock supply and the production process. The results show that the uncertainty around the cost of electrolyser systems, the capacity factor, and the gas price are the most critical factors affecting the timing of the transition to renewable H₂. We find that hydrogen production will likely be dominated by fossil fuels for the next few decades if the cost of carbon emissions are not accounted for, resulting in cumulative emissions from hydrogen production of 650 Mt CO₂-e by 2050. However, implementing a price on carbon emissions can significantly expedite the transition to renewable hydrogen and cut the cumulative emissions significantly.     

Operational performance of energy storage as function of electricity prices for on-grid hybrid renewable energy system by optimized fuzzy logic controller

Realization of benefits from on-grid distributed generation based on renewable energy sources requires employment of energy storage to overcome the intermittency in power generation by such sources, while accounting for time-varying electricity prices. The objective of this study is to examine the effects of time-varying electricity prices on the performance of energy storage components for an on-grid hybrid renewable energy system (HRES) utilizing an optimized fuzzy logic controller (FLC). To achieve the objective, FLC membership functions are optimized for minimizing the operational cost of the HRES based on weekly and daily prediction of data for grid electricity price, electrical load, and environmental parameters, including wind speed, solar irradiation, and ambient temperature, using shuffled frog leap algorithm. FLC three inputs include (a) grid electricity price, (b) net power flow as the difference between energy produced and energy consumed, and (c) state of charge (SOC) of battery stack. It is confirmed that accounting for grid electricity price has considerable effects on the performance of energy storage components for operation of on-grid HRES, as the weekly and daily optimized FLCs result in less working hours for fuel cell and electrolyzer and less fluctuations in SOC of battery stack.     

Parameter study for dimensioning of a PV optimized hydrogen supply plant

Green hydrogen produced from intermittent renewable energy sources is a key component on the way to a carbon neutral planet. In order to achieve the most sustainable, efficient and cost-effective solutions, it is necessary to match the dimensioning of the renewable energy source, the capacity of the hydrogen production and the size of the hydrogen storage to the hydrogen demand of the application.For optimized dimensioning of a PV powered hydrogen production system, fulfilling a specific hydrogen demand, a detailed plant simulation model has been developed. In this study the model was used to conduct a parameter study to optimize a plant that should serve 5 hydrogen fuel cell buses with a daily hydrogen demand of 90 kg overall with photovoltaics (PV) as renewable energy source. Furthermore, the influence of the parameters PV system size, electrolyser capacity and hydrogen storage size on the hydrogen production costs and other key indicators is investigated. The plant primarily uses the PV produced energy but can also use grid energy for production.The results show that the most cost-efficient design primarily depends on the grid electricity price that is available to supplement the PV system if necessary. Higher grid electricity prices make it economically sensible to invest into higher hydrogen production and storage capacity. For a grid electricity price of 200 €/MWh the most cost-efficient design was found to be a plant with a 2000 kWp PV system, an electrolyser with 360 kW capacity and a hydrogen storage of 575 kg.     

Study on the decision-making of district cooling and heating systems by means of value engineering

A district cooling and heating (DCH) system can provide both cooling and heating for blocks of buildings in cold climate areas, however, different thermal source schemes of a DCH project always differ in their first cost, operating cost, maintenance cost, regulation performance, control performance, energy-saving and environment protection performance, etc. In order to evaluate various DCH thermal source schemes quantitatively, the paper firstly establishes an evaluation model based on value engineering theory. It then elaborates on how this model is applied in the first seawater source heat pump DCH project in China—Dalian Xinghai Bay project. The calculation results show that even though the scheme of seawater source heat pump system is not economical under commercial electricity price mainly because of its relatively high initial cost, yet it has the highest value coefficient under civil electricity price. This also implies that privileges of policy for renewable energy utilization system are necessary to help promote the energy-saving and environment-friendly scheme of seawater source heat pump system.     

Lower electricity prices and greenhouse gas emissions due to rooftop solar: empirical results for Massachusetts

Monthly and hourly correlations among photovoltaic (PV) capacity utilization, electricity prices, electricity consumption, and the thermal efficiency of power plants in Massachusetts reduce electricity prices and carbon emissions beyond average calculations. PV utilization rates are highest when the thermal efficiencies of natural gas fired power plants are lowest, which reduces emissions of CO₂ and CH₄ by 0.3% relative to the annual average emission rate. There is a positive correlation between PV utilization rates and electricity prices, which raises the implied price of PV electricity by up to 10% relative to the annual average price, such that the average MWh reduces electricity prices by $0.26–$1.86 per MWh. These price reductions save Massachusetts rate-payers $184 million between 2010 and 2012. The current and net present values of these savings are greater than the cost of solar renewable energy credits which is the policy instrument that is used to accelerate the installation of PV capacity. Together, these results suggest that rooftop PV is an economically viable source of power in Massachusetts even though it has not reached socket parity.     

Comparing the cost of electricity sourced from a fuel cell-based renewable energy system and the national grid to electrify a rural health centre in India: A case study

The provision of electricity is a key component in the development of a country’s health care facilities. This study was performed to estimate the cost of powering a rural primary health centre, in India with a decentralised renewable energy system. The costs were also compared between a decentralised renewable energy system and providing electricity from a grid source. The critical or break-even distance that makes electricity from a decentralised renewable energy system cost effective over that from a grid source was determined. The decentralised renewable energy system considered was a hydrogen-based fuel cell for the generation of electricity with hydrogen extracted from biogas obtained from biomass. The software program HOMER was used for the simulation analysis. The cost of a decentralised renewable energy system was found to be between seven times and less than half that of conventional energy, and the break-even distance was between 43.8 km to a negative distance for varying ranges of input component costs. The results of this study indicated that the use of a decentralised renewable energy system to power a rural primary health centre is both feasible and cost effective, and may even be cheaper than using electricity from a grid source.     

The economic feasibility study of a 100-MW Power-to-Gas plant

Power-to-Gas (PtG) is a grid-scale energy storage technology by which electricity is converted into gas fuel as an energy carrier. PtG utilizes surplus renewable electricity to generate hydrogen from Solid-Oxide-Cell, and the hydrogen is then combined with CO₂ in the Sabatier process to produce the methane. The transportation of methane is mature and energy-efficient within the existing natural gas pipeline or town gas network. Additionally, it is ideal to make use of the reverse function of SOC, the Solid-Oxide-Fuel-Cell, to generate electricity when the grid is weak in power. This study estimated the cost of building a hypothetical 100-MW PtG power plant with energy storage and power generation capabilities. The emphasis is on the effects of SOC cost, fuel cost and capacity factor to the Levelized Cost of Energy of the PtG plant. The net present value of the plant is analyzed to estimate the lowest affordable contract price to secure a positive present value. Besides, the plant payback period and CO₂ emission are estimated.     

Design analysis and tri-objective optimization of a novel integrated energy system based on two methods for hydrogen production: By using power or waste heat

Hydrogen is rapidly turning into one of the essential energy carriers for future sustainable energy systems. The main reason for this is the possibility of off-peak excess power production and storage of renewable stations such as wind farms, photovoltaic plants, etc. For hydrogen (itself) or its sub-productions methanol, ammonia, etc. Such energy systems are so-called power2X technologies. For hydrogen and other biogases, using a fuel cell is a promising method for returning the fuel to the power grid or electric cars in the form of electricity. In this paper, a novel hybrid energy system consisting of a molten carbonate fuel cell (MCFC) and different options to generate hydrogen from the waste heat of the MCFC is investigated. The system consists of two scenarios of weather using proton exchange membrane electrolyzer (PEME) of vanadium chloride (VCL) cycle. The article presents a comprehensive thermodynamic, economic, and environmental analysis of the system optimized by tri-objective optimization (as an innovative optimization) methods. The aim of the optimization task here is to minimize the costs and emissions while maximizing efficiency. A parametric study is conducted to see the effect of different design parameters on the system's performance. Results demonstrate that fuel utilization factor, stack temperature, and current density have the most critical effect on the system performance. In addition, the system coupled with the VCL cycle exhibits better performance than the system with PEME. In addition, at the optimized point, the efficiency, cost rate, and emission become 69.28%, 3.73 ($/GJ), and 1.16 kg/kWh, respectively. In addition, the produced hydrogen in VCL and PEME are 585 kg/day and 293 kg/day respectively.     

Cost-effectiveness of renewable electricity policies

We analyze policies to promote renewable sources of electricity. A portfolio standard (RPS) raises electricity prices and primarily reduces gas-fired generation. A knee of the cost curve exists between 15% and 20% goals for 2020 in our central case, and higher natural gas prices lower the cost of greater reliance on renewables. A renewable energy production tax credit lowers electricity price at the expense of taxpayers, which limits its effectiveness in reducing carbon emissions, and it is less cost-effective at increasing renewables than a portfolio standard. Neither policy is as cost-effective as a cap-and-trade policy for achieving carbon emission reductions.     

Synergistic planning of an integrated energy system containing hydrogen storage with the coupled use of electric-thermal energy

Regional integrated energy systems (RIES) can economically and efficiently use regional renewable energy resources, of which energy storage is an important means to solve the uncertainty of renewable energy output, but traditional electrochemical energy storage is only single electrical energy storage, and the energy efficiency level is low. Hydrogen energy storage has the advantages of large energy storage capacity, long storage time, clean and pollution-free, and can realize the synergistic and efficient utilization of electricity and thermal power. Based on this, this paper proposes a synergistic planning method for an integrated energy system with hydrogen storage taking into account the coupled use of electric-thermal energy, which effectively reduces the system carbon emission and improves the comprehensive energy efficiency level. Firstly, this paper constructs an electric-thermal coupling model of the hydrogen energy storage unit and proposes an optimization strategy for the integrated energy system containing hydrogen storage taking into account the utilization of electricity and thermal power. Secondly, a planning optimization model with the lowest economy and carbon emission and the highest comprehensive energy efficiency was constructed. Third, the CSPO-GE optimization algorithm is proposed for solving the problem, which significantly improves the solution efficiency. Finally, a planning optimization simulation of RIES for a residential community W in northern China verifies the effectiveness of the model and method proposed in this paper. The comparative analysis of the three schemes shows that compared with the integrated energy system with conventional electrochemical energy storage and heat storage tank as the main form of energy storage and the integrated energy system with only hydrogen storage, the integrated energy system with hydrogen storage and heat storage tank can reduce carbon emissions by 43.8% and 7.61%, respectively, and improve the integrated energy efficiency level by 337.14% and 14.44%.     

Long-term prospects for compressed air storage

The compressed air storage (CAS) concept has been reviewed in the light of the long-term requirement for energy storage to effect load following in a predominantly nuclear generating system. This requirement would eventually lead to the operation of storage plant on a daily cycle of storing energy for 6–8 h and generating for 12–16 h. Conventional CAS schemes, typified by the Nordwestdeutchen Kraftwerke (NWK) installation in West Germany, are shown to be incapable of fulfilling this duty on merit.The basic concept is then re-examined and a novel development is proposed which, by using uncooled compressors and conserving the compression energy, constitutes a true energy storage scheme requiring no fuel other than the off-peak energy taken from the electrical grid. The efficiency and other performance characteristics of this proposal are discussed.The capital cost of an 8 GWh storage scheme is tentatively put at £125–175/kW (at 1974 price levels), depending on the air store construction, well within the £200/kW cost target which storage plant would need to meet to be of interest for storing off-peak nuclear power by the end of the present century. It is concluded that, once developed, CAS schemes which incorporate heat storage could provide an attractive method for storing off-peak electricity.     

高铁客运站分布式多能源系统供能协同优化策略研究

为解决传统高铁客运站供能系统中能源利用率较低的问题,以日运行购气费用和购电费用最优为优化目标,以系统运行过程中实时能量平衡为约束条件,以可再生能源出力和吸收式制冷占比为优化变量,建立多能源协同供能的分布式能源系统,并将该模型应用于北方某高铁客运站,分析可再生能源的利用率、制冷系统中可再生能源电出力的电制冷占比以及电网出力的节电率。仿真计算结果表明,分布式能源系统的使用提高了可再生能源的利用率,其中风电机组出力占其出力极限的96.5%,光伏机组出力94.7%;相比于参比系统,分布式能源系统的成本节约率为12.5%;电制冷占比为13%;电网的节电率为53.9%。     

The pricing of off-peak power

Benefit-cost analysis is used to show that even with only one electricity production technique, marginal cost pricing of electricity in a firm off-peak period might reduce social welfare rather than improve it. This may occur when there are more periods with dissimilar demands for power than feasible prices for electricity. Thus the conclusion is reinforced that it may be more important to charge a higher price for electricity during periods of peak demand than a price equal to marginal running costs during the most off-peak hours.