Economic buy-back rates for electricity from cogeneration: Case of sugar industry in Vietnam

Cogeneration of heat and power could be an attractive option for meeting electricity demand in Vietnam, which is facing acute shortage in generation capacity due to high demand growth spurred by rapid economic growth of the country. The sugar industry has significant potential for cogeneration. This paper focuses on the cogeneration potential of the sugar industry and estimates, based on avoided cost, the economic rate at which excess power could be sold to the utility. We found that cogeneration would be a financially viable option for medium and large size sugar plants. Time-of-day rates would be the most suitable form of buy-back rate and the IRR ranges between 12% and 15% in this case. The sensitivity analysis indicates that cogeneration plants would be vulnerable to changes in buy-back rates and investment costs. The internal rate of return is more sensitive to changes in buy-back rates than those in investment costs. Medium and large sized plants would be in a better position to withstand such changes in the business environment.     

Framework for formulating a performance-based incentive-rebate scale for the demand-side-energy management scheme for commercial buildings in Hong Kong

Many, but not all, rebate-type demand side management (DSM) programmes worldwide have met with success. The rebate rate offered is a critical factor to success but a rational rebate scale determination method that would help strike a proper balance between the incentive offered and the effectiveness of the programme is lacking. For the DSM programmes recently launched in Hong Kong, the rebate rates are disproportionate to the cost and performance of the promoted energy-saving measures, resulting in diverse participation rates among the programmes. This paper presents a conceptual framework for formulating the rebate scales for incentive-based DSM programmes for commercial buildings, which would attract participation of building owners and boost electricity saving. The establishment of the scale starts from developing a performance curve that relates the cost effectiveness and the long-term benefits of different energy-saving DSM measures. The rebate scale is set based on the premise that a proportionally higher rebate rate should be offered for the adoption of each additional measure, which would yield a diminished marginal rate of return. Analysis showed that replacing the current rebate scale by the proposed scale would lead to benefits, both to the building owners and the utility companies.     

Inverted block or lifeline rates and micro-efficiency in the consumption of electricity

Recent evidence indicates that the marginal cost of electricity exceeds average electricity rates. A model is presented in this paper to investigate the conditions under which inverted block or ‘lifeline’ rates could contribute to minimizing the deadweight loss associated with electricity consumption. Although conditions exist where inverted block rates might aggravate deadweight loss, empirical evidence is presented suggesting that inverted block rates would, in fact, improve the efficiency of electricity consumption.     

The theory of maximum kW demand charges for electricity

The kilowatt (kW) demand charge characterizes most electricity price schedules for industrial customers, yet it has not been analysed thoroughly (compared with time-of-use rates). This article shows how such charges complicate interpretations of past estimates of the industrial demand for electricity. Using a utility maximization (cost minimization) model, we derive consistent demand curves, which are shown potentially to be subject to discontinuities.     

Financial impact of energy efficiency under a federal combined efficiency and renewable electricity standard: Case study of a Kansas “super-utility”

Historically, local, state and federal policies have separately promoted the generation of electricity from renewable technologies and the pursuit of energy efficiency to help mitigate the detrimental effects of global climate change and foster energy independence. Federal policymakers are currently considering and several states have enacted a combined efficiency and renewable electricity standard which proponents argue provides a comprehensive approach with greater flexibility and at lower cost. We examine the financial impacts on various stakeholders from alternative compliance strategies with a Combined Efficiency and Renewable Electricity Standard (CERES) using a case study approach for utilities in Kansas. Our results suggest that an investor-owned utility is likely to pursue the most lucrative compliance strategy for its shareholders—one that under-invests in energy efficiency resources. If a business model for energy efficiency inclusive of both a lost fixed cost recovery mechanism and a shareholder incentive mechanism is implemented, our analysis indicates that an investor-owned utility would be more willing to pursue energy efficiency as a lower-cost CERES compliance strategy. Absent implementing such a regulatory mechanism, separate energy efficiency and renewable portfolio standards would improve the likelihood of reducing reliance on fossil fuels at least-cost through the increased pursuit of energy efficiency.     

Economic optimization and sensitivity analysis of photovoltaic system in residential buildings

This paper deals with the problem of optimal size of grid-connected photovoltaic (PV) system for residential application. It is assumed the PV system can input or output liberally the electricity to the utility electricity grid. A simple linear programming model is developed. The objective is to minimize the annual energy cost of a given customer, including PV investment cost, maintenance cost, utility electricity cost, subtracting the revenue from selling the excess electricity. The model reports the optimal PV capacity that customers adopt with their electricity requirements. Using this model, an investigation is conducted of economically optimal PV investment under several conditions for a typical residential building. Additionally, the sensitivity of levelized cost and simple payback period to various economic and technical circumstances has been analyzed.     

A simpler method for calculating the cost of conservation subsidies for an electric utility

This article presents a highly aggregated method of calculating the cost of conservation subsidies for an electric utility company. The cost is expressed in terms of the company's total expenditures on subsidies versus the reduction in electricity demand due to customers' extra conservation investments. We argue that the highly aggregated method would serve as a useful complement to the detailed programme by programme calculations normally performed to determine conservation cost-effectiveness. The simpler method is demonstrated with an application to the conservation programmes of the Pacific Gas and Electric Company.     

The coal gasification fuel cell system for efficient economic and environmentally acceptable power production from coal

Detailed conceptual design, performance and cost data for a fully integrated coal gasification fuel cell system for electric utility applications are presented below.The system consists of fixed-bed air-blown coal gasifier, gas cooling, cleaning and processing systems, a sulfur removal section, phosphoric acid water-cooled fuel cells and a bottoming cycle using gas and steam turbines. Both commercially available and newly developed fixed-bed gasifiers are considered and the difference in their performance estimated. Very attractive overall heat rates and extremely low plant emissions are obtained employing commercially proven technology.The system economics are based on the actual equipment costs obtained by vendor solicitations, the site specific cost data provided by the Southern California Edison Company and the calculation methodology developed by the Electric Power Research Institute. The cost of electricity from a 150 MW baseload power plant is competitive with the cost of electricity produced by the present generation of coal fire power plants.     

Economic comparison between coal-fired and liquefied natural gas combined cycle power plants considering carbon tax: Korean case

Economic growth is main cause of environmental pollution and has been identified as a big threat to sustainable development. Considering the enormous role of electricity in the national economy, it is essential to study the effect of environmental regulations on the electricity sector. This paper aims at making an economic analysis of Korea's power plant utilities by comparing electricity generation costs from coal-fired power plants and liquefied natural gas (LNG) combined cycle power plants with environmental consideration. In this study, the levelized generation cost method (LGCM) is used for comparing economic analysis of power plant utilities. Among the many pollutants discharged during electricity generation, this study principally deals with control costs related only to CO₂ and NO₂, since the control costs of SO₂ and total suspended particulates (TSP) are already included in the construction cost of utilities. The cost of generating electricity in a coal-fired power plant is compared with such cost in a LNG combined cycle power plant. Moreover, a sensitivity analysis with computer simulation is performed according to fuel price, interest rates and carbon tax. In each case, these results can help in deciding which utility is economically justified in the circumstances of environmental regulations.     

The marginal cost of electricity used as backup for solar hot water systems: A case study

In this study, a method is developed for estimating the long run marginal cost to electric utilities of providing backup service for solar residential heating and hot water (HHW) systems. This method accounts for all investment, fuel, and operating costs required to provide the added electric service for HHW. From the information produced using this method, the impacts of various rate design philosophies and of government tax and regulatory policies on annual homeowner costs, fuel consumption patterns, environmental pollutants, and the net social cost of providing HHW service can be computed. Also, the differences in these parameters among solar, electric, and conventional HHW systems can be compared.In an initial study, it was found that for one Northeastern utility the estimated marginal cost of electricity for backup to solar hot water (HW) systems was less than that for comparable electric HW systems for the period of the mid to late 1990s. Load management (shifting all electricity use to off-peak periods) substantially reduced marginal costs for both electric and solar systems and essentially eliminated any difference between them. In all cases, the marginal cost was lower than the average cost of all electricity generated for market penetration rates that can realistically be expected to be experienced. The impact on total annual costs to homeowners of various electricity rate schemes and the impacts of Federal tax credits and property tax exemptions were computed. Net changes in resource consumption patterns due to the use of solar systems were estimated.     

Economic analysis of small wind-energy conversion systems

The financial costs of obtaining electricity from small wind-energy conversion systems are calculated and compared with the cost of electricity from traditional utility companies. A 3 kW rated wind electric system for residential use is examined. The amount of energy from this system is estimated by using a computer-operated simulation model which incorporates wind speeds, residential electricity demands and parameters from the generator, inverter and storage components. Variations in electricity costs as a function of available wind energy, residential consumption patterns and system components and costs are examined. The cost of electricity from small wind-energy conversion systems has considerable variations under differing assumptions or parameters but may, in some cases, be competitive with utility company costs.     

Reviving manufacturing with a federal cogeneration policy

Improving the energy economics of manufacturing is essential to revitalizing the industrial base of advanced economies. This paper evaluates ex-ante a federal policy option aimed at promoting industrial cogeneration—the production of heat and electricity in a single energy-efficient process. Detailed analysis using the National Energy Modeling System (NEMS) and spreadsheet calculations suggest that industrial cogeneration could meet 18% of U.S. electricity requirements by 2035, compared with its current 8.9% market share. Substituting less efficient utility-scale power plants with cogeneration systems would produce numerous economic and environmental benefits, but would also create an assortment of losers and winners. Multiple perspectives to benefit/cost analysis are therefore valuable. Our results indicate that the federal cogeneration policy would be highly favorable to manufacturers and the public sector, cutting energy bills, generating billions of dollars in electricity sales, making producers more competitive, and reducing pollution. Most traditional utilities, on the other hand, would lose revenues unless their rate recovery procedures are adjusted to prevent the loss of profits due to customer owned generation and the erosion of utility sales. From a public policy perspective, deadweight losses would be introduced by market-distorting federal incentives (ranging annually from $30 to $150 million), but these losses are much smaller than the estimated net social benefits of the federal cogeneration policy.     

State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes

We have developed a state-scale version of the MARKAL energy optimization model, commonly used to model energy policy at the US national scale and internationally. We apply the model to address state-scale impacts of a renewable electricity standard (RES) and a carbon tax in one southeastern state, Georgia. Biomass is the lowest cost option for large-scale renewable generation in Georgia; we find that electricity can be generated from biomass co-firing at existing coal plants for a marginal cost above baseline of 0.2–2.2 cents/kWh and from dedicated biomass facilities for 3.0–5.5 cents/kWh above baseline. We evaluate the cost and amount of renewable electricity that would be produced in-state and the amount of out-of-state renewable electricity credits (RECs) that would be purchased as a function of the REC price. We find that in Georgia, a constant carbon tax to 2030 primarily promotes a shift from coal to natural gas and does not result in substantial renewable electricity generation. We also find that the option to offset a RES with renewable electricity credits would push renewable investment out-of-state. The tradeoff for keeping renewable investment in-state by not offering RECs is an approximately 1% additional increase in the levelized cost of electricity.     

Simulating the spiral of impossibility in the electric utility industry

This article examines the ‘spiral of impossibility’ for different types of investor-owned electric utility companies in the USA. The spiral begins with an increase in electricity price that discourages demand growth. The utility must spread its fixed costs over fewer kilowatt-hours of sales, which, in turn, leads to still higher rates. Computer simulation techniques are used to quantify whether the spiral would pose serious planning problems for utility companies, and the effect of policies that might mitigate the spiral's effects are tested. The conclusion is that the spiral poses substantial planning problems for utility companies building long lead-time power plants, serving customers with high price elasticity of demand and quick response time, but those relying on oil or natural gas are less vulnerable.     

Techno-economic feasibility of fleets of far offshore hydrogen-producing wind energy converters

Innovative solutions need to be developed for harvesting wind energy far offshore. They necessarily involve on-board energy storage because grid-connection would be prohibitively expensive. Hydrogen is one of the most promising solutions. However, it is well-known that it is challenging to store and transport hydrogen which may have a critical impact on the delivered hydrogen cost.In this paper, it is shown that there are vast areas far offshore where wind power is both characterized by high winds and limited seasonal variations. Capturing a fraction of this energy could provide enough energy to cover the forecast global energy demand for 2050. Thus, scenarios are proposed for the exploitation of this resource by fleets of hydrogen-producing wind energy converters sailing autonomously. The scenarios include transportation and distribution of the produced hydrogen.The delivered hydrogen cost is estimated for the various scenarios in the short term and in the longer term. Cost estimates are derived using technical and economic data available in the literature and assumptions for the cost of electricity available on-board the wind energy converters. In the shorter term, delivered cost estimates are in the range 7.1–9.4 €/kg depending on the scenario and the delivery distance. They are based on the assumption of on-board electricity cost at 0.08€/kWh. In the longer term, assuming an on-board electricity cost at 0.04€.kWh, the cost estimates could reduce to 3.5 to 5.7 €/kg which would make the hydrogen competitive on several hydrogen markets without any support mechanism. For the hydrogen to be competitive on all hydrogen markets including the ones with the highest GHG emissions, a carbon tax of approximately 200 €/kg would be required.     

Feed-in tariff structure development for photovoltaic electricity and the associated benefits for the Kingdom of Bahrain

In this study, the feed-in tariff (FIT) scheme was considered to facilitate an effective introduction of renewable energy in the Kingdom of Bahrain. An economic model was developed for the estimation of feasible FIT rates for photovoltaic (PV) electricity on a residential scale. The calculations of FIT rates were based mainly on the local solar radiation, the cost of a grid-connected PV system, the operation and maintenance cost, and the provided financial support. The net present value and internal rate of return methods were selected for model evaluation with the guide of simple payback period to determine the cost of energy and feasible FIT rates under several scenarios involving different capital rebate percentages, loan down payment percentages, and PV system costs. Moreover, to capitalise on the FIT benefits, its impact on the stakeholders beyond the households was investigated in terms of natural gas savings, emissions cutback, job creation, and PV-electricity contribution towards the energy demand growth. The study recommended the introduction of the FIT scheme in the Kingdom of Bahrain due to its considerable benefits through a setup where each household would purchase the PV system through a loan, with the government and the electricity customers sharing the FIT cost.     

Modelling the competitiveness of first generation commercial OTEC power plants

First generation OTEC plants are expected to be used mainly for baseload electricity generation in the United States Gulf Coast region. In this application, OTEC plants would compete directly with nuclear and coal-fired power plants. The prospective competitiveness of OTEC is evaluated by comparing the delivered cost of electricity generated by the three types of plant for a geographical scenario typical of the region. The comparison is carried out using a modified version of the cost of energy model developed by the Jet Propulsion Laboratory and current estimates of future construction, operating and maintenance costs for the three power plant types. Four main independent variables are considered in this study: OTEC plant capital costs, real fuel escalation rates, real cost of capital resources, and OTEC plant operating capacity factors. The first two factors are found to be prime determinants of OTEC competitiveness. The values commonly forecasted suggest that OTEC plants are likely to deliver electricity at roughly the same cost as nuclear and coal-fired power plants by the year 2000. By contrast, variations in the real cost of capital resources and in OTEC plant capacity factors are found to have only a minor impact on the competitiveness of OTEC with conventional modes of electricity generation.     

Hydrogen for heat: Using underground hydrogen storage for seasonal energy shifting in northern climates

To determine if a power-to-gas pilot-scale plant would be possible in Oregon, a feasibility study was conducted that assessed the technical, political, economic, environmental, safety, and policy aspects of a potential project in the region. The results of this study were submitted as part of Oregon State University – Cascades' entry to the Hydrogen Education Foundation's 2018 student design competition. The Pacific Northwest has a need for long term energy storage (seasonal energy shifting) due to seasonally available low-priced, low-carbon electricity. There appears to be the political motivation and the technical feasibility to install a demonstration-scale power-to-gas plant in the region to assess the technical and economic performance of the system when exposed to real-world boundary conditions. However, preliminary economic analyses show the system will be challenged by low capacity factor operation resulting in a levelized cost of hydrogen of $121.81/kg_H2 when only using otherwise curtailed electricity, or $8.84/kg_H2 when running continuously for 6 months per annum. To fund a pilot scale plant a renewable gas development surcharge of $0.18/therm is proposed as a way for willing customers to support the decarbonization mission. There is precedent within the utility for such an incentive, indicating that it would be approved by the utility commission and could be a viable path forward for a pilot-scale plant.     

Peak-load management in steel plants

Mini steel-plants in India, using electric-arc furnaces for steel manufacturing, are highly energy intensive. In the context of increasing electricity prices and the introduction of time varying electricity rates by utilities, mini steel-plants can reschedule their operations to reduce their electricity bills. This paper presents a load model, which incorporates the characteristics of batch-type loads common to any type of process industry. The model is coupled with an optimisation formulation utilising integer programming for minimising the total electricity-cost satisfying production, process flow and storage constraints for different tariff structures. The methodology proposed can be used for determining the optimal response for any industry under time varying tariffs. The case study of a steel plant shows that significant reductions in peak-period demand (about 50%) and electricity cost (about 5.7%) are possible with optimal-load schedules. The utility can also get significant reduction in the peak coincident demand if large industries optimally reschedule their productions in response to time-of-use (TOU) tariff.     

A multiple objective decision making model for energy generation portfolio under fuzzy uncertainty: Case study of large scale investor-owned utilities in Florida

The objective of this paper is to present a methodology to evaluate the viability of developing solar photovoltaic projects for large investor-owned utilities. By taking into account the trade-off between the cost per kWh of electricity generation and total risk for an investor-owned utility, a multi-objective model of the energy generation portfolios is developed. The decision making model can determine the proportion of different energy generation sources in an investor-owned utility portfolio that reduces risk while providing the lowest cost per kWh of electricity generation possible. In order to measure the risk of the investor-owned utility for energy portfolio selection, an investigation of possible dangers and failures of energy generation portfolios is made and 9 main failure modes are identified. The failure mode and effects analysis is employed to calculate the risk priority numbers for each risk. To deal with the uncertainties of the levelized cost of electricity and risk levels of failure modes, the fuzzy method is introduced and an equivalent crisp model is derived which is then solved by employing a multiple objective particle swarm optimization algorithm. The analysis for four large scale investor-owned utilities in Florida is presented to highlight the performance of the developed optimization method.