Price and subsidy under uncertainty: Real-option approach to optimal investment decisions on energy storage with solar PV

2021 ◽  
pp. 0958305X2199229
Author(s):  
Jingyu Qu ◽  
Wooyoung Jeon
Keyword(s):  
Renewable Energy ◽  
Energy Storage ◽  
Real Option ◽  
Financial Burden ◽  
Investment Decisions ◽  
Optimal Investment ◽  
Investment Incentives ◽  
Solar Pv ◽  
Increased Risk ◽  
Trigger Price

Renewable generation sources still have not achieved economic validity in many countries including Korea, and require subsidies to support the transition to a low-carbon economy. An initial Feed-In Tariff (FIT) was adopted to support the deployment of renewable energy in Korea until 2011 and then was switched to the Renewable Portfolio Standard (RPS) to implement more market-oriented mechanisms. However, high volatilities in electricity prices and subsidies under the RPS scheme have weakened investment incentives. In this study we estimate how the multiple price volatilities under the RPS scheme affect the optimal investment decisions of energy storage projects, whose importance is increasing rapidly because they can mitigate the variability and uncertainty of solar and wind generation in the power system. We applied mathematical analysis based on real-option methods to estimate the optimal trigger price for investment in energy-storage projects with and without multiple price volatilities. We found that the optimal trigger price of subsidy called the Renewable Energy Certificate (REC) under multiple price volatilities is 10.5% higher than that under no price volatilities. If the volatility of the REC price gets doubled, the project requires a 26.6% higher optimal investment price to justify the investment against the increased risk. In the end, we propose an auction scheme that has the advantage of both RPS and FIT in order to minimize the financial burden of the subsidy program by eliminating subsidy volatility and find the minimum willingness-to-accept price for investors.

scholarly journals Optimal Energy Management of Railroad Electrical Systems with Renewable Energy and Energy Storage Systems

2019 ◽  
Vol 11 (22) ◽  
pp. 6293 ◽  
Author(s):  
Seunghyun Park ◽  
Surender Reddy Salkuti
Keyword(s):  
Renewable Energy ◽  
Energy Storage ◽  
Energy Management ◽  
Storage Systems ◽  
Solar Pv ◽  
Energy Storage Systems ◽  
Hybrid Energy ◽  
Hybrid Energy Storage ◽  
Optimal Energy ◽  
Optimal Energy Management

The proposed optimal energy management system balances the energy flows among the energy consumption by accelerating trains, energy production from decelerating trains, energy from wind and solar photovoltaic (PV) energy systems, energy storage systems, and the energy exchange with a traditional electrical grid. In this paper, an AC optimal power flow (AC-OPF) problem is formulated by optimizing the total cost of operation of a railroad electrical system. The railroad system considered in this paper is composed of renewable energy resources such as wind and solar PV systems, regenerative braking capabilities, and hybrid energy storage systems. The hybrid energy storage systems include storage batteries and supercapacitors. The uncertainties associated with wind and solar PV powers are handled using probability distribution functions. The proposed optimization problem is solved using the differential evolution algorithm (DEA). The simulation results show the suitability and effectiveness of proposed approach.

scholarly journals Maximizing Solar PV Dissemination under Differential Subsidy Policy across Regions

Energies ◽  
2020 ◽  
Vol 13 (11) ◽  
pp. 2763 ◽  
Author(s):  
Jeongmeen Suh ◽  
Sung-Guk Yoon
Keyword(s):  
Renewable Energy ◽  
Theoretical Model ◽  
Simulation Analysis ◽  
Investment Decisions ◽  
Solar Photovoltaic ◽  
Solar Pv ◽  
Subsidy Policy ◽  
Total Capacity ◽  
Solar Resource

This study investigates the effect of a renewable energy dissemination policy on investment decisions regarding solar photovoltaic (PV) installation. We present a theoretical model and conduct a simulation analysis to estimate the total capacity of solar PV generators according to a given subsidy policy. We show how the capacity maximizing subsidy policy depends on the total amount of subsidy budget, interest rate, the expected amount of solar resource and land price in each region. We particularly focus on the improvements of solar PV capacities under the same subsidy budget when the subsidy policy is changed from uniform (equal for all regions) to differential (varying over regional characteristics). This improvement is shown through a case study using Korean data.

Lost Hills Solar Project: Powering an Oil and Gas Field with California Sunshine

2021 ◽  
pp. 1-9
Author(s):  
T. N. Demayo ◽  
N. K. Herbert ◽  
D. M. Hernandez ◽  
J. J. Hendricks ◽  
B. Velasquez ◽  
...  
Keyword(s):  
Renewable Energy ◽  
Energy Storage ◽  
Oil And Gas ◽  
Oil Field ◽  
Carbon Intensity ◽  
Solar Pv ◽  
Gas Field ◽  
Solar Plant ◽  
Oil And Gas Field ◽  
Solar Electricity

Summary This paper outlines one of the first efforts by a major oil and gas company to build a net-exporting, behind-the-meter solar photovoltaic (PV) plant to lower the operating costs and carbon intensity of a large, mature oil and gas field. The 29 MWAC (35 MWDC) Lost Hills solar plant in Lost Hills, California, USA, commissioned in April 2020, covers approximately 220 acres on land adjacent to the oil field and is designed to provide more than 1.4 TWh of solar energy over 20 years to the field’s oil and gas production and processing facilities. The upgrades to the electrical infrastructure in the field also include new technology to reduce the risk of sulfur hexafluoride emissions, another potent greenhouse gas (GHG). Before the solar project, the Lost Hills field was importing all its electricity from the grid. With the introduction of the Innovative Crude Program as part of California’s Low Carbon Fuel Standard (LCFS) and revisions to the California Public Utilities Commission Net Energy Metering program, Lost Hills was presented with a unique opportunity to reduce its imported electricity expenses and reduce its carbon intensity, while also generating LCFS credits. The solar plant was designed to power the field during the day and export excess power to the grid to help offset nighttime electricity purchases. It operates under a power purchase agreement (PPA) with the solar PV provider and, initially, will meet approximately 80% of the oil field’s energy needs. Future plans include incorporating 20 MWh of lithium-ion batteries, direct current (DC)–coupled with the solar inverters. This energy storage system will increase the amount of solar electricity fed directly into the field and reduce costs by controlling when the site uses stored solar electricity rather than electricity from the grid. The battery system will also increase the number of LCFS credits by 15% over credits generated by solar alone. Together, solar power and energy storage provide a robust renewable energy solution. This project will generate multiple cobenefits for the Lost Hills oil field by lowering the cost of power, reducing GHG emissions, generating state LCFS credits and federal Renewable Energy Certificates, and demonstrating a commitment to energy transition by investing in renewable technology. Conceivably, the Lost Hills solar project can be a model for similar future projects in other oil fields, not only in California, but across the globe.

scholarly journals An Analysis of an Advanced Compressed Air Energy System (CAES) Using Turbomachinery for Energy Storage and Recovery and for Continuous On-Site Power Augmentation as an Air Brayton Cycle

2020 ◽  
Vol 22 (2) ◽  
pp. 479-494
Author(s):  
David Japikse ◽  
Francis A. Di Bella
Keyword(s):  
Power Generation ◽  
Renewable Energy ◽  
Energy Storage ◽  
Waste Heat ◽  
High Energy ◽  
High Energy Density ◽  
Prime Mover ◽  
Solar Pv ◽  
Battery Storage ◽  
Continuous Power

AbstractA thermodynamic analysis of an advanced CAES for Distributed Power Generation (DPG) is presented that utilizes turbomachinery for energy recovery, but also gives continuous power generation to augment on-site power. The advanced CAES uses renewable energy such as wind power and solar PV in the power range of 1500 to 2500 kW plus recuperation of waste heat from the existing on-site prime mover to improve the utility of the energy storage system. The proposed system also utilizes battery storage to maintain high energy density storage, preferably without the need for costly electrical rectifying and inversion systems to improve the stabilization of power generation. This proposed system may be thought of as a “cross-over” system that combines CAES technology with electric battery storage technology, particularly if the stored electric power is used directly as D.C. power at an industrial facility. The direct use of stored energy from a battery as heat input to the proposed “cross-over” system also may be considered in some limited applications. The ideal application of the proposed system is for isolated DPG systems perhaps in remote sites utilizing “power islands” of renewable energy augmented with on-site fossil fuel prime mover, power generation systems. The proposed “cross-over” system enables higher reliability, faster response to transient power loads, and the efficient use of renewable energy, as well as heat recovery from conventional prime mover systems that are on site.

Lost Hills Solar Project: Powering an Oil and Gas Field with California Sunshine

2021 ◽  
Author(s):  
Trevor N. Demayo ◽  
Nevil K. Herbert ◽  
Dulce M. Hernandez ◽  
Jana J. Hendricks ◽  
Beberly Velasquez ◽  
...  
Keyword(s):  
Renewable Energy ◽  
Energy Storage ◽  
Oil And Gas ◽  
Oil Field ◽  
Carbon Intensity ◽  
Solar Pv ◽  
Gas Field ◽  
Solar Plant ◽  
Oil And Gas Field ◽  
Solar Electricity

Abstract This paper outlines one of the first efforts by a major oil and gas company to build a net exporting, behind the meter solar photovoltaic (PV) plant to lower the operating costs and carbon intensity of a large, mature oil and gas field in Lost Hills, California. The 29 MWAC (35 MWDC) Lost Hills solar plant, commissioned in April 2020, covers approximately 220 acres on land adjacent to the oil field and is designed to provide more than 1.4 billion kilowatt hours of solar energy over 20 years to the field's oil and gas field production and processing facilities. The upgrades to the electrical infrastructure in the field also include new technology to reduce the risk of sulfur hexafluoride (SF6) emissions, another potent greenhouse gas (GHG). Prior to solar, the Lost Hills field was importing all its electricity from the grid. With the introduction of the Innovative Crude Program as part of California's Low Carbon Fuel Standard (LCFS) and the revisions to the California Public Utilities Commission Net Energy Metering program, Lost Hills was presented with a unique opportunity to reduce its imported electricity expenses, reduce its carbon intensity, while also generating LCFS credits. The plant was designed to power the field during the day and export excess power to the grid to help offset night-time electricity purchases. The solar plant operates under a Power Purchase Agreement (PPA) with the solar PV provider and, initially, will meet approximately 80% of the oil field's energy needs. Future plans include the incorporation of lithium ion batteries, DC-coupled with the solar inverters, and with a total capacity of 20 MWh. This energy storage system will increase the amount of solar electricity fed directly into the field and reduce costs by controlling when the site uses stored solar electricity rather than electricity from the grid. The battery system will also increase the number of LCFS credits by 15% over credits generated by solar alone. Together, solar power plus energy storage provides a robust renewable energy solution. This project will generate multiple co-benefits for the Lost Hills oil field by lowering the cost of power, reducing GHG emissions, generating state LCFS credits and federal Renewable Energy Certificates, and demonstrating a commitment to energy transition by investing in renewable technology. Hopefully, Lost Hills solar can be a model for similar future projects in other oil fields, not only in California, but across the globe.

scholarly journals The Implications of Policy Uncertainty on Solar Photovoltaic Investment

Energies ◽  
2020 ◽  
Vol 13 (23) ◽  
pp. 6233
Author(s):  
Martina Assereto ◽  
Julie Byrne
Keyword(s):  
Renewable Energy ◽  
Electricity Market ◽  
Investment Decisions ◽  
Electricity Price ◽  
Policy Uncertainty ◽  
Solar Photovoltaic ◽  
Price Uncertainty ◽  
Solar Pv ◽  
Energy Investment ◽  
Renewable Energy Investment

Policy and electricity price uncertainty provide disincentives to investors considering renewable energy investments. While electricity price uncertainty impacts on investment decisions relating to any energy investment, whether renewable or non-renewable, policy uncertainty will affect renewable energy investment decisions to a far greater extent. In this study, we consider the two main sources of uncertainty a solar Photovoltaic (PV) project is exposed to: electricity price uncertainty and policy uncertainty. We focus our analysis on utility-scale solar photovoltaics in the Pennsylvania, Jersey, Maryland Power Pool (PJM) electricity market and the New Jersey Solar Renewable Energy Credit (SREC) market. Using Solar Renewable Energy Credits as a proxy for policy, we find that there is considerable volatility in both electricity prices and policy. In a sample covering eleven years, we implement univariate Generalized Autoregressive Conditional Heteroskedastic (GARCH) and combinations of GARCH models with different weighting schemes and find that combination models provide superior forecasts. In renewable energy markets, policy supports have a significant impact on an investment’s profitability. The implication for policymakers is clear: to foster investment in solar PV, policy stability is critical.

scholarly journals Capacity Expansion Pathways for a Wind and Solar Based Power Supply and the Impact of Advanced Technology—A Case Study for Germany

Energies ◽  
2019 ◽  
Vol 12 (2) ◽  
pp. 324 ◽  
Author(s):  
Philip Tafarte ◽  
Marcus Eichhorn ◽  
Daniela Thrän
Keyword(s):  
Renewable Energy ◽  
Energy Storage ◽  
Power Supply ◽  
Electric Energy ◽  
Capacity Expansion ◽  
Advanced Technology ◽  
Series Data ◽  
Solar Pv ◽  
Electric Energy Storage

Wind and solar PV have become the lowest-cost renewable alternatives and are expected to dominate the power supply matrix in many countries worldwide. However, wind and solar are inherently variable renewable energy sources (vRES) and their characteristics pose new challenges for power systems and for the transition to a renewable energy-based power supply. Using new options for the integration of high shares of vRES is therefore crucial. In order to assess these options, we model the expansion pathways of wind power and solar photovoltaics (solar PV) capacities and their impact on the renewable share in a case study for Germany. Therefore, a numerical optimization approach is applied on temporally resolved generation and consumption time series data to identify the most efficient and fastest capacity expansion pathways. In addition to conventional layouts of wind and solar PV, our model includes advanced, system-friendly technology layouts in combination with electric energy storage from existing pumped hydro storage as promising integration options. The results provide policy makers with useful insights for technology-specific capacity expansion as we identified potentials to reduce costs and infrastructural requirements in the form of power grids and electric energy storage, and to accelerate the transition to a fully renewable power sector.

scholarly journals An Economic Examination of Solar Energy with Storage based Supply Options: Solar PV-Battery and CSP with Thermal-Storage

2019 ◽  
Vol 8 (6S3) ◽  
pp. 740-748
Keyword(s):  
Power Generation ◽  
Renewable Energy ◽  
Energy Storage ◽  
Solar Energy ◽  
Thermal Energy ◽  
Power Supply ◽  
Solar Power ◽  
Renewable Energy Sources ◽  
Solar Pv ◽  
Levelized Cost Of Electricity

Renewable energy is being promoted amidst rising environmental concerns associated with fossil-fuel usage for power generation. The stock of such fuels is also limited and is fast depleting. Renewable energy sources such as solar photovoltaic (PV) systems present a clean alternative that has become cost-competitive with conventional thermal power generation systems. However, to counter the intermittent nature of solar power and ensure firm power supply, energy storage is essential. This paper presents a comparative analysis of power supply options based on two solar energy technologies - PV and concentrated solar power (CSP). Energy storage in the form of battery and thermal energy respectively has been included and different combinations of supply options, along with utility grid, have been analyzed in terms of the levelized cost of electricity (LCOE). The LCOE values for supplying a particular substation load in India have been compared and it was found that CSP with thermal energy storage emerged to be the economically viable option for supplying the load.

Development of the Renewable Energy Deployment and Display (REDD) Facility at the Desert Research Institute

2014 ◽  
Author(s):  
Christopher Damm ◽  
Elise Strobach ◽  
Curtis Robbins ◽  
Amber Broch ◽  
Robert Turner ◽  
...  
Keyword(s):  
Renewable Energy ◽  
Energy Storage ◽  
New Technologies ◽  
Combustion Engine ◽  
Hot Water ◽  
Future Research ◽  
Solar Pv ◽  
Grid Operation ◽  
Desert Research ◽  
Research Institute

The Desert Research Institute (DRI) has developed a Renewable Energy Deployment and Display (REDD) Facility as an off-grid capable facility for exploration of integration, control, and optimization of distributed energy resources (DER) with an emphasis on solar and wind energy. The primary goal of the facility is to help grow DRI’s capabilities and expertise in areas of renewable energy research, development, demonstration, and deployment. The facility is powered by four solar PV arrays (6 kW total) and two wind turbines (3 kW total) during off-grid operation. Energy storage is achieved via two 2.5 m3 hydrogen storage tanks and a 9 kWh battery bank. The hydrogen is produced via a 5 kW electrolyzer and is used to fuel an internal combustion engine (ICE) with an alternator when needed. The REDD Facility consists of a 111.5 m2 residence and a 56 m2 workshop. The REDD House features over 37 m2 of solar thermal collectors used to provide hot water to either a 15.9 kW heat exchanger or a 17.6 kW absorption chiller. The REDD Workshop features a 54 m2 solar collector air heater and thermal storage via water and air in the floor. Also housed in the REDD Workshop is a modified 3-cylinder 950cc naturally aspirated renewable gas engine connected to a 5 kW generator to be used for future biomass-related research. Future research at the REDD Facility will include continued investigation into the use and regulation of site-built solar air collectors, solar cooling technologies, and the advancement of hydrogen as energy storage for residential applications. The facility is also continually used for education and outreach purposes. Lastly, DRI encourages the use of the REDD Facility as a test bench for new technologies; whether for proof of concept or demonstration.

scholarly journals Stand-Alone Microgrid with 100% Renewable Energy: A Case Study with Hybrid Solar PV-Battery-Hydrogen

2020 ◽  
Vol 12 (5) ◽  
pp. 2047 ◽  
Author(s):  
Furat Dawood ◽  
GM Shafiullah ◽  
Martin Anda
Keyword(s):  
Renewable Energy ◽  
Energy Storage ◽  
Energy Balance ◽  
Rural Communities ◽  
Storage System ◽  
Economic Feasibility ◽  
Solar Pv ◽  
Economic Optimization ◽  
Renewable Energy Resources ◽  
Hybrid Energy

A 100% renewable energy-based stand-alone microgrid system can be developed by robust energy storage systems to stabilize the variable and intermittent renewable energy resources. Hydrogen as an energy carrier and energy storage medium has gained enormous interest globally in recent years. Its use in stand-alone or off-grid microgrids for both the urban and rural communities has commenced recently in some locations. Therefore, this research evaluates the techno-economic feasibility of renewable energy-based systems using hydrogen as energy storage for a stand-alone/off-grid microgrid. Three case scenarios in a microgrid environment were identified and investigated in order to select an optimum solution for a remote community by considering the energy balance and techno-economic optimization. The “HOMER Pro” energy modelling and simulating software was used to compare the energy balance, economics and environmental impact amongst the proposed scenarios. The simulation results showed that the hydrogen-battery hybrid energy storage system is the most cost-effective scenario, though all developed scenarios are technically possible and economically comparable in the long run, while each has different merits and challenges. It has been shown that the proposed hybrid energy systems have significant potentialities in electrifying remote communities with low energy generation costs, as well as a contribution to the reduction of their carbon footprint and to ameliorating the energy crisis to achieve a sustainable future.

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