Evaluation criteria of independent hybrid

energy systems
..............................................................................................................................................................

Tae Yong Jung, Donghun Kim*, SeoKyung Lim and Jongwoo Moon†
Graduate School of International Studies, Yonsei University, South Korea
............................................................................................................................................
Abstract

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Based on actual measurement data from a resort in the Maldives, this paper explores the criteria for the
optimal off-grid renewable energy systems that contribute to greenhouse gas mitigation and climate adapta-
tion efforts from three perspectives: technical, economic and environmental. Using Hybrid Optimization
of Multiple Electric Renewables software, the optimal technical combination of hybrid energy system is
determined. Moreover, indicators such as levelized cost of energy and net present cost are considered as
economic criteria to determine the financial feasibility of the off-grid renewable energy systems. Finally,
CO2 emission level and renewable shares are reviewed from environmental perspective.

Keywords: hybrid energy system; energy storage system; off-grid system; LCOE; HOMER
∗ Corresponding author:
[email protected] Received 20 November 2018; revised 8 May 2019; editorial decision 8 May 2019; accepted 26 May 2019
................................................................................................................................................................................

1 INTRODUCTION Fiji. According to an economic analysis based on HOMER

software, the hybrid solar PV-diesel-ESS energy system claimed
Record-breaking heat waves, wildfires and floods that hit all parts to be economical for the Maldives government as well as
of the world in 2018 have been pointed out as the consequence for its users. In addition, Vendoti et al. [5] found that the
of the global warming, climate change caused by humans. The hybrid renewable energy systems are sustainable and found
impact of global warming on climate change is occurring in real economical power supply in southern India (Chittoor) through
time and is no longer ambiguous. The International Renewable an optimization analysis using HOMER simulation. Based on
Energy Agency (IRENA) argued that two-thirds of global green- simulation results as well as the cost optimization process, the
house gas (GHG) emissions come from the production and use paper concluded that the installation of wind solar hybrid system
of energy from fossil fuels [1]. Although electricity has been configuration is most suitable for stand-alone loads around
generated mainly by fossil fuels over many decades, new power- Chittoor. Moreover, Phurailatpam et al. [6] investigated the
generating technologies are being developed, which are more flex- planning and optimization of DC microgrids for India context.
ible and allow for the integration of a variety of renewable sources, The paper considered different scenarios of rural and urban
such as solar and wind energy. According to IRENA’s global microgirds to derive optimized and reasonable cost of electricity
energy roadmap, the share of wind and solar power is expected for reliable supply of power. Also, Chouaib et al. investigated
to increase from 25% to 85% by 2050 worldwide, assuming that the optimal sizing of renewable resources available in south-
a variety of flexible options will be developed to ensure grid western Algeria and concluded that the usage of 2500 kW solar
stability, including time-of-use electricity pricing, adaptation of photovoltaic (PV) energy, two wind turbines, 1400 kW diesel
market designs and new business models [2]. Indeed, the renew- generator and 2400 kW storage system (battery) could be the best
able energy market has made remarkable progress, achieving a configuration that is both ecological and economical based on
worldwide investment of $200 billion in 2017 [3]. In particular, the HOMER PRO simulations. Furthermore, Mei et al. [7] assessed
world installed more new solar power projects than the combined the economic viability of a hybrid PV/wind turbine/diesel system
net additions of coal, gas and nuclear plants in 2017. in the southern city of Malaysia, Johor Bahru. Using HOMER
Reflecting the growing importance of renewable energy, simulation, the technical feasibility of the system was evaluated
various researches on the application of independent renewable and the economic analysis of the system was performed. The
energy systems in remote areas have been conducted. For paper concluded that the configuration of 80 kW PV, 8 units of
instance, Jung et al. [4] conducted an economic analysis on the wind turbines and 50 units batteries has the greatest potential to
feasibility of a hybrid PV-diesel-ESS system on Mavuva Island, replace the stand-alone diesel system in Johor Bahru, Malaysia.
† Jongwoo Moon, http://orcid.org/0000-0003-3147-3102
International Journal of Low-Carbon Technologies 2019, 14, 493–499
© The Author(s) 2019. Published by Oxford University Press.
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doi:10.1093/ijlct/ctz036 Advance Access publication 1 August 2019 493
T. Y. Jung et al.

With reasonable cost of energy and system installation, such Table 1. Input assumptions
system configuration was also proved to reduce the emission of
Parameters Value
CO2 gases the most [8].
In this paper we aim to investigate the evaluation criteria of Diesel price $1.06/L
renewable energy system using solar PV in particular, which is PV/ESS/diesel O&M 2% of system cost
Inflation rate 2.2%
considered as a suitable solution for electrification in remote areas Discount rate (weighted average cost of capital) 8%
where the grid extension is difficult and uneconomical. With Rate of return (debt) 6%
declining costs and increasing performance of solar PV as well Rate of return (equity) 12.67%
as declining costs and technological improvements in electricity
storage and control systems, adopting hybrid renewable energy

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systems could serve as an optimum option to diversify the source
of energy supply. Based on data from one of the resorts located
in the Maldives, the criteria for the optimal off-grid renewable
energy systems will be examined from three perspectives: tech-
nical, economic and environmental. Using HOMER, technical
criteria will be investigated to determine which combination of
renewable energy systems could result in the most optimal sys-
tem configuration among all possible combinations of renewable
energy systems. Moreover, based on HOMER results, indicators
such as investment cost, operation and maintenance cost, lev-
elized cost of energy (LCOE) and net present cost (NPC) will be
considered as economic criteria to determine the financial fea-
sibility of deploying the independent renewable energy systems.
Finally, environmental criteria such as CO2 emission level and
renewable shares will be reviewed to determine that adopting Figure 1. HOMER system configuration.
independent hybrid energy systems could contribute to GHG
mitigation and climate adaptation efforts. petroleum, gas or coal resources, and hydropower is not feasible
due to the inappropriate topography [11]. As a result, Small Island
Developing States (SIDS), including the Maldives, depend highly
2 OPTIMIZATION METHODS AND on petroleum imports for their power generation. As such, the
Maldives is extremely vulnerable to oil price changes and is subject
SIMULATIONS to fluctuating international oil prices. Thus, solar PV can be an
attractive option for the Maldives with its strong solar resource.
2.1. System simulations Meanwhile, due to the dispersed habitation in the Maldives,
HOMER, the energy modeling software, is used in this paper to
the conventional, large-scale, fossil fuel-based grid system is no
determine criteria from technical, economic and environmental
longer a sustainable option. In this regard, this paper examines the
perspectives to replace diesel generators in the Maldives with solar
independent hybrid system incorporating the use of PV, energy
PV hybrid systems. Based on the input parameters such as hourly
storage system (ESS) and existing diesel generators to assess the
and monthly load variations as well as system costs, HOMER
feasibility of an independent hybrid renewable energy system in
performed an hourly simulation of all possible combination of
the Holiday Inn Resort located on Kandooma Island, the Mal-
components entered and ranked the system configurations that
dives. The load pattern and system costs are based on the data
satisfy the technical constraints at the lowest life-cycle cost [9].
collected from the Holiday Inn Resort and the corresponding data
Hence, multiple optimizations under a range of input assumptions
will be investigated using HOMER software.
to measure the effects or changes in the model inputs could be
examined.[10].
2.3. Input assumptions
The project in the Maldives is designed to replace the existing
2.2. Independent solar PV + ESS project in the diesel generators with solar PV and ESS. It is assumed that there is
Maldives no limit for the size of solar PV to be installed and HOMER opti-
The Maldives, a small island developing country in the Indian mizer decides the optimal size of solar PV panels. ESS installed
Ocean, is selected for our research purpose to assess the technical, in this project is a vanadium redox flow battery (VRFB) type and
economic and environmental viability of independent hybrid its standard size is 250 kWh. Likewise, a HOMER simulation of
renewable energy systems. The Maldives is one of the most all possible combination of system configurations is performed to
vulnerable countries to climate change impacts such as rising present the optimal number of ESS to be deployed that satisfies
sea levels and extreme weather conditions. It has no indigenous the technical constraints at the lowest cost of electricity.

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 Evaluation criteria of independent hybrid energy systems

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Figure 2. Load profile. (a) Daily load; (b) monthly load. Source: Jung and Kim [15]

Table 2. HOMER result of system configurations a

ST 2 System Architecture Cost
configuration
PV (kW) DIESEL ESS CONVERTER COE ($/kWh) NPC ($) Renewable
GENSET (kW) (kW) fraction (%)

ST1 DIESEL-PV-ESS 462 500 1 1184 0.311 4.55 M 44.0

ST2 DIESEL-PV 546 500 - 786 0.332 4.86 M 36.1
ST3 DIESEL only - 500 - - 0.367 5.37 M 0
a Source: HOMER optimization 2 system type.

The electric load pattern is based on the data provided by 3 RESULTS AND DISCUSSION
the Holiday Inn Resort. Since Kandooma Island is located in a
tropical region where the building’s cooling system is essential, the 3.1. Technical criteria
electric load shows a relatively stable pattern with daytime peaks. In terms of technical criteria, the most optimal system configu-
It also shows relatively stable daily and monthly loads, as shown ration at the Holiday Inn Resort is evaluated using HOMER soft-
in Figure 2, as tourists visit the island all year round. ware. It was found that the system configuration combining ESS-
The cost of solar panels and ESS are based on the prices pro- PV-diesel (System Type 1) generates electricity at the lowest cost
vided by WonGwang Electric Power Corporation and H2 Inc., as shown in Table 2. The optimal size of PV to support the existing
respectively. The operation and management (O&M) costs of each 500 kW diesel generator is 462 kW and one ESS (250 kW) will
system are estimated to be 2% of the system costs. The project be needed to back up electricity production by PV. Meanwhile,
lifetimes as well as the system lifetimes of solar PV and VRFB are the system configuration deploying PV-diesel (System Type 2) is
assumed to be 20 years. The inverter will be replaced every 7 years found to be a less efficient system setting because its COE is higher
and the diesel generator is assumed to be replaced after operating than ST1 (System Type 1), which is 0.332$/kWh. ST2 will use a
60 000 h. In order to calculate LCOE, this paper assumes that larger PV size (546 kW) than ST1 to meet the electricity needs,
the inflation rate is expected to be 2.2% on average, the average because it does not have a storage system to store electricity at
inflation rate of the Maldives between 2013 and 2017. Also, the night.
average diesel price is assumed to follow the world average, which As shown in Figure 3 below, when PV panels and diesel gen-
is $1.06/L [12]. Also, this paper assumes that 70% of the capital erators are used together, the amount of electricity produced by
costs are financed by debt and the rest of them are raised using PV accounts for almost half of the total electricity production.
equity as other typical renewable energy projects assume [13]. When installing a hybrid system, the total amount of electricity
Moreover, this paper assumes the discount rate to be 8%, which production becomes greater than when using a diesel generator
is considered to be a conservative rate to be used for renewable alone as shown below. In the case of ST1, the renewable fraction
energy projects [14]. Given the ratio of debt and equity as well as turns out to be as high as 44%, the largest percentage among
the discount rate, the rates of return for debt and equity are 6% the three options. Meanwhile, the renewable fraction of ST2 is
and 12.67%, respectively. The debt is assumed to be amortized in 36.1%, slightly lower than that of ST1. This means that without
8 years. ESS, the hybrid system cannot save PV-generated electricity at

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Figure 3. Monthly average electric production by system configurations.

Table 3. Cost comparisons from HOMER a

ST System Cost IRR (%) Simple Discounted
configuration payback (yr) payback (yr)
COE ($/kWh) NPC ($) Initial capital ($) Operating cost ($)

ST1 DIESEL-PV-ESS 0.311 4.55 M 1.14 M 558 341 13.5 6.49 7.83
ST2 DIESEL-PV 0.332 4.86 M 1.02 M 565 604 11.3 6.74 11.23
ST3 DIESEL only 0.467 5.37 M - 515 904 0 N/A N/A
a Source: HOMER optimization.

night and electricity loss is inevitable. Therefore, per the graphs of all cash flows in the project zero, is found to be the highest of
shown below, when ST1 and ST2 are compared, diesel generators the three options. However, both simple and discounted payback
generate slightly more electricity when there is no ESS to store periods of ST1 calculated were the shortest of the three system
the electricity produced during the daytime. Diesel-only case is settings. These results are aligned with the findings in the previous
used as a base case to compare how different it would be when section evaluating technical criteria, suggesting that ST1 is the
renewables are installed in the resort. most optimal option in terms of economic criteria as well.
A direct comparison between ST1 and ST3 (base case) tells us
that in 6.5 years the cumulative cash flow of ST1 starts to fall below
3.2. Economic criteria that of ST3, implying that after 6.5 years, installing PV-ESS-diesel
The sensitivity analysis showed that among the three system type hybrid systems (ST1) becomes practically a cost-effective option.
options, the PV-diesel-ESS hybrid system (ST1) is found to be the From the seventh year after the project initiation, the accumulated
most economical option. As shown in Table 3 below, ST1 showed cash flow of ST1 becomes constantly greater than that of ST3 as
the lowest COE, NPC and operating cost among three system displayed in Figure 4.
configurations. Although installing PV and ESS requires an initial Moreover, ST1 shows a larger annual nominal cash flow than
capital cost of ∼$1.14 M, which is greater than that of ST2, this ST3 throughout the whole project years as shown in Figure 5
is due to high ESS unit cost and installation cost of ESS at the below, indicating that ST3 is more economical option than ST3.
beginning of the project. Meanwhile, the Internal Rate of Return Due to the replacement cost, ST3 shows increased cash flows
(IRR) of ST1, the discount rate that makes the net present value in the 10th and 19th year. On the other hand, ST1, which is

496 International Journal of Low-Carbon Technologies 2019, 14, 493–499

 Evaluation criteria of independent hybrid energy systems

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Figure 4. Cumulative cash flow of ST1: diesel-PV-ESS vs. ST3: diesel only.
Figure 7. Cost summary of ST2.

Figure 5. Annual nominal cash flows ST1: diesel-PV-ESS vs. ST3: diesel only. Figure 8. Cost summary of ST3.

items and the operating cost of PV is far smaller than that of the
diesel generator.
The existing diesel generator requires operating, replacement
and fuel costs. Compared with the previous two system types, ST3
has the largest fuel costs among the three options.
In the Maldives, a state-owned company named STELCO cur-
rently produces electricity at a price of $0.5/kWh for the res-
idents. Under the electricity policy of the Maldivian govern-
ment, producing electricity using renewable energy allows the
stakeholders to receive a feed-in tariff of $0.25/kWh. According
to the HOMER simulation, ST1 could produce 751 750 kWh
of electricity per year using PV. This allows the resort to earn
Figure 6. Cost summary of ST1. 751 750 kWh × 0.25$/kWh = $187 938 per year. The present value
of the entire project revenue for 20 years is $1 845 207 (discount
rate of 8%). The fuel cost from ST1’s diesel generator ($228 332)
composed of only a diesel generator, shows drastic increases in is much less than ST3 ($388 276) as shown in Table 4. Therefore,
the 7th and 14th year due to the replacement cost of the inverter. it is possible to conclude that deploying ST1 is the best choice for
ST3’s large cash flow in the first year is owing to the initial capital the project developer from an economic point of view.
cost of installing PV and ESS in the Maldives.
The cost summary of ST1 shows that resource cost, which refers
to the fuel cost, accounts for the largest portion of all cost items. 3.3. Environmental criteria
Regarding capital and operating cost, PV and ESS require quite In terms of environmental criteria, ST1 is found to consume the
a large investment at the beginning, but the operating cost of the smallest amount of fuel while at the same time showing the highest
two is much smaller than that of the diesel generator as shown in percentage of renewable fraction, which is 44%. ST2, which does
the second bar graph below. not have ESS to minimize the loss of electricity, shows slightly
The cost summary of ST2 also shows a similar pattern to that of less percentage of renewable fraction 36.1% and consuming more
ST1. The resource cost accounts for the largest portion of all cost fuels than ST1. ST3, which uses diesel generator alone, turned

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T. Y. Jung et al.

Table 4. Monetary benefits from RE system

ST System Generator [STELCO] PV [Project developer]
configuration
Hours Production (kWh) Fuel (L) O&M cost Fuel cost ($) Capital cost ($) Production Revenue ($/yr)
($/yr) (kWh/yr)

ST1 DIESEL-PV-ESS 6496 696 458 215 408 47 403 228 332 96 585 751 750 187 938
ST3 DIESEL only 8760 1 249 910 366 298 43 800 388 276 0

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Figure 9. Environmental benefits from RE system.

Table 5. Emission comparisons a

Pollutants (kg/yr) ST1 ST2 ST3

Carbon dioxide 564 848 642 874 960 516

Carbon monoxide 2922 3326 4969
Unburned hydrocarbons 155 177 264
Particulate matter 25.0 28.4 42.5
Sulfur dioxide 1139 1296 1937
Nitrogen oxides 560 637 952
a Source: HOMER optimization.

out to be the most inefficient system type, consuming the largest

amount of fuel.
Furthermore, when comparing the emission levels of the three
system configurations, ST1 is found to be the most environment- Figure 10. CO2 emissions.
friendly option of the three system types. For instance, ST1 emits
564 848 kg of carbon dioxide per year, while ST2 emits 642 874 kg
and ST3 emits 960 516 kg of carbon dioxide per year. As shown to be the optimal technical option considering COE, NPC and
in the Table 5 below, the emission amount of other types of monthly average electricity production. Moreover, we provided
pollutants from ST1 is found to be the smallest among the three annual nominal cash flows, cumulative cash flows, IRRs, payback
system configurations. This also supports claim that ST1 is the periods and NPCs to assess the most cost-effective system types
most environmentally optimal system type to be installed. of the three options on an economic basis. Despite significant
investment in the first year of the project, it has been found
economically most beneficial to deploy renewable energy systems
4 CONCLUSION than to maintain current diesel-only system. Considering the
IRR, payback period and NPC, installing ST1 rather than ST2
In terms of technical criteria, as the HOMER simulation has sug- would be the best option for the project developer to adopt in the
gested, ST1 that combines PV, diesel generator and ESS was found Maldives. Finally, from the environmental point of view, choosing

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 Evaluation criteria of independent hybrid energy systems

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