Hybrid wind-diesel power plant valuation and optimization using real option theory and dynamic programming

El sistema de energía eólica-diesel híbrido tiene un gran potencial en la prestación de suministro de energía a comunidades remotas. En comparación con los sistemas tradicionales de diesel, las plantas de energía híbridas ofrecen grandes ventajas tales como el suministro de capacidad de energía extra para "microgrids", reducción de los contaminantes y emisiones de gases de efecto invernadero, y la cobertura del riesgo de aumento inesperado del precio del combustible. El principal objetivo de la presente tesis es proporcionar nuevos conocimientos para la evaluación y optimización de los sistemas de energía híbrido eólico-diesel considerando las incertidumbres. Dado que la energía eólica es una variable estocástica, ésta no puede ser controlada ni predecirse con exactitud. La naturaleza incierta del viento como fuente de energía produce serios problemas tanto para la operación como para la evaluación del valor del sistema de energía eólica-diesel híbrido. Por un lado, la regulación de la potencia inyectada desde las turbinas de viento es una difícil tarea cuando opera el sistema híbrido. Por otro lado, el bene.cio económico de un sistema eólico-diesel híbrido se logra directamente a través de la energía entregada a la red de alimentación de la energía eólica. Consecuentemente, la incertidumbre de los recursos eólicos incrementa la dificultad de estimar los beneficios globales en la etapa de planificación. La principal preocupación del modelo tradicional determinista es no tener en cuenta la incertidumbre futura a la hora de tomar la decisión de operación. Con lo cual, no se prevé las acciones operativas flexibles en respuesta a los escenarios futuros. El análisis del rendimiento y simulación por ordenador en el Proyecto Eólico San Cristóbal demuestra que la incertidumbre sobre la energía eólica, las estrategias de control, almacenamiento de energía, y la curva de potencia de aerogeneradores tienen un impacto significativo sobre el rendimiento del sistema. En la presente tesis, se analiza la relación entre la teoría de valoración de opciones y el proceso de toma de decisiones. La opción real se desarrolla con un modelo y se presenta a través de ejemplos prácticos para evaluar el valor de los sistemas de energía eólica-diesel híbridos. Los resultados muestran que las opciones operacionales pueden aportar un valor adicional para el sistema de energía híbrida, cuando esta flexibilidad operativa se utiliza correctamente. Este marco se puede aplicar en la optimización de la operación a corto plazo teniendo en cuenta la naturaleza dependiente de la trayectoria de la política óptima de despacho, dadas las plausibles futuras realizaciones de la producción de energía eólica. En comparación con los métodos de valoración y optimización existentes, el resultado del caso de estudio numérico muestra que la política de operación resultante del modelo de optimización propuesto presenta una notable actuación en la reducción del con- sumo total de combustible del sistema eólico-diesel. Con el .n de tomar decisiones óptimas, los operadores de plantas de energía y los gestores de éstas no deben centrarse sólo en el resultado directo de cada acción operativa, tampoco deberían tomar decisiones deterministas. La forma correcta es gestionar dinámicamente el sistema de energía teniendo en cuenta el valor futuro condicionado en cada opción frente a la incertidumbre. ABSTRACT Hybrid wind-diesel power systems have a great potential in providing energy supply to remote communities. Compared with the traditional diesel systems, hybrid power plants are providing many advantages such as providing extra energy capacity to the micro-grid, reducing pollution and greenhouse-gas emissions, and hedging the risk of unexpected fuel price increases. This dissertation aims at providing novel insights for assessing and optimizing hybrid wind-diesel power systems considering the related uncertainties. Since wind power can neither be controlled nor accurately predicted, the energy harvested from a wind turbine may be considered a stochastic variable. This uncertain nature of wind energy source results in serious problems for both the operation and value assessment of the hybrid wind-diesel power system. On the one hand, regulating the uncertain power injected from wind turbines is a difficult task when operating the hybrid system. On the other hand, the economic profit of a hybrid wind-diesel system is achieved directly through the energy delivered to the power grid from the wind energy. Therefore, the uncertainty of wind resources has increased the difficulty in estimating the total benefits in the planning stage. The main concern of the traditional deterministic model is that it does not consider the future uncertainty when making the dispatch decision. Thus, it does not provide flexible operational actions in response to the uncertain future scenarios. Performance analysis and computer simulation on the San Cristobal Wind Project demonstrate that the wind power uncertainty, control strategies, energy storage, and the wind turbine power curve have a significant impact on the performance of the system. In this dissertation, the relationship between option pricing theory and decision making process is discussed. A real option model is developed and presented through practical examples for assessing the value of hybrid wind-diesel power systems. Results show that operational options can provide additional value to the hybrid power system when this operational flexibility is correctly utilized. This framework can be applied in optimizing short term dispatch decisions considering the path-dependent nature of the optimal dispatch policy, given the plausible future realizations of the wind power production. Comparing with the existing valuation and optimization methods, result from numerical example shows that the dispatch policy resulting from the proposed optimization model exhibits a remarkable performance in minimizing the total fuel consumption of the wind-diesel system. In order to make optimal decisions, power plant operators and managers should not just focus on the direct outcome of each operational action; neither should they make deterministic decisions. The correct way is to dynamically manage the power system by taking into consideration the conditional future value in each option in response to the uncertainty.

A common-sense climate index: Is climate changing noticeably?

We propose an index of climate change based on practical climate indicators such as heating degree days and the frequency of intense precipitation. We find that in most regions the index is positive, the sense predicted to accompany global warming. In a few regions, especially in Asia and western North America, the index indicates that climate change should be apparent already, but in most places climate trends are too small to stand out above year-to-year variability. The climate index is strongly correlated with global surface temperature, which has increased as rapidly as projected by climate models in the 1980s. We argue that the global area with obvious climate change will increase notably in the next few years. But we show that the growth rate of greenhouse gas climate forcing has declined in recent years, and thus there is an opportunity to keep climate change in the 21st century less than “business-as-usual” scenarios.

Can ozone depletion and global warming interact to produce rapid climate change?

The atmosphere displays modes of variability whose structures exhibit a strong longitudinally symmetric (annular) component that extends from the surface to the stratosphere in middle and high latitudes of both hemispheres. In the past 30 years, these modes have exhibited trends that seem larger than their natural background variability, and may be related to human influences on stratospheric ozone and/or atmospheric greenhouse gas concentrations. The pattern of climate trends during the past few decades is marked by rapid cooling and ozone depletion in the polar lower stratosphere of both hemispheres, coupled with an increasing strength of the wintertime westerly polar vortex and a poleward shift of the westerly wind belt at the earth's surface. Annular modes of variability are fundamentally a result of internal dynamical feedbacks within the climate system, and as such can show a large response to rather modest external forcing. The dynamics and thermodynamics of these modes are such that strong synergistic interactions between stratospheric ozone depletion and greenhouse warming are possible. These interactions may be responsible for the pronounced changes in tropospheric and stratospheric climate observed during the past few decades. If these trends continue, they could have important implications for the climate of the 21st century.

Wheat leaves emit nitrous oxide during nitrate assimilation

Nitrous oxide (N2O) is a key atmospheric greenhouse gas that contributes to global climatic change through radiative warming and depletion of stratospheric ozone. In this report, N2O flux was monitored simultaneously with photosynthetic CO2 and O2 exchanges from intact canopies of 12 wheat seedlings. The rates of N2O-N emitted ranged from <2 pmol⋅m−2⋅s−1 when NH\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \setlength{\oddsidemargin}{-69pt} \begin{document} \begin{equation*}{\mathrm{_{4}^{+}}}\end{equation*}\end{document} was the N source, to 25.6 ± 1.7 pmol⋅m−2⋅s−1 (mean ± SE, n = 13) when the N source was shifted to NO\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \setlength{\oddsidemargin}{-69pt} \begin{document} \begin{equation*}{\mathrm{_{3}^{-}}}\end{equation*}\end{document}. Such fluxes are among the smallest reported for any trace gas emitted by a higher plant. Leaf N2O emissions were correlated with leaf nitrate assimilation activity, as measured by using the assimilation quotient, the ratio of CO2 assimilated to O2 evolved. 15N isotopic signatures on N2O emitted from leaves supported direct N2O production by plant NO\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \setlength{\oddsidemargin}{-69pt} \begin{document} \begin{equation*}{\mathrm{_{3}^{-}}}\end{equation*}\end{document} assimilation and not N2O produced by microorganisms on root surfaces and emitted in the transpiration stream. In vitro production of N2O by both intact chloroplasts and nitrite reductase, but not by nitrate reductase, indicated that N2O produced by leaves occurred during photoassimilation of NO\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \setlength{\oddsidemargin}{-69pt} \begin{document} \begin{equation*}{\mathrm{_{2}^{-}}}\end{equation*}\end{document} in the chloroplast. Given the large quantities of NO\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \setlength{\oddsidemargin}{-69pt} \begin{document} \begin{equation*}{\mathrm{_{3}^{-}}}\end{equation*}\end{document} assimilated by plants in the terrestrial biosphere, these observations suggest that formation of N2O during NO\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \setlength{\oddsidemargin}{-69pt} \begin{document} \begin{equation*}{\mathrm{_{2}^{-}}}\end{equation*}\end{document} photoassimilation could be an important global biogenic N2O source.

Impactos de regulações ambientais sobre o transporte de cargas no Brasil: uma análise para o transporte de soja

O aumento da concentração de gases de efeito estufa na atmosfera levou a uma preocupação de como se reduzir as emissões destes gases. Desta preocupação surgiram instrumentos de regulação a fim de reduzir ou controlar os níveis de poluição. Dentro deste contexto, esta pesquisa analisou o setor de transportes de cargas, com ênfase no transporte de soja. No Brasil, o setor de transportes é um dos principais responsáveis pelas emissões de gases de efeito estufa provenientes da queima de combustíveis fósseis. No setor de transportes, as emissões diferem entre os modais, sendo que as ferrovias e hidrovias poluem menos que as rodovias. Desta forma, simulou-se por meio de um modelo de programação linear se a adoção de medidas regulatórias sobre as emissões de CO2 traria uma alteração no uso das ferrovias e hidrovias. Uma das constatações, ao se utilizar o modelo de Minimização de Fluxo de Custo Mínimo para o transporte de soja em 2013, foi que a capacidade de embarque nos terminais ferroviários e hidroviários desempenha um papel fundamental na redução das emissões de CO2. Se não houver capacidade suficiente, a adoção de uma taxa pode não provocar a redução das emissões. No caso do sistema de compra e crédito de carbono, seria necessária a compra de créditos de carbono, numa situação em que a capacidade de embarque nos terminais intermodais seja limitada. Verificou-se, ainda, que melhorias na infraestrutura podem desempenhar um papel mitigador das emissões. Um aumento da capacidade dos terminais ferroviários e hidroviários existentes, bem como o aumento da capacidade dos portos, pode provocar a redução das emissões de CO2. Se os projetos de expansão das ferrovias e hidrovias desenvolvidos por órgãos governamentais saírem do papel, pode-se chegar a uma redução de pouco mais de 50% das emissões de CO2. Consideraram-se ainda quais seriam os efeitos do aumento do uso de biodiesel como combustível e percebeu-se que seria possível obter reduções tanto das emissões quanto do custo de transporte. Efeitos semelhantes foram encontrados quando se simulou um aumento da eficiência energética. Por fim, percebeu-se nesta pesquisa que a adoção de uma taxa não traria tantos benefícios, econômicos e ambientais, quanto a melhoria da infraestrutura logística do país.

Estudo sobre aproveitamento de resíduos sólidos dispostos em aterros sanitários visando seu aproveitamento energético

Equacionar a problemática do aumento da geração de resíduos sólidos é tarefa complexa, que envolve entre outras, questões de ordem ambiental, de saúde pública e econômica. Quando se trata de disposição final de resíduos sólidos, o aterro sanitário é a única técnica utilizada ambientalmente correta, porém ainda são poucas as cidades que a emprega. Espera-se que nos próximos anos, aumente o número de municípios com aterro sanitário e deste modo, surge um outro problema de cunho ambiental, e em nível mais global, que se refere aos gases liberados pelos aterros sanitários, durante a decomposição anaeróbia da parte orgânica dos resíduos. Estão entre estes gases, o dióxido de carbono e o metano, que contribuem para o efeito estufa. Se por um lado o metano é prejudicial, quando se trata de efeito estufa, por outro lado, pode ser utilizado para fins energéticos como fonte de energia renovável e justamente substituindo os combustíveis fósseis, que representam a maior fonte dos chamados gases de efeito estufa. O presente trabalho, tem como objetivo inicial, levantar as alternativas para o uso de gases de aterro sanitário como fonte de energia, em um segundo momento do trabalho, relacionar as fases da digestão anaeróbia com a produção de metano, através da análise de amostras coletadas em diferentes pontos e profundidades do aterro do município de Piracicaba/SP.

Trees as Tools in Environmental Improvement; An Analysis of the Contribution of Vegetation to Energy and Water Conservation in the Front Range of Colorado

The Denver metropolitan area is facing rapid population growth that increases the stress on already limited resources. Research and advanced computer modeling show that trees, especially those in urban areas, have significant environmental benefits. These benefits include air quality improvements, energy savings, greenhouse gas reduction, and possible water conservation. This Capstone Project applies statistical methods to analyze a small data set of residential homes and their energy and water consumption, as a function of their individual landscape. Results indicate that tree shade can influence water conservation, and that irrigation methods can be an influential factor as well. The Capstone is a preliminary analysis for future study to be performed by the Institute for Environmental Solutions in 2007.

Recommendations for Creating and Implementing Climate Change Mitigation Strategies for Municipalities

The effects of climate change are beginning to show themselves globally and not enough is being done to counteract these changes. Institutional action is a necessity, and municipalities have an opportunity to fill this void by developing mitigation strategies that will reduce greenhouse gas emissions. This report critically reviews the municipal climate action plans for Portland, Oregon; Boulder, Colorado; and Toronto, Ontario and provides recommendations for other municipalities who wish to create and implement climate change mitigation plans.

A Comparison of the Impacts of Lithium Extraction and Lithium Recycling Processes

Lithium is used in the cathode and electrolyte of rechargeable batteries in many portable electronics and electric vehicles, and is thus seen as a critical component of modern technology (Gruber et al., 2011). Electric vehicles are promoted as a way to reduce carbon emissions associated with the transportation sector, which accounts for 14.3% of anthropogenic greenhouse gas emissions (OECD International Transport Forum, 2010). However, the sustainability of lithium procurement will influence the overall environmental impact of this proposed “green” solution. It is estimated that 66% of the world’s lithium resource is contained in natural brines, 24% in pegmatites, and 8% in sedimentary rocks such as hectorite clays (Gruber et al., 2011). It has been shown that “[r]ecycling of lithium from Li-ion batteries may be a critical factor in balancing the supply of lithium with future demand” (Gruber et al., 2011). In an attempt to quantify energy and materials consumption associated with production of a unit of useful lithium compounds, industry reports and peer-reviewed scientific literature concerning lithium mining and lithium recycling were reviewed and compared. Other aspects of sustainability, such as waste or by-products produced in the production of a unit of useful lithium, were also explored. Thus, this paper will serve to further the evaluation of the comparative environmental consequences associated with lithium production via extraction versus recycling. Efficiencies must be made in both processes to maximize productivity while minimizing ecological harm.

An Assessment of US Progress towards its Pledge on Climate Change Mitigation. CEPS ECP Report No. 12, 15 October 2012

In 2009, President Obama pledged that, by 2020, the United States would achieve reductions in greenhouse gas emissions of 17% from 2005 levels. With the failure of Congress to adopt comprehensive climate legislation in 2010, the feasibility of the pledge was put in doubt. However, we find that the United States is near to reaching this goal: the country is currently on course to achieve reductions of 16.3% from 2005 levels in 2020. Three factors contribute to this outcome: greenhouse gas regulations under the Clean Air Act, secular trends including changes in relative fuel prices and energy efficiency and sub-national efforts. Perhaps even more surprising, domestic emissions are probably lower than would have been the case if the Waxman-Markey cap-and-trade proposal had become law in 2010. At this point, however, the United States is expected to fail to meet its financing commitments under the Copenhagen Accord for 2020.

The Potential Evolution of the European Energy System to 2020 and 2050. CEPS Working Document No. 392, 26 March 2014

This paper assesses the impact of decarbonisation of the energy sector on employment in Europe. Setting the stage for such an assessment, the paper provides an analysis of possible pathways to decarbonise Europe’s energy system, taking into account EU greenhouse gas emissions reduction targets for 2020 and 2050. It pays particular attention to various low-carbon technologies that could be deployed in different regions of the EU. It concludes that efficiency and renewables play a major role in any decarbonisation scenario and that the power sector is the main enabler for the transition to a low-carbon economy in Europe, despite rising electricity demand. The extent of the decline in the share of fossil fuels will largely depend on the existence of carbon capture and storage (CCS), which remains a major source of uncertainty.

A European response to the resource and climate challenge. CHALLENGE EUROPE Issue 22 - Challenges and new beginnings: Priorities for the EU's new leadership, September 2014

The 20th Century was characterised by growth: the world population grew by four times and its economic output grew by 40 times. At the same time, the resource use and greenhouse gas emissions increased drastically. Only within the last two decades, the worldwide extraction of resources increased by over 50%. With the expectation that the demand of resources will triple by 2050 and the demand for food, feed and fibre is projected to increase by 70%, there is no doubt that we will exceed our planet's boundaries, the safe thresholds within which humanity can continue to develop and thrive for generations to come. Crossing these boundaries could generate abrubt or irreversible environmental changes. Respecting them reduces the risk that human society and ecosystems will face irreversible damages.

The Sustainability Impact of the EU Emissions Trading System on the European Industry. Bruges European Economic Policy (BEEP) Briefing 17/2007

This BEEP explains the mechanism of the EU Emissions Trading System (ETS) for the greenhouse gas carbon dioxide and explore into its likely sustainability impact on European industry. In doing so, it focuses on energy-intensive industries like cement, steel and aluminium production as well as on the emerging hydrogen economy. The BEEP concludes that at the moment it is still very inconsistently implemented and has a fairly narrow scope regarding greenhouse gases and involved sectors. It may also give an incentive to relocate for energy-intensive industries. In its current format, the EU ETS does not yet properly facilitate long term innovation dynamics such as the transition to a hydrogen economy. Nevertheless, the EU ETS is foremost a working system that – with some improvements – has the potential to become a pillar for effective and efficient climate change policy that also gives incentives for investment into climate friendly policies.

EU 2020 Renewable Energy Goals Insufficient. IES Policy Brief Issue 2012/01/January 2012

Summary. It is clear that any action to combat climate change must involve extensive efforts in reducing the greenhouse gas (GHG) emissions from the energy sector. In the EU, nearly 80% of total GHG emissions come from the energy sector (European Commission, 2011, p. 21). Any credible action within the EU on combating climate change therefore requires deep shifts in the way we produce and use our energy. This paper highlights that renewable energy policies to 2020 are insufficient to meet the EU’s long-term climate policy objectives of reducing GHG emissions by between 80 and 95% by 2050, and thereby aiming to avoid an increase in global temperatures of more than 2°C. Such an ambition would likely require a very high share of renewable energy (in the range of 80 to 100%) in the overall energy mix of the EU, given current uncertainties about the feasibility of potential technological developments (e.g. carbon capture and storage technology).

Renewables: The great uncertainty of the EU energy strategy. Egmont Paper No. 71, November 2014

Summary. For more than two decades, the development of renewable energy sources (RES) has been an important aim of EU energy policy. It accelerated with the adoption of a 1997 White Paper and the setting a decade later of a 20% renewable energy target, to be reached by 2020. The EU counts on renewable energy for multiple purposes: to diversify its energy supply; to increase its security of supply; and to create new industries, jobs, economic growth and export opportunities, while at the same time reducing greenhouse gas (GHG) emissions. Many expectations rest on its development. Fossil fuels have been critical to the development of industrial nations, including EU Member States, which are now deeply reliant upon coal, oil and gas for nearly every aspect of their existence. Faced with some hard truths, however, the Member States have begun to shelve fossil fuel. These hard truths are as follows: firstly, fossil fuels are a finite resource, sometimes difficult to extract. This means that, at some point, fossil fuels are going to be more difficult to access in Europe or too expensive to use.1 The problem is that you cannot just stop using fossil fuels when they become too expensive; the existing infrastructure is profoundly reliant on fossil fuels. It is thus almost normal that a fierce resistance to change exists. Secondly, fossil fuels contribute to climate change. They emit GHG, which contribute greatly to climate change. As a consequence, their use needs to be drastically reduced. Thirdly, Member States are currently suffering a decline in their own fossil fuel production. This increases their dependence on increasingly costly fossil fuel imports from increasingly unstable countries. This problem is compounded by global developments: the growing share of emerging economies in global energy demand (in particular China and India but also the Middle East) and the development of unconventional oil and gas production in the United States. All these elements endanger the competitiveness of Member States’ economies and their security of supply. Therefore, new indigenous sources of energy and a diversification of energy suppliers and routes to convey energy need to be found. To solve all these challenges, in 2008 the EU put in place a strategy based on three objectives: sustainability (reduction of GHG), competitiveness and security of supply. The adoption of a renewable energy policy was considered essential for reaching these three strategic objectives. The adoption of the 20% renewable energy target has undeniably had a positive effect in the EU on the growth in renewables, with the result that renewable energy sources are steadily increasing their presence in the EU energy mix. They are now, it can be said, an integral part of the EU energy system. However, the necessity of reaching this 20% renewable energy target in 2020, combined with other circumstances, has also engendered in many Member States a certain number of difficulties, creating uncertainties for investors and postponing benefits for consumers. The electricity sector is the clearest example of this downside. Subsidies have become extremely abundant and vary from one Member State to another, compromising both fair competition and single market. Networks encountered many difficulties to develop and adapt. With technological progress these subsidies have also become quite excessive. The growing impact of renewable electricity fluctuations has made some traditional power plants unprofitable and created disincentives for new investments. The EU does clearly need to reassess its strategy. If it repeats the 2008 measures it will risk to provoke increased instability and costs.