Power generation investment opportunities evaluation: A comparison between net present value and real options approach

To evaluate an investment project in the competitive electricity market, there are several key factors that affects the project's value: the present value that the project could bring to investor, the possible future course of actions that investor has and the project's management flexibility. The traditional net present value (NPV) criteria has the ability to capture the present value of the project's future cash flow, but it fails to assess the value brought by market uncertainty and management flexibility. By contrast with NPV, the real options approach (ROA) method has the advantage to combining the uncertainty and flexibility in evaluation process. In this paper, a framework for using ROA to evaluate the generation investment opportunity has been proposed. By given a detailed case study, the proposed framework is compared with NPV and showing a different results

The impact of monsoon intraseasonal variability on renewable power generation in India

India is increasingly investing in renewable technology to meet rising energy demands, with hydropower and other renewables comprising one-third of current installed capacity. Installed wind-power is projected to increase 5-fold by 2035 (to nearly 100GW) under the International Energy Agency’s New Policies scenario. However, renewable electricity generation is dependent upon the prevailing meteorology, which is strongly influenced by monsoon variability. Prosperity and widespread electrification are increasing the demand for air conditioning, especially during the warm summer. This study uses multi-decadal observations and meteorological reanalysis data to assess the impact of intraseasonal monsoon variability on the balance of electricity supply from wind-power and temperature-related demand in India. Active monsoon phases are characterised by vigorous convection and heavy rainfall over central India. This results in lower temperatures giving lower cooling energy demand, while strong westerly winds yield high wind-power output. In contrast, monsoon breaks are characterised by suppressed precipitation, with higher temperatures and hence greater demand for cooling, and lower wind-power output across much of India. The opposing relationship between wind-power supply and cooling demand during active phases (low demand, high supply) and breaks (high demand, low supply) suggests that monsoon variability will tend to exacerbate fluctuations in the so-called demand-net-wind (i.e., electrical demand that must be supplied from non-wind sources). This study may have important implications for the design of power systems and for investment decisions in conventional schedulable generation facilities (such as coal and gas) that are used to maintain the supply/demand balance. In particular, if it is assumed (as is common) that the generated wind-power operates as a price-taker (i.e., wind farm operators always wish to sell their power, irrespective of price) then investors in conventional facilities will face additional weather-volatility through the monsoonal impact on the length and frequency of production periods (i.e. their load-duration curves).

The need of subsidy for the implementation of photovoltaic solar energy as supporting of decentralized electrical power generation in Brazil

The growing demand for electrical power and the limited capital invested to provide this power is forcing countries like Brazil to search for new alternatives for electrical power generation. The purpose of this paper is to present a technical and economic study on a 15 kW solar plant installed in an isolated community, highlighting the importance of the need for financial subsidy from the government. It evaluates the importance of parameters such as the annual interest rate, specific investment, the marginal cost of expanding the electrical power supply and the government subsidy on amortization time of capital invested. © 2012 Elsevier Ltd All rights reserved.

Probabilistic cost benefit analysis of generation investment in a deregulated electricity market

A new methodology is proposed for the analysis of generation capacity investment in a deregulated market environment. This methodology proposes to make the investment appraisal using a probabilistic framework. The probabilistic production simulation (PPC) algorithm is used to compute the expected energy generated, taking into account system load variations and plant forced outage rates, while the Monte Carlo approach has been applied to model the electricity price variability seen in a realistic network. The model is able to capture the price and hence the profitability uncertainties for generator companies. Seasonal variation in the electricity prices and the system demand are independently modeled. The method is validated on IEEE RTS system, augmented with realistic market and plant data, by using it to compare the financial viability of several generator investments applying either conventional or directly connected generator (powerformer) technologies. The significance of the results is assessed using several financial risk measures.

Direct integration of battery energy storage systems in distributed power generation

In this paper, a wind energy conversion system interfaced to the grid using a dual inverter is proposed. One of the two inverters in the dual inverter is connected to the rectified output of the wind generator while the other is directly connected to a battery energy storage system (BESS). This approach eliminates the need for an additional dc-dc converter and thus reduces power losses, cost, and complexity. The main issue with this scheme is uncorrelated dynamic changes in dc-link voltages that results in unevenly distributed space vectors. A detailed analysis on the effects of these variations is presented in this paper. Furthermore, a modified modulation technique is proposed to produce undistorted currents even in the presence of unevenly distributed and dynamically changing space vectors. An analysis on the battery charging/discharging process and maximum power point tracking of the wind turbine generator is also presented. Simulation and experimental results are presented to verify the efficacy of the proposed modulation technique and battery charging/discharging process.

Cost efficiency of Japanese steam power generation companies : a Bayesian comparison of random and fixed frontier models

This study analyses and compares the cost efficiency of Japanese steam power generation companies using the fixed and random Bayesian frontier models. We show that it is essential to account for heterogeneity in modelling the performance of energy companies. Results from the model estimation also indicate that restricting CO2 emissions can lead to a decrease in total cost. The study finally discusses the efficiency variations between the energy companies under analysis, and elaborates on the managerial and policy implications of the results.

Regulation, pollution and heterogeneity in Japanese steam power generation companies

In this paper, the random stochastic frontier model is used to estimate the technical efficiency of Japanese steam power generation companies taking into regulation and pollution. The companies are ranked according to their productivity for the period 1976-2003 and homogenous and heterogeneous variables in the cost function are disentangled. Policy implication is derived.

Some of the design considerations in power generation from offshore wind farms

The global efforts to reduce carbon emissions from power generation have favoured renewable energy resources such as wind and solar in recent years. The generation of power from the renewable energy resources has become attractive because of various incentives provided by government policies supporting green power. Among the various available renewable energy resources, the power generation from wind has seen tremendous growth in the last decade. This article discusses various advantages of the upcoming offshore wind technology and associated considerations related to their construction. The conventional configuration of the offshore wind farm is based on the alternative current internal links. With the recent advances of improved commercialised converters, voltage source converters based high voltage direct current link for offshore wind farms is gaining popularity. The planning and construction phases of offshore wind farms, including related environmental issues, are discussed here.

Hampson type heat-exchanger technology and economic evaluation for LNG re- gasification and power generation At LNG receiving terminals

The system for high utilization of LNG cold energy is proposed by use of process simulator. The proposed design is a closed loop system, and composed by a Hampson type heat exchanger, turbines, pumps and advanced humid air turbine (AHAT) or Gas turbine combined cycle (GTCC). Its heat sources are Boil-off gas and cooling water for AHAT or GTCC. The higher cold exergy recovery to power can be about 38 to 56% as compared to the existing cold power generation of about 20% with a Rankine cycle of a single component. The advantage of the proposed system is to reduce the number of heat exchangers. Furthermore, the environmental impact is minimized because the proposed design is a closed loop system. A life cycle comparative cost is calculated to demonstrate feasibility of the proposed design. The development of the Hampson type exchangers is expected to meet the key functional requirements and will result in much higher LNG cold exergy recovery and the overall system performance i.e. re-gasification. Additionally, the proposed design is expected to provide flexibility to meet different gas pressure suited for the deregulation of energy system in Japan and higher reliability for an integrated boil-off gas system.

Integration and optimization of pressure retarded osmosis with reverse osmosis for power generation and high efficiency desalination

Salinity gradient power is proposed as a source of renewable energy when two solutions of different salinity are mixed. In particular, Pressure Retarded Osmosis (PRO) coupled with a Reverse Osmosis process (RO) has been previously suggested for power generation, using RO brine as the draw solution. However, integration of PRO with RO may have further value for increasing the extent of water recovery in a desalination process. Consequently, this study was designed to model the impact of various system parameters to better understand how to design and operate practical PRO-RO units. The impact of feed salinity and recovery rate for the RO process on the concentration of draw solution, feed pressure, and membrane area of the PRO process was evaluated. The PRO system was designed to operate at maximum power density of . Model results showed that the PRO power density generated intensified with increasing seawater salinity and RO recovery rate. For an RO process operating at 52% recovery rate and 35 g/L feed salinity, a maximum power density of 24 W/m2 was achieved using 4.5 M NaCl draw solution. When seawater salinity increased to 45 g/L and the RO recovery rate was 46%, the PRO power density increased to 28 W/m2 using 5 M NaCl draw solution. The PRO system was able to increase the recovery rate of the RO by up to 18% depending on seawater salinity and RO recovery rate. This result suggested a potential advantage of coupling PRO process with RO system to increase the recovery rate of the desalination process and reduce brine discharge.

Biomass gasification: Environmentally sound technology for decentralized power generation, a case study from India

This study aims at understanding the need for decentralized power generation systems and to explore the potential, feasibility and environmental implications of biomass gasifier-based electricity generation systems for village electrification. Electricity needs of villages are in the range of 5–20 kW depending on the size of the village. Decentralized power generation systems are desirable for low load village situations as the cost of power transmission lines is reduced and transmission and distribution losses are minimised. A biomass gasifier-based electricity generation system is one of the feasible options; the technology is readily available and has already been field tested. To meet the lighting and stationary power needs of 500,000 villages in India the land required is only 16 Mha compared to over 100 Mha of degraded land available for tree planting. In fact all the 95 Mt of woody biomass required for gasification could be obtained through biomass conservation programmes such as biogas and improved cook stoves. Thus dedication of land for energy plantations may not be required. A shift to a biomass gasifier-based power generation system leads to local benefits such as village self reliance, local employment and skill generation and promotion of in situ plant diversity plus global benefits like no net CO2 emission (as sustainable biomass harvests are possible) and a reduction in CO2 emissions (when used to substitute thermal power and diesel in irrigation pump sets).

Variable-speed wind power generation using doubly fed wound rotor induction machine - A comparison with alternative schemes

In this paper, a wind energy conversion system (WECS) using grid-connected wound rotor induction machine controlled from the rotor side is compared with both fixed speed and variable speed systems using cage rotor induction machine. The comparison is done on the basis of (I) major hardware components required, (II) operating region, and (III) energy output due to a defined wind function using the characteristics of a practical wind turbine. Although a fixed speed system is more simple and reliable, it severely limits the energy output of a wind turbine. In case of variable speed systems, comparison shows that using a wound rotor induction machine of similar rating can significantly enhance energy capture. This comes about due to the ability to operate with rated torque even at supersynchronous speeds; power is then generated out of the rotor as well as the stator. Moreover, with rotor side control, the voltage rating of the power devices and dc bus capacitor bank is reduced. The size of the line side inductor also decreasesd. Results are presented to show the substantial advantages of the doubly fed system.

Power generation using wind energy in northwest Karnataka, India

On the backdrop of climate change scenario, there is emphasis on controlling emission of greenhouse gases such as CO2. Major thrust being seen worldwide as well as in India is for generation of electricity from renewable sources like solar and wind. Chitradurga area of Karnataka is identified as a suitable location for the production of electricity from wind turbines because of high wind-energy resource. The power generated and the performance of 18 wind turbines located in this region are studied based on the actual field data collected over the past seven years. Our study shows a good prospect for expansion of power production using wind turbines.