E-Book
48,99 €

Renewable Energy and Energy Efficiency E-Book

Aidan Duffy

0,0

48,99 €

Sammeln Sie Punkte in unserem Gutscheinprogramm und kaufen Sie E-Books und Hörbücher mit bis zu 100% Rabatt.

Mehr erfahren.

Herausgeber: John Wiley & Sons
Kategorie: Wissenschaft und neue Technologien
Sprache: Englisch

Beschreibung

The recent rise to prominence of renewable energy and energy efficiency has been driven by their potential to lower the environmental impacts of energy use. As these technologies mature they must demonstrate not only their environmental benefits, but also their economic competitiveness. The relative costs and benefits of each potential project, whether large or small, must be systematically modelled and assessed before they can be financed and implemented.

Renewable Energy and Energy Efficiency: Assessment of Projects and Policies deals with the appraisal of such projects against financial and non-financial criteria, illustrating the assessment tools necessary to make appropriate, evidence based decisions as efficiently as possible. The most important technologies are first described, stressing their economic and performance characteristics. Key project appraisal concepts are then introduced, approaches to modelling the cash flows in energy projects are described, and the issues of uncertainty and optimisation are fully discussed. These financial concepts, together with methods for estimating greenhouse gas emissions, are extended to address aspects of energy policy. Illustrated with many case studies this is an ideal introduction to financial and non-financial appraisal techniques as applied to energy efficient and renewable energy technologies.

Details

Sie lesen das E-Book in den Legimi-Apps auf:

Android

iOS

von Legimi
zertifizierten E-Readern

Seitenzahl: 436

Veröffentlichungsjahr: 2015

Bewertungen

0,0

Rezensionen(0 Rezensionen)

Leseprobe

Title Page

Symbols, Units and Abbreviations

Abbreviations

Symbols and Units

Subscript Symbols

About the Companion Website

Chapter 1: Introduction

1.1 Background

1.2 Aim

1.3 Aspects of renewable energy project appraisal

1.4 Book layout

References

Chapter 2: Technologies

2.1 Introduction

2.2 Key concepts

2.3 Electrical power generation

2.4 Heat generation

2.5 Combined heat and power

2.6 Energy storage

2.7 Energy efficiency

References

Chapter 3: Modelling Energy Systems

3.1 Introduction

3.2 System, model and simulation

3.3 Modelling and simulating energy systems

3.4 Case studies

3.5 Conclusions

References

Chapter 4: Financial Analysis

4.1 Introduction

4.2 Fundamentals

4.3 Financial measures

4.4 Case studies

4.5 Conclusion

References

Chapter 5: Multi-Criteria Analysis

5.1 General

5.2 Simple non-compensatory methods

5.3 Simple additive weighting method

5.5 Concordance analysis

5.6 Site selection for wind farms – a case study from Cavan (Ireland)

5.7 Concluding comments on MCDA models

References

Chapter 6: Policy Aspects

6.1 Energy policy context

6.2 Energy policy overview

6.3 Marginal abatement cost

6.4 Subsidy design

6.5 Social cost–benefit analysis

6.6 Case studies

6.7 Conclusions

References

Appendix A: Table of Discount Factors

Index

End User License Agreement

Pages

xii

xiii

100

101

102

103

104

105

106

107

108

109

110

111

112

113

114

115

116

117

118

119

120

121

122

123

124

125

126

127

128

129

130

131

132

133

134

135

136

137

138

139

140

141

142

143

144

145

146

147

148

149

151

152

153

154

155

156

157

158

159

160

161

162

163

164

165

166

167

168

169

170

171

172

173

174

175

176

177

178

179

180

181

182

183

184

185

186

187

188

189

190

191

192

193

194

195

196

197

198

199

200

201

202

203

204

205

206

207

208

209

210

211

212

213

214

215

216

217

218

219

220

221

222

223

224

225

226

227

228

229

230

231

232

233

234

235

236

237

238

239

240

241

242

243

244

245

246

247

248

249

251

252

253

254

255

256

257

258

259

260

261

Guide

Cover

Table of Contents

Begin Reading

List of Illustrations

Figure 1.1

Figure 2.1

Figure 2.2

Figure 2.3

Figure 2.4

Figure 2.5

Figure 2.6

Figure 2.7

Figure 2.8

Figure 2.9

Figure 2.10

Figure 2.11

Figure 2.12

Figure 2.13

Figure 2.14

Figure 2.15

Figure 2.16

Figure 2.17

Figure 2.18

Figure 2.19

Figure 3.1

Figure 3.2

Figure 3.3

Figure 3.4

Figure 3.5

Figure 3.6

Figure 3.7

Figure 3.8

Figure 3.9

Figure 3.10

Figure 3.11

Figure 3.12

Figure 3.13

Figure 3.14

Figure 3.15

Figure 3.16

Figure 3.17

Figure 3.18

Figure 3.19

Figure 3.20

Figure 3.21

Figure 4.1

Figure 4.2

Figure 4.3

Figure 4.4

Figure 4.5

Figure 5.1

Figure 5.2

Figure 5.3

Figure 5.4

Figure 6.1

Figure 6.2

Figure 6.3

Figure 6.4

Figure 6.5

Figure 6.6

Figure 6.7

Figure 6.8

Figure 6.9

List of Tables

Table 2.1

Table 2.2

Table 2.3

Table 2.4

Table 2.5

Table 2.6

Table 2.7

Table 2.8

Table 2.9

Table 2.10

Table 2.11

Table 2.12

Table 2.13

Table 2.14

Table 2.15

Table 2.16

Table 2.17

Table 2.18

Table 3.1

Table 3.2

Table 3.3

Table 3.4

Table 3.5

Table 3.6

Table 3.7

Table 3.8

Table 3.9

Table 3.10

Table 3.11

Table 3.12

Table 3.13

Table 3.14

Table 3.15

Table 4.1

Table 4.2

Table 4.3

Table 4.4

Table 4.5

Table 4.6

Table 4.7

Table 4.8

Table 4.9

Table 4.10

Table 4.11

Table 4.12

Table 4.13

Table 4.14

Table 4.15

Table 4.16

Table 4.17

Table 4.18

Table 4.19

Table 4.20

Table 4.21

Table 4.22

Table 4.23

Table 4.24

Table 4.25

Table 4.26

Table 4.27

Table 4.28

Table 4.29

Table 5.1

Table 5.2

Table 5.3

Table 5.4

Table 5.5

Table 5.6

Table 5.7

Table 5.8

Table 5.9

Table 5.10

Table 5.11

Table 5.12

Table 5.13

Table 5.14

Table 5.15

Table 5.16

Table 5.17

Table 5.18

Table 5.19

Table 5.20

Table 5.21

Table 5.22

Table 5.23

Table 5.24

Table 5.25

Table 5.26

Table 5.27

Table 5.28

Table 5.29

Table 5.30

Table 5.31

Table 5.32

Table 5.33

Table 5.34

Table 5.35

Table 5.36

Table 5.37

Table 5.38

Table 5.40

Table 5.41

Table 5.42

Table 5.43

Table 5.44

Table 5.45

Table 5.46

Table 5.47

Table 5.48

Table 5.49

Table 5.50

Table 5.51

Table 5.52

Table 5.53

Table 5.54

Table 5.55

Table 5.56

Table 5.57

Table 5.58

Table 5.59

Table 5.60

Table 5.61

Table 5.62

Table 5.63

Table 5.64

Table 5.65

Table 6.1

Table 6.2

Table 6.3

Table 6.4

Table 6.5

Table 6.6

Table 6.7

Table 6.8

Table 6.9

Table 6.10

Table 6.11

Table 6.12

Table 6.13

Table 6.14

Table 6.15

Table 6.16

Table 6.17

Table 6.18

Table 6.19

Table 6.20

Renewable Energy and Energy Efficiency

Assessment of Projects and Policies

Aidan Duffy

Professor School of Civil and Structural Engineering Dublin Institute of Technology

Martin Rogers

Senior Lecturer Dublin Institute of Technology

Lacour Ayompe

Researcher International Energy Research Centre

This edition first published 2015

Registered office

John Wiley & Sons, Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom.

Editorial offices:

9600 Garsington Road, Oxford, OX4 2DQ, United Kingdom.

The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom.

For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com/wiley-blackwell.

The right of the author to be identified as the author of this work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher.

Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book.

Limit of Liability/Disclaimer of Warranty: While the publisher and author(s) have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom. If professional advice or other expert assistance is required, the services of a competent professional should be sought.

Library of Congress Cataloging-in-Publication Data applied for.

ISBN: 9781118631041

A catalogue record for this book is available from the British Library.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books.

Cover image: iStockphoto\ © demachi.

Symbols, Units and Abbreviations

Abbreviations

Alternating Current

AHP

Analytic Hierarchy Process

BAU

Business as Usual

BAWT

Building Augmented Wind Turbine

bbl

Barrel of oil

BOS

Balance of System

CAES

Compressed Air Energy Storage

CAPEX

Capital expenditure

CBA

Cost-benefit Analysis

CCGT

Combined Cycle Gas Turbine

CCS

Carbon Capture and Storage

Capacity Factor

CHP

Combined Heat and Power

CHPC

Combined Heat and Power and Cooling

CNG

Compressed Natural Gas

CPC

Compound Parabolic Collector

CPI

Consumer Price Index

Direct Current

EDC

Engine-driven Chiller

EIA

Environmental Impact Assessment

ETC

Evacuated Tube Collectors (SWHS)

ETS

Emissions Trading Scheme

FIT

Feed-in Tariff

FPC

Flat Plate Collector (SWHS)

GFA

Gross Floor Area

GHG

Greenhouse Gas

GHP

Gas Heat Pump

GWP

Global Warming Potential

HAWT

Horizontal-axis Wind Turbine

HHV

Higher (gross) heating value

HICP

Harmonised Index of Consumer Prices

HPS

High-pressure Sodium (lamp)

HVAC

Heating, Ventilation and Air Conditioning

IHA

International Hydropower Association

I-O

Input-output (LCA)

IRR

Internal Rate of Return

LCA

Life Cycle Assessment

LCC

Life Cycle Cost

LCE

Life Cycle Emissions

LCOE

Levelised Cost of Energy

LED

Light Emitting Diode

LHS

Latent Heat Storage

LHV

Lower (net) heating value

LPG

Liquid Petroleum Gas

MAC

Marginal Abatement Costs

MARR

Minimum Acceptable Rate of Return

MAUT

Multi-attribute Utility Theory

MCDA

Multi-Criteria Decision Analysis

MIRR

Modified Internal Rate of Return

NHA

National Heritage Area

NPV

Net Present Value

O&M

Operation and Maintenance

OCGT

Open Cycle Gas Turbine

PCM

Phase Change Material

PEM

Proton Exchange Membrane (fuel cell)

PHS

Pumped Hydroelectric Storage

PM10

Particulate Matter (<10µm)

(Simple) Payback Period

PPA

Power Purchase Agreement

PSH

Peak Sun Hour

Photovoltaic

ROC

Renewable Obligation Certificate

ROCE

Return on Capital Employed

RoI

Return on Investment

SAC

Special Area of Conservation

SAW

Simple Additive Weighting

SEA

Strategic Environmental Assessment

SHS

Sensible Heat Storage

SMP

System Marginal Price

SPF

Shadow Price Factors

SWHS

Solar Water Heating System

TES

Thermal Energy Storage

TUoS

Transmission Use of System

TYM

Typical Meteorological Year

VAWT

Vertical-axis Wind Turbine

VSD

Variable Speed Drive

WECS

Wind energy conversion system

Symbols and Units

Area

Annuity Factor (

Chapter 6

)

dimensionless

Cost

€

CBR

Cost-benefit Ratio

dimensionless

CDF

Cumulative Discount Factor

dimensionless

Capacity Factor

dimensionless

Net Cash Flow

€

-eq

Carbon dioxide equivalent

COP

Coefficient of Performance

dimensionless

Power Coefficient (wind turbine)

dimensionless

Specific Heat Capacity

J/kg °C

CPI

Consumer Price Index

dimensionless

Capital Subsidy

€/W

Debt

€

Discount Rate

Discount Factor

dimensionless

DPP

Discounted Payback Period

Equity

€

Energy (or Electrical Energy)

J or Wh

Inflation

EAC

Equivalent Annual Cost

€/y

Emissions Intensity

g CO

-eq/€

Cash Flow

€/time interval

FIT

Feed-in Tariff

€/Wh

Acceleration due to gravity

m/s

In-plane Solar Radiation

W/m

Significant Wave Height

Heat Rate

kJ/kWh

irr

Internal Rate of Return

LCC

Life Cycle Cost

€

LCE

Life Cycle Emissions

gCO

-eq

LCOE

Levelised Cost of Energy

€/Wh

Learning Rate

Mass

Fluid mass flow rate

kg/s

MAC

Marginal Abatement Costs

€/gCO

-eq

MAD

Mean Absolute Deviation

dimensionless

MAPE

Mean Absolute Percentage Error

dimensionless

MARR

Minimum Acceptable Rate of Return

mirr

Modified Internal Rate of Return

MPE

Mean Percentage Error

dimensionless

Number

dimensionless

NPV

Net Present Value

€

Power

Cost

€

Profitability Index

dimensionless

(Simple) Payback Period

Progress Ratio

dimensionless

Fuel

Heat

Quantity

g, l, m

,Wh, etc

Return (financial)

ROCE

Return on Capital Employed

RoI

Return on Investment

Solar Fraction

dimensionless

SIR

Savings-to-investment Ratio

dimensionless

Time

y, h, s

Tariff

€/Wh

Corporate Tax Rate

Tariff

€/Wh

Unit Heat Loss Rate (U-Value)

W/m

Velocity

m/s

WACC

Weighted Average Cost of Capital

Efficiency

Density

g/m

Payback Period

yrs

Subscript Symbols

aux

Auxiliary

Avoided

Investment, Capital

comp

Compressor

Chilled Water

Debt

dem

Demand

Displaced Technology

Equity

Electrical

Round-trip

Export

Fluid, Fuel

Future value

Gas

gen

Generator

Heat

i, in

Input, Inflows

i,j,n

year

inv

Inverter

loss

Losses

main

Maintenance

Nominal

Net

Net Operating

Output, Outflow

out

Output

Present Value

Real

Sector

Saving

sto

Stored

Thermal

TUoS

Transmission Use of System

Useful

About the Companion Website

This book's companion website www.wiley.com/go/duffy/renewable provides you with case study material to further your understanding of Renewable Energy and Energy Efficiency.

Chapter 1Introduction

Energy-efficient projects use alternative technologies, fuels and management systems to reduce heat and electricity consumption. Renewable energy-supply projects produce heat and electricity using sources of energy which are regenerated over short time periods. Their recent rise to prominence in modern society has been driven by their low environmental impacts relative to fossil-fuelled alternatives. However, as they mature, energy-efficient and renewable energy technologies must demonstrate not only their environmental benefits but also their economic competitiveness. This book focuses on the assessment of projects using approaches that take into account the unique economic, environmental and energy characteristics of renewable and energy-efficient technologies.

The global demand for energy-supply and efficiency projects has never been greater. Between 2012 and 2035, the demand for primary energy and electricity is estimated to increase by half and 70%, respectively, mainly in developing countries, while in developed countries the ongoing shift to energy-efficient and low carbon supply technologies are projected to continue. These trends are driven by many – mostly inescapable – factors: a growing global population, increasing wealth, uncertainty of fossil fuel price, security of supply concerns and enhanced policies to combat greenhouse gas (GHG) emissions and global warming. For example, by 2013, China, the European Union (EU) and Japan had adopted emission-reduction targets, while California, Australia, New Zealand and the EU had introduced carbon emissions trading schemes. Assuming the implementation of such existing policy commitments only, it is projected that between 2010 and 2035, a $37tn investment will be required in the world's energy-supply infrastructure and as much as $11.8tn will be spent on energy-efficient measures across all economic sectors (IEA, 2012).

Each of the myriad of energy efficiency and supply projects which will comprise these investments must be identified, shortlisted, modelled and economically assessed before it can be financed and implemented. Some will be very large investments such as nuclear or hydro power schemes; others will be small energy-efficient measures such as the installation of domestic attic insulation. All require a systematic approach to assessing their relative costs and benefits. The intention of this book is to present and illustrate the assessment tools necessary to make these decisions as efficiently as possible.

1.1 Background

The history of assessing the costs and benefits of energy projects is probably as long as humans have been harnessing energy for their needs. Hunter-gatherers must have recognised that the advantages of cooking, light and warmth from fires outweighed the time and effort involved in collecting the necessary fuel. However, it was not until the 18th century that the formal process of investment appraisal (or capital budgeting) emerged as a discipline, which focused on quantifying the benefits of long-term capital investments to companies. Assessing the cost-effectiveness of energy investments became much more important as a result of the 1973 oil and 1979 energy crises, which resulted in real oil prices increasing from a long-term historic average of about $20/barrel to $60 and then over (Figure 1.1). This heralded a much greater level of interest in energy-efficient and renewable energy-supply technologies as economic alternatives to fossil fuels. With the long-term rise in fossil fuel prices since the 1970s and projections for this trend to continue, the investment appraisal of energy projects has continued to become increasingly important (see Figure 1.1).

Figure 1.1 Real prices ($2013) of US imported crude oil, wellhead natural gas and bituminous coal, 1970–2012 (US EIA, 2013), and projected oil price in 2030 (IEA, 2012).

While the process of investment appraisal has been developed to meet the needs of the private investors of a project, the costs and benefits to the wider community are often ignored, often because they have no market value and are thus difficult to quantify. As energy-supply infrastructure became more widely deployed in developed countries in the mid-20th century and as societies became more environmentally and socially aware, these costs and benefits became more apparent. For example, coal combustion for industrial and domestic heating caused smog, resulting in increased morbidity, higher health costs and lost productivity; hydroelectric dams were built without sufficient consideration of their undesirable impacts on agriculture, fishery and local communities. As these impacts often have no direct market value and are, therefore, difficult to monetise, methods other than investment appraisal become necessary. One solution to this was cost–benefit analysis (CBA or benefit–cost analysis), which was first developed in the mid-19th century but was not used in practice until the 1930s for assessing the attractiveness to society of large infrastructural projects. CBA is typically used to monetise and compare the costs and benefits of large projects or policies that have societal impacts. It attempts to approximate and account for the monetary values of non-marketed goods and services such as air and water quality, employment impacts or displaced local industry. A project is beneficial where its societal benefits outweigh its costs.

However, many large energy projects are complex and have important attributes that are difficult to either quantify or monetise or both. For example, the visual impact of wind turbines on the landscape may affect house prices for the local population and amenity value for tourists: these effects can be difficult to quantify and value. In projects of public importance where environmental and social criteria assume significant importance, purely economic approaches such as CBA or investment appraisal cannot represent all of the attributes which must be considered for an accurate assessment. The emergence of multi-criteria decision analysis (MCDA) in the 1960s and 1970s attempted to address this failure by allowing impacts on different scales to be compared. It breaks the assessment problem in smaller parts to facilitate analysis and aggregates these in a way that allows a project ranking to be made. MCDA is now widely used to shortlist options for large energy projects of public importance such as hydroelectric dams, transmission infrastructure and wind farms.

Energy policies as well as large, strategically important energy projects, which are supported by the state, must be measured not only by their value for money to their investors and wider society but also by their ability to achieve important national objectives such as GHG emission-reduction targets. In February 2005, the Kyoto agreement came into force obliging many developed countries to limit emissions of GHGs. Since then, emission mitigation has become a key energy policy objective for many industrialised countries. In order to develop and monitor policies, project appraisal techniques have been extended to measure the societal cost of climate change mitigation. One widely used metric is the marginal abatement cost (MAC) of a technology, which expresses the cost to an economy of reducing emissions by one unit by switching to a more energy-efficient or renewable energy technology. Initially, only operational emissions were considered when estimating MACs, but the low operational and relatively high production and installation emissions of renewable energy systems led to concerns about the accuracy of this approach. This has led to the increasing adoption of life cycle assessment as a method for estimating the whole life (or “cradle-to-grave”) emissions of energy systems.

The development of the aforementioned economic and non-economic assessment techniques (investment appraisal, CBA and MCDA) over the past two centuries has been critical to the effective assessment of energy projects. Two more recent developments are the widespread development of personal computers (PCs) and the collection of large energy-related datasets, many of which are in the public domain. These provide both a wide variety of input data and the necessary processing power for energy-related models. PCs now support powerful programming and data analysis packages that can be configured to simulate a wide range of detailed energy systems. Hourly wholesale electricity data are publically available in Ireland; dynamic wind farm output data are freely available in Denmark, and the advent of smart metering leads to collection of energy demand data at the level of individual buildings. These enable the development of detailed dynamic numerical models which are representative of energy conversion and conservation processes, which, until even a decade ago, were not possible. The resulting ability to model accurate cash flows, pollutant emissions and other outputs provides much more knowledge for decision-making purposes than was possible heretofore.

1.2 Aim

The aim of this book is to provide the reader with the tools to shortlist and economically evaluate energy projects as well as gain an appreciation for aspects of energy policy design. Specifically, students will learn

approaches to the dynamic modelling of energy inputs and outputs to and from a wide variety of projects employing a range of different renewable and energy-efficient technologies;

how to extend these models to estimate cash flows and GHG emissions;

ways of parameterising these results in order to quantify the financial and environmental performances of the projects;

techniques for assessing and shortlisting complex projects involving non-economic impacts; and

simple methods for designing price supports for energy technologies.

The book is written for students and practitioners alike. Undergraduate and postgraduate students will be introduced to the economic performances of a variety of technologies and to the basic concepts and frameworks of project financial assessment. Facilities' manager will learn how to provide evidence for business plans outlining their proposals for the energy retrofit and upgrade of their assets. Design engineers will benefit from understanding how to economically optimise their design solutions rather than sizing the plant and equipment to meet peak loads. Planners of large infrastructural projects will be introduced to systematic techniques for site and project screening before undertaking a detailed economic appraisal of a smaller set of project alternatives. Policy makers and planners will be introduced to the fundamentals of subsidy design for renewable and energy-efficient technologies.

The book deals primarily with renewable energy-supply and energy-efficient technologies. Renewable energy supply relates to energy conversion technologies, which use sources of energy that are naturally regenerated on a short (human) time scale, such as solar, wind, ocean, biofuels and geothermal energies. Typical technologies that convert renewable energy sources into electricity include wind turbines, solar photovoltaics (PV), biomass-driven gas and steam turbines, geothermally driven steam turbines, concentrating solar power, tidal barrages and a variety of wave-powered devices. Thermal conversion technologies are very diverse and include solar water heaters, biomass and biogas boilers and stoves and geothermal technologies. Non-renewable energy supply relates primarily to fossil fuels such as oil, coal and natural gas, which cannot be created in a human time scale and typically take many millions of years to form. Fossil-fuelled electricity generation usually employs various gas- and steam-turbine technologies, but also includes reciprocating engines, while heat generation is normally undertaken using boiler technologies and, to a lesser extent, stoves. We do not deal specifically with nuclear power in this book because this is a large topic in itself that, at the time of writing, has an uncertain medium-term future for political, economic and environmental reasons. Nonetheless, many of the principles described here can be directly applied to this technology.

Energy-efficient projects involve the use of alternative technologies, fuels and management systems to deliver the same level of service or output using less energy (irrespective of the energy-supply source). Therefore, any technology, fuel or management system has the potential to be energy efficient, because this classification is gained by comparing it to the displaced alternative. An obvious example is increasing the amount of insulation in a building to reduce heat losses, so that the same level of thermal comfort can be provided using less heat and, therefore, fuel. Burning gas instead of coal in a thermal power station can result in the consumption of less primary energy and, in this situation, may be viewed as an energy-efficient technology. It should be highlighted that although fossil-fuelled technologies are not the focus of this book, the concepts presented are equally valid for their assessment.

The learning approach adopted involves explaining each theory and providing an example in close proximity in order to illustrate and embed the concept. Larger case studies are also included to demonstrate the combination of different concepts for more complex examples. We attempt to give examples for a wide variety of industry sectors and applications to make the book as broadly relevant as possible. Examples are given for the domestic, commercial, energy and industrial sectors using single and multiple electrical and thermal technologies such as PV, solar water heaters, wind turbines, wave power, combined heat and power, boilers and insulation. In addition, a number of policy examples that illustrate feed-in-tariff and capital subsidy design are given. We attempt to make this book as practical as possible, so that the reader is able to easily apply the concepts to projects of personal interest. For this reason, the examples and case studies are made available online (www.wiley.com/go/duffy/renewable), which help the reader to gain a detailed understanding of the techniques used and apply them directly to problems of personal interest.

Finally, this book adopts a bottom-up ‘engineering’ approach to the financial appraisal of renewable energy projects. This involves the modelling, simulation and economic parameterisation of individual energy projects in isolation to the market in which they operate.

1.3 Aspects of renewable energy project appraisal

In general, the appraisal of renewable energy and energy-efficient projects is no different to the assessment of any other capital projects. Although we will see that some project performance measures are specific to the field, the main appraisal techniques described here such as investment appraisal, CBA, and multi-criteria analysis are widely applied to other investments, both large and small. Nevertheless, renewable and energy-efficient projects do have unique characteristics, which the assessor must be aware of in order to undertake a proper assessment.

Many renewable and energy-efficient projects are characterised by high initial investment costs and low operational costs. This is true for technologies such as wind, PV and solar thermal as well as energy-efficient measures such as insulation. Conventional fossil-fuelled plant, on the other hand, has lower capital costs as a proportion of total life cycle costs with relatively higher operational outgoings because of the ongoing need to purchase fossil fuels. This means that renewable energy and energy-efficient supply projects are generally less exposed to fluctuations in variable costs as compared to fossil-fuelled ones due to the high price volatility of fuel inputs, particularly oil and its derivatives. Renewables do remain exposed to fluctuations in revenues resulting from changes in the unit cost of energy outputs, such as electricity and heat, as does conventional plant, although input and output prices tend to move together, thus acting as a natural ‘hedge’ to revenue risk for fossil-fuelled plant. Often, the ‘revenues’ in renewable or energy-efficient projects are avoided costs such as the cost of grid electricity displaced by embedded generators. Revenues from many renewable projects may also include long-term price supports such as feed-in-tariffs, which provide a fixed production tariff or tariff floor. However, these can represent a significant risk because a single regulatory decision can greatly alter the basis of an initial investment decision. This political risk is exacerbated by the long payback periods needed for many renewable energy technologies. For example, PV feed-in-tariffs were reduced in the United Kingdom, Spain, Germany and Bulgaria, between 2009 and 2011. Societal imperatives can also shift quickly: the Great Recession of 2009 focused public debate on economic growth and employment while costly emissions' mitigation policies dropped down the priority list. The identification and quantification of project risk are, therefore, an important task in many renewable and energy-efficient project assessments.

The fast-changing energy and renewables landscape results in other risks too. Technology costs are evolving quickly: real capital costs of installed US commercial PV system have more than halved in the 15 years between 1998 and 2013 (Feldman et al., 2012), whereas the development of hydraulic fracturing technology has been associated with a drop in nominal US wellhead natural gas prices from $6.25 to $2.66/1000 ft3 between 2007 and 2012 (US EIA, 2014). Therefore, the timing of investments in renewable energy and energy-efficient projects and policies is particularly important. For example, investing under conditions of strong global growth is likely to be more attractive as energy prices are likely to be higher giving greater certainty to short- and medium-term revenues. Moreover, technology costs in the future are likely to be lower, possibly resulting in better returns to the private investor and lower technology subsidies.

Many renewable energy technologies rely on national subsidies for a variety of reasons, not least because they may not be competitive with conventional alternatives. The approach is controversial as governments do not have a reputation for ‘picking winners’, particularly in a field as technologically complex as energy conversion, storage, transmission and efficiency. These subsidies include feed-in-tariffs, capital subsidies, tax rebates and renewable obligations certificates. Opponents argue that putting a price on the negative effects of fossil fuels using a carbon tax is a more efficient approach because the market would adopt the technology with the lowest marginal abatement cost, thus resulting in lower overall societal costs as compared with subsidies. However, renewables' subsidies are regarded by others as important in encouraging investment in emerging low carbon technologies, accelerating market growth and reducing technology costs. State investments in onshore wind since the 1990s, for example, have greatly contributed to a decrease of about two-thirds in the real cost of wind power plant over the past two decades. Indeed, the costs of renewable technologies are falling more rapidly than conventional technologies because they are typically less mature. However, while policy supports can result in widespread technological deployment, learning and cost reductions, they can also result in supply constraints and increased market prices. Policy makers must apply project appraisal techniques to answer the questions: What is the minimum support necessary to support a technology? Is this cost-effective in supporting key government policies such as emissions mitigation? It is important that where subsidies are introduced they represent value for money for the taxpayer.

Project assessors should be aware that renewable energy-supply technologies do not always offer identical outputs to the conventional alternatives. A unit of electricity from a wind turbine is not the same as that from a thermal power station because the latter is almost always available when it is needed (i.e. it is ‘dispatchable’), whereas the former is only available when the wind is blowing and its availability cannot be guaranteed when needed (and it, therefore, is ‘non-dispatchable’). An accurate comparative analysis should always compare like-with-like; for example, storage and backup should be included with intermittent renewable generation when comparing it with dispatchable plant, so that identical levels of service are provided in each case. This approach should be considered when comparing any intermittent technology (wind, solar and ocean). However, when compared to conventional alternatives, renewable energy projects can provide additional benefits to society over fossil-fuelled alternatives, which should be considered as part of the assessment process. These include emissions reductions, local employment as well as increased national security of energy-supply due to reduced import dependency (in net energy importing countries only). Social costs imposed by renewable and energy-efficient projects should also be included.

1.4 Book layout

There are five main chapters in this book that introduce the reader to the techno-economic characteristics of renewable and energy-efficient systems, financial and non-financial project assessment methods and aspects of energy policy. Each chapter includes an initial content overview before describing relevant theory; short examples are provided throughout, which apply this theory to practical applications of renewable energy and energy-efficient projects. Chapters 3–6 include concluding comments, which highlight the key concepts introduced. Case studies are included at the ends of chapters, which illustrate how complete renewable energy projects might be assessed using the main concepts introduced.

Chapter 2, ‘Technologies’, describes a variety of renewable energy and energy-efficient technologies, which are necessary to understand the examples and case studies described in the book. The descriptions mainly focus on those aspects that are necessary for subsequent modelling and appraisal such as efficiencies and other operational parameters, investment costs, operating and maintenance costs and environmental emissions. This is by no means a comprehensive overview of all relevant technologies because this is not the focus of the book.

The foundation of almost all financial measures of energy project performance is an accurate cash flow. For energy projects, all cash flows are directly related to energy flows to and from the system being considered. For example, the cost of running a gas-fired boiler is related to how efficient it is at converting the gas input into the necessary heat output. Quantities of gas used and heat produced represent the main costs and benefits of the system and, together with capital cost, largely determine its financial performance. Similarly, environmental impacts such as GHG emissions are largely determined by the gas inputs to the system. Therefore, Chapter 3, ‘Modelling Energy Systems’, is dedicated to system definition, modelling and simulation.

Chapter 4, ‘Financial Analysis’, uses these cash flows to create financial measures – or parameters – for renewable energy and energy-efficient projects. First, fundamental concepts are introduced, which are necessary for converting project cash flows into useful parameters. A wide variety of parameters are then presented and their strengths and weaknesses in different contexts discussed. Those of particular relevance to assessing renewable energy projects are highlighted.

Not all projects can be compared on purely economic grounds. Many other advantages and disadvantages of a particular project option may be important. For example, social, political and environmental dimensions may be particularly important for large infrastructural projects such as the construction of hydroelectric dams or the routing of large overhead transmission lines. Chapter 5, ‘Multi-criteria Analysis’, offers alternative methods for shortlisting and selecting projects using MCDA techniques.

Chapter 6, ‘Policy Aspects’, combines these financial techniques with environmental assessment methods and extends them to introduce basic concepts in policy design. An initial review of policy options for emission mitigation is followed by an overview of life cycle assessment and methods for quantifying GHG emissions from different renewable energy and energy-efficient projects. The chapter explains marginal abatement costs and subsidy design and gives a short introduction to social CBA.

Case studies are provided at the end of Chapters 3–6, which demonstrate the application of many of the key concepts introduced in these chapters. Case studies include energy and cash flow models (commercial PV systems, gas heat pumps for data room cooling, compressed air energy storage), financial appraisals (converting a bus fleet to compressed natural gas fuel, wind farm appraisal), non-economic analysis (wind farm site selection) and policy-related assessments (MAC estimation and domestic PV feed-in-tariff design). Case study spreadsheet calculations can be accessed at www.wiley.com/go/duffy/renewable.

References

Feldman, D., Barbose, G., Margolis, R., Wiser, R., Darghouth, N. and Goodrich, A. (2012) Photovoltaic (PV) Pricing Trends: Historical, Recent, and Near-Term Projections, US Department of the Environment. [online]. Available at

www.nrel.gov/docs/fy13osti/56776.pdf

. Accessed 20 Oct 2014.

IEA (2012)

World Energy Outlook 2012

. Organisation for Economic Co-operation and Development (OECD)/International Energy Agency (IEA).

US EIA (2013)

Short-Term Energy Outlook Real and Nominal Prices

, US Energy Information Administration [online]. Available at

www.eia.gov/forecasts/steo/realprices

www.eia.gov/coal/data.cfm#prices

. Accessed 20 Oct 2014.

US EIA (2014) Natural Gas Price Data, US Energy Information Administration [online]

http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_a.htm

. Accessed 30 Oct 2014.

Chapter 2Technologies

2.1 Introduction

This chapter provides information on the technical and economic characteristics of renewable energy and energy efficient systems that is necessary for the energy modelling, financial appraisal, policy analysis and non-economic assessment methods described in Chapters 3–6. It covers a variety of technologies involved in energy generation, use and storage, many of which are used in examples and case studies throughout the book. The technologies are grouped into broad areas, which include electrical power generation; heat generation; combined heat, power and cooling; energy storage and energy efficiency. Fossil-fuelled technologies are included because although they are not renewable, switching to more efficient fossil-fuelled plant is an important source of energy efficiency gains in many situations.

For each of the energy systems covered, a description of the technology is presented followed by an analysis of its energy and economic characteristics. Emphasis is placed on parameters relevant to the appraisal of these technologies which include energy conversion processes, efficiencies, capital costs and operation and maintenance (O&M) costs. Different technologies are at different levels of maturity, and life cycle costs will decrease more rapidly for some as compared to others as they become more widely deployed. Therefore, where possible, technology learning rates are also presented.

2.2 Key concepts

A number of concepts which are common to many of the technologies are discussed in this chapter. These primarily focus on fuel characteristics, energy efficiency, power and energy, measures of plant availability and technology learning.

2.2.1 Heat of combustion

Almost all fossil-fuelled and biomass energy conversion technologies involve combustion. In the case of boilers, this thermal energy is used directly for a thermal end use. In electricity production, it is normally converted to rotational mechanical energy and then to electricity using an alternator. The heat of combustion of the fuel (or the ‘heating value’ or ‘calorific value’) is an important parameter in estimating the final thermal or electrical energy output. The heating value of any fuel is the energy released per unit mass when the fuel is completely burned. It depends on the chemical characteristics of the fuel and on the state of water molecules in the final combustion products. The fuel energy input can be evaluated as either the higher (gross) heating value (HHV) or the lower (net) heating value (LHV) of the fuel. HHV refers to a condition under which the water condenses out of the combustion products. As a result of this condensation, both latent and sensible heats affect the heating value. LHV, on the other hand, refers to the condition under which water in the final combustion products remains as vapour (or steam). The steam does not condense into liquid water; therefore, the latent heat is not accounted for. It is, therefore, important to use the same heating value when comparing the efficiency of different energy conversion heating systems.

2.2.2 Efficiency

The energy efficiency of an energy conversion device is defined as the useful energy output divided by energy input. The amount of energy inputted into a system is typically less (but never greater) than its energy output due to losses. These occur for many reasons including frictional, thermal and electrical resistance.

It is important to consider the system you are analysing when estimating its energy efficiency. For example, in order to estimate the amount of fuel consumed in providing electrical lighting in a home, it is important to consider all steps in the process: electricity production by the power plant, transmission and distribution losses, light bulb efficiency and any shading effects. In this case, the overall efficiency could be lower than 25%. However, if the efficiency of the electricity produced by the power plant only is considered then the efficiency would be in the range of 40–60%.

2.2.3 Rated power and energy

The size of a power plant or energy conversion technology is normally discussed in terms of its rated power. This is the maximum electrical or thermal power that it is capable of producing under normal operating conditions, which is recommended by the manufacturer. Rated power is typically given in kilowatts (kW) or megawatts (MW). It is analogous to brake horsepower in a car. Domestic energy conversion (e.g. domestic boilers) devices are normally measured in kilowatts, while power stations are normally measured in megawatts. Devices normally operate at a power output between a minimum threshold and the maximum rated power.

The energy output from an energy conversion technology is the product of the power output and the time of operation at this output. Although the international unit for energy is joule (J), we will normally measure energy in kilowatt-hours (kWh), megawatt-hours (MWh) or gigawatt-hours (GWh), where 1 Wh is equivalent to 3600 J.

Energy cannot be ‘consumed’ because it can only be converted from one form to another. We, therefore, attempt to refer to energy ‘use’ rather than ‘consumption’; fuels, however, can be consumed.

2.2.4 Capacity and availability factors

The capacity factor (CF) or load factor of an energy conversion technology is its energy output as a fraction of the energy that could be generated at its rated power over the same period of time. CF is often expressed in equivalent full-load hours representing the time over which the technology would have to operate annually at its rated power to reach the measured annual generation, for example, a CF of 30% corresponds to an equivalent full-load use of .

Plant availability factor is the percentage of time that it is available for energy conversion. Planned outages are scheduled periods when the plant operation is stopped for anticipated maintenance. Forced outages are unscheduled maintenance periods when the plant unexpectedly ceases to operate normally and requires maintenance. It is important to consider plant availability in any financial analysis.

2.2.5 Technology learning

‘Technology learning’ or ‘learning-by-doing’ occurs as the market for a technology develops. It results in lower technology costs for a wide variety of reasons, including technological advances, process optimisation, manufacturing economies of scale and supply chain development. The rate of technology learning has been rapid for a number of renewable technologies such as wind and photovoltaics (PV). It is important that this phenomenon be considered when designing policy supports or making investment decisions for large projects with long lead-in periods.

Learning curves are expressed as

2.1

where is the cost in year , is the cost in an arbitrary starting year, is the learning parameter or learning elasticity parameter or rate of innovation, is the cumulative installed capacity in year and is the cumulative installed capacity in the starting year.

With every doubling of cumulative production, costs decrease to a value expressed as the initial cost multiplied by a factor called the ‘progress ratio’. The progress ratio is expressed as

2.2

where is the progress ratio and is the learning rate.

Learning rates for industrial products including energy efficient and supply technologies typically range from 10% to 30%.

2.3 Electrical power generation

2.3.1 Natural-gas-fired power plant

Natural-gas-fired power plants have recently become more popular for electricity generation because they can be more efficient compared to other fossil-fuelled technologies, generate fewer pollutants and due to the recent fall in North American gas prices. Technologies that use natural gas to generate electricity include steam units, gas turbines and combined cycle units. In steam-generating units, natural gas is burned in a boiler to heat water to produce steam, which is used to turn a turbine and generate electricity. Steam units have low efficiencies, typically ranging between 32% and 35%. In gas turbines, hot gases from burning natural gas are used to turn the turbine and generate electricity. Combined cycle units incorporate both a steam unit and a gas turbine as a single unit, as shown in Figure 2.1. Here, natural gas is burned with air and the resulting hot gases generate electricity as in gas turbines, while the waste heat from the gas turbine is used to generate steam, which drives a turbine and generates electricity. Combined cycle plants have efficiencies of 50–60% as a result of the efficient use of the heat generated. Over their lifespan, combined cycle plants are an economically competitive option for new base-load power generation.

Figure 2.1 Combined cycle gas power plant.

The performance of a power plant can be expressed in terms of the heat rate (HR) and thermal efficiency. The electrical energy output from a gas-fired power plant is related to its efficiency and gas fuel input by

2.3

where is the electricity generated (kWh) over a time period , is the quantity of fuel used (kWh) over a time period and is the plant efficiency (%).

The HR is the efficiency of conversion from fuel energy input to electricity output. It is the fuel energy required to generate a unit of electricity and is traditionally used in the industry instead of plant efficiency. HR is related to efficiency by

2.4

The electricity generation cost for natural gas plants is influenced by the number of full operating hours, efficiency, capital (investment) cost, variable and fixed O&M costs. For gas turbine and combined cycle gas turbine (CCGT) plant, capital expenditure includes gas (and steam for CCGT) turbines; balance of plant; engineering, procurement, construction management services and other costs (such as land, inventory capital, spare parts and plant equipment, grid connections, project development, project management). Turbines and balance of plant account for at least half of all investment costs. Variable O&M costs are much higher than fixed O&M costs because the former are dominated by fuel, the most expensive system input. Table 2.1 summarises the characteristics of natural gas power plants.

Table 2.1 Characteristics of selected natural gas power plants

Parameter

Gas turbine

Combined cycle

Capacity (MW)

211

580

Efficiency (%)

32.8

50.9

Capital cost (€/kW)

360–610

690–1150

Variable O&M costs (€/MWh)

22.50

2.75

Fixed O&M costs (€/(kW yr))

3.95

4.73

Emissions rate (g/MWh)

0.0015

0.0005

0.2421

0.0195

PM10

0.0440

0.0155

858.2

312.2

Source: U.S. Energy Information Administration, Form EIA-860, ‘Annual Electric Generator Report’; NREL (2012).

2.3.2 Coal-fired power plant

Coal-fired power plant generates electricity by burning coal and heating water in a furnace or boiler to produce steam. The steam flows under high pressure through a turbine that turns a generator to produce electricity. The boiler is the main component of a coal-fired power plant, and its optimal design and operation have a large impact on the plant's overall efficiency and emissions. New coal power plant technologies are under constant development, resulting in on-going efficiency gains and reduced emissions. Such technologies include fluidised bed combustion, oxy-fuel combustion, advanced gasification, integrated gasification combined cycle and high performance power systems. Figure 2.2 shows a typical coal-fired power plant.

Figure 2.2 Coal-fired power plant.

The efficiency of a conventional coal-fired power plant using a steam turbine generation system is in the range of 25–40%, and it is predicted that future combined cycle plants will have efficiencies in excess of 60%. Integrated gasification combined cycle is one of the recent concepts of advanced power generation with the most efficient power and lowest emission of pollutants. The energy output characteristics of coal-fired plant are the same as those for gas-fired plant and are given by Equations 2.3 and 2.4.

The electricity generation costs for coal-fired power plant is influenced by the number of full operating hours, efficiency, capital, variable and fixed O&M costs. For pulverised coal plants, investment costs include turbine equipment; balance of plant/installation (accounting for over 60% of capital costs); engineering, procurement, construction management services and other costs (such as land, inventory capital, spare parts and plant equipment, utility connections, project development, project management). An important international policy objective is the decarbonisation of coal-fired power plant through the use of carbon capture and storage (CCS). Current technologies at demonstration stage can remove 85% of flue gas carbon emissions but the plant efficiency reduces by about 34% (the HR increases from 7.07 to 10.64 MJ/kWh). Table 2.2 outlines some characteristics of different coal-fired power plant technologies.

Table 2.2 Characteristics of selected coal-fired power plant technologies

Parameter

Pulverised coal

Pulverised coal with carbon capture

Gasification combined cycle

Gasification combined cycle with carbon capture

Flue gas desulphurisation retrofit

Capacity (MW)

606

455

590

520