Assessing and modelling the costs of on-farm distributed renewable energy systems

Description

This chapter describes the most relevant costs assessment methodologies and the state-of-the-art research lines regarding the cost of on-farm distributed renewable energy systems (on-farm DG-RES). The analysis of the costs of on-farm DG-RES can be looked at from the perspective of “private” or “public” cost. Private cost analysis aims to assess the financial sustainability of the projects for investors and to compare the economic risks and returns of different alternatives. The most commonly used techniques for assessing the private cost of on-farm DG-RES include techno-economic assessment (TEA) and the levelized cost of energy (LCOE). The analysis of the “public” cost of on-farm DG-RES is carried out in order to identify the total costs of the projects, not only for their promoters but also for society as a whole. This includes elements such as indirect and environmental impacts and changes in welfare. Public cost analysis is particularly relevant for public authorities and policy makers in order to produce efficient regulatory frameworks and supporting measures. The methodologies suited to analyse the public cost of on-farm DG-RES include cost-benefit assessment (CBA) and Life Cycle assessment (LCA). Some of the most relevant results of applying TEA, LCOE, CBA and LCA to the analysis of on-farm DG-RES are presented in this chapter, showing the need for creation of reliable datasets and comparable methodologies and metrics in order to facilitate further research. Finally, a case study consisting of the calculation of the LCOE of a solar system for irrigation is included.

Table of contents

1 Introduction 2 Private costs of on-farm distributed generation-renewable energy systems 3 Social costs of energy 4 Risk analysis methods 5 Case study 6 Conclusion 7 Annex 1: Focus and methodologies for on-farm distributed renewable energy systems 8 Where to look for further information 9 References