Babatunde 2019
Babatunde 2019
Babatunde 2019
https://www.emerald.com/insight/1750-6220.htm
Hybrid power
Analysis of an optimal hybrid system
power system for an off-grid
community in Nigeria
Olubayo Moses Babatunde 335
Faculty of Engineering, University of Lagos, Akoka Yaba, Nigeria
Received 26 January 2019
Damilola Elizabeth Babatunde Revised 28 May 2019
27 August 2019
Covenant University, College of Science and Technology, Ota, Nigeria Accepted 26 September 2019
Abstract
Purpose – This study aims to analyze the effects of variations in annual real interest rates in the
assessment of the techno-economic feasibility of a hybrid renewable energy system (HRES) for an off-
grid community.
Design/methodology/approach – Hybrid Optimization of Multiple Energy Resources (HOMER)
software is used to propose an HRES for Abadam community in northern Nigeria. The HRES was designed to
meet the basic needs of the community over a 25-year project lifespan. Based on the available energy
resources in the community, photovoltaic (PV), wind turbine, diesel generator and battery were suggested for
integration to serve the load requirements.
Findings – When the annual real interest rates were taken as 10 and 8 per cent, the total amount of total
energy fraction from PV, wind turbine and the diesel generator is 28, 57 and 15 per cent, respectively. At these
interest rates, wind turbines contributed more energy across all months than other energy resources. The
energy resource distribution for 0, 2,4 and 6 per cent annual real interest rates have a similar pattern, but PV
contributed a majority of the energy.
Practical implications – This study has used annual real interest and inflation rates dynamic behavior
to determine optimal HRES for remote communities. Hence, its analysis will equip decision-makers with the
necessary information for accurate planning.
Originality/value – The results of this study can be used to plan and design HRES infrastructure for off-
grid communities around the world.
International Journal of Energy
Keywords Energy production, Optimization, Wind-PV, Cash flow, HOMER, Hybrid renewable energy, Sector Management
Vol. 14 No. 2, 2020
pp. 335-357
Net present cost © Emerald Publishing Limited
1750-6220
Paper type Research paper DOI 10.1108/IJESM-01-2019-0009
IJESM 1. Introduction
14,2 Many scholars have asserted that there is a positive correlation between lack/inadequate
energy access and poverty in developing economies, especially in sub-Saharan Africa
(Chakravarty and Tavoni, 2013; Kanagawa and Nakata, 2007; Monyei and Adewumi, 2017;
Pachauri et al., 2004). Inadequate access to energy (especially electricity) is a big hindrance
to the social and economic development of a society. And, the negative effect of this is
336 majorly predominant among women and children in developing countries (Oseni, 2012;
Spagnoletti and O’Callaghan, 2013). In 2017, the United Nations Economic Commission for
Africa (UNECA) reported that approximately 1.3 billion people across the globe do not have
access to electricity (UNECA, 2018). The majority of this population reside in urban and
rural communities in sub-Saharan Africa (SSA); this region has an average electrification
rate of less than 32 per cent (Huet and Aurelien, 2017). This figure indicates that SSA has the
worst electricity access rates in the world.
Based on energy access, installed capacity and overall consumption, the electricity sector
in SSA is grossly underdeveloped. The low rate of electrification in SSA has ensured that the
industrial and residential sectors are starved of electricity; hence, countries in SSA struggle
to sustain and grow a healthy gross domestic product (GDP). With specific reference to
Nigeria, statistics have shown that only 45 per cent of Nigerians have access to electricity
(Power Africa, 2018). Residents of semi-urban and rural communities are the most
neglected – they have an electricity access rate of 36 per cent (Power Africa, 2018). This rate
is not likely to increase due to the perpetual population increase and the inherent challenges
faced by the Nigerian power sector. Available statistics also indicate that the residential
sector accounts for more than 50 per cent of electricity consumption in 2014 (Power Africa,
2018); the basic electricity needs of the population accounted is 14,003 GWh (European
Union, 2018). As a result, meeting the basic loads of the consumers is very important.
To enjoy access to electricity, several electricity consumers in rural communities rely on
privately owned captive gasoline and diesel generators. These methods of electricity
generation are usually stable, until there is a rise in fuel pump prices. This is usually
encountered regularly due to fuel shortages or government policies. The incessant fuel
scarcity and increase in fuel prices raise the fear and concerns about the sustainability of
these types of electricity generation in the long term. Apart from the aforementioned
challenges, the release of greenhouse gases (GHGs) to the environment and the challenges of
transporting these fuels to rural communities increase the cost of managing this type of
electricity generation. The challenges of transporting fuels to rural communities increase
during the raining season, especially for a community with a bad road network.
The stakes are high and, as such, governments and investors must strive to invest and
develop the vast capacity of the available energy resource of the region to solve the
problems of energy poverty. To accelerate the electrification rate in Nigeria, decolonization
of the conventional grid coupled with adequate funding on both research and infrastructure
is essential. Due to the high cost of grid extension and challenges utility companies may
experience in the recovery of investment incurred on connecting rural communities, it is
unlikely that these increase in demand for electricity will be met through centralized
generation in rural communities. Challenges ranging from high transmission losses to
expensive costs of electricity generation and shortage of fuel have always been a hurdle in
guaranteeing access to reliable electricity in many rural communities in Nigeria. An
innovative, flexible and decentralized power generation alternative is, therefore, necessary.
Distributed energy generation based on renewable energies could be essential in
addressing the low electricity access rates in SSA. Power plants using renewable energy
have the potential of ensuring that societies and communities are provided with clean and
affordable energy (Energy and Act, 2001). This is supported by the recent decrease in the Hybrid power
global cost of variable renewable energy (VRE) technologies (such as wind and PV) and the system
massive potentials of solar irradiation and wind in SSA (Akinbulire et al., 2014). However,
the effectiveness of relying on a single VRE source is hampered by seasonal solar radiation,
cyclic (day and night) solar radiation and wind speed fluctuations, which could negatively
affect the supply of power (Borhanazad et al., 2014). The challenge of solar radiation and
wind speed fluctuations can be overcome by ensuring an increase in the capacity and the
size of all parts and components of a renewable energy system – such as the wind turbines 337
or PV modules. This requires huge cost, thereby making renewable energy technologies
expensive for consumers of developing countries and adding a financial constraint to its
adoption (Elhadidy, 2002). An optimum combination of different integrated energy
resources with two or more renewable energy sources and a storage system can be used to
mitigate the aforementioned challenges; this combination generates what is known as a
hybrid renewable energy system (HRES) (Ashok, 2007).
An HRES increases access to electricity, which is an essential tool that can alleviate
many of the challenges faced by developing economies; therefore, it has the capacity to
improve the social and economic status of developing countries (Mohammed et al., 2013).
Even though HRESs are credible energy alternatives, complexity in design is increased by
factors such as the limit in operational, technical, economic and environmental constraints
(Hafez and Bhattacharya, 2012). To arrive at a cost-effective system, it is necessary to
consider multiple criteria. From the investors’ and policymakers’ perspective, the
determination of the cost-effective alternative may not be sufficient in securing investments.
It is expected that the HRES must be sustainable and return enough revenue to
accommodate the running costs and, or break even. In some cases, there is a need to inject
more capital to increase the capacity of the HRES. No matter where the additional
investment is coming from, it usually comes at a cost – this cost is tied to annual real interest
rates. This rate affects the optimal configuration, the cost of investment, the energy mix and
some other economic metrics. The determination of the effects of this rate on the
aforementioned features makes an HRES model robust and flexible to changes associated
with it. Hence, this study analyzed the effects of varying annual real interest rates on the
techno-economic feasibility of an HRES for an off-grid community.
338
IJESM
Table I.
related works
Comparison of
Effects of
Effects of annual real Effects of annual real Effects annual real annual real
Component Cost Emission interest rates interest rates interest rates on interest rates on
Authors/studies sizing optimization quantification on sizing on costs emission the energy mix
2. Literature review
Many scholars have investigated the use of an HRES in rural areas, for example, Adaramola
et al. (2012) carried out techno-economic feasibility of wind energy in south-western Nigeria.
339
Charrouf et al. (2018) also reported techno-economic viability analysis of wind energy using
Algeria as a case study. On the other hand, Hassan et al. (2010) described how to use
standalone photovoltaic (PV) systems to supply electricity to an emergency health care
clinic in Egypt. HOMER software was used to carry out their analysis. Babatunde et al.
(2018) reported a study on the role of demand-side management for the minimization of
GHGs in rural healthcare clinics. Akikur et al. (2013) compared a hybrid renewable energy
and standalone solar system. Their findings demonstrated the need for energy storage for
efficient operation. Furthermore, their study investigated the cost analysis of these systems
and concluded that even though both systems will generate clean energy, the cost of a
hybrid is constant with increasing distance from the grid. They concluded that hybrid
energy systems are appropriate for rural electrification. Nakata et al. (2005) established that
a single source of renewable energy for hybrid energy systems are not efficient because
renewable energy sources are intermittent and, so, a combination of more than one
renewable energy sources may offer a promising approach to rural electrification.
Akinbulire et al. presented the effect of applying demand-side management on rural loads
before the sizing of the HRES for a typical rural community (Akinbulire et al., 2014).
Olatomiwa (2016) evaluated the technical and economic advantages of supplying a rural
health clinic using renewable energy. The author used a remote community situated at
Fatika in northern Nigeria as a case study. Based on a techno-economic analysis, the author
reported that a PV/diesel/battery offers the best configuration. Their results demonstrated a
high probable use of an HRES for generating electricity for the rural health clinics far away
from a grid network. Babatunde et al. (2018) reported an assessment of standalone solar PV
power supply for rural primary health centres (PHCs) using Abadam, Nigeria as a case
study.
Rehman and Al-Hadhrami (2010) investigated the techno-economic viability of a
PV-diesel hybrid system for a rural community close to Rafha, Saudi Arabia. The result of
the hybrid system exhibits better financial gain as compared to a diesel generator system.
Abanda et al. (2016) analyzed the deployment of standalone PV systems in Cameroon.
Similarly, Hiendro et al. (2013) carried out a techno-economic analysis of wind and solar
energy for onshore rural zones in Indonesia. Lal and Raturi (2012) discussed the techno-
economic analysis of a hybrid system using a remote region in Fiji Island as a case study –
HOMER software was used to perform system optimization analysis. They observed GHG
reduction in their results, which could have contributed to the environmental impact if only
the conventional energy was considered. Celik (2007) reported a techno-economic analysis of
wind energy using Iskenderun, Turkey, as a focus. Their results demonstrated a significant
drop in wind energy cost once certain components were exempted from taxes. Bhakta et al.
(2015) carried out a techno-economic analysis of PV/wind/hybrid power system in
Lakshadweep Islands, India. An off-grid community’s techno-economic simulation was
conversed by Babatunde et al. (2017). The techno-economic analysis of using wind and solar
for the production of hydrogen in Saudi Arabia was discussed by Al-Sharafi et al. (2017).
Chong et al. (2011) investigated the technical and economic viability of wind-solar hybrid
IJESM renewable energy for Malaysia use. Nagaraj et al. (2016) performed a techno-economic
14,2 analysis of a hybrid system designed for sustainable operation of a small purification plant
in remote areas. Ahmed et al. (2015) discussed the application of a solar-biomass hybrid
system for rural electrification using Bangladesh as a case study. Askari and Ameri (2012)
presented a feasibility analysis of a renewable energy system for meeting the load demand
of 50 households in a remote area of Kerman, Iran. Opoku et al. (2018) reported a techno-
340 economic analysis of a hybrid system using Kumasi in Ghana as a case study.
The discussed literature has conducted relevant and interesting concepts on the techno-
economic optimization of energy systems. They offer a significant background on which
this current study stands. The authors of these papers have made exclusive contributions to
the body of knowledge on the techno-economic viability of renewable energy systems.
However, emission quantification was not discussed by the reviewed literature (Table I)
(Adaramola et al., 2012; Ahmed et al., 2015; Al-Sharafi et al., 2017; Askari and Ameri, 2012;
Bhakta et al., 2015; Celik, 2007; Charrouf et al., 2018; Chong et al., 2011; Nagaraj et al., 2016;
Nakata et al., 2005; Opoku et al., 2018; Rehman and Al-Hadhrami, 2010). This paucity will be
addressed in this present paper by providing an emission analysis of the optimal energy
systems. In addition, the effects of annual real interest rates on the optimal size of the energy
system, costs, emission and energy mix have not been considered (Table I). These are also
considered in this study.
3. Methodology
This section presents the methodology applied in this study. To elucidate the feasibility of
HRES adoption in a rural community in Nigeria, a remote community in northern Nigeria is
selected. The location’s wind speed and solar irradiation are needed to determine what
energy system alternative is technically and economically viable. Also of importance is the
typical energy demand of the community. This will help in determining the size and cost
implication of the optimal energy system. The daily energy demand is estimated in this
section. The mathematical details (technical and economic) involved in the determination of
the optimal system are also discussed in this section.
3.2 Technical
3.2.1 Hybrid renewable energy system model. Based on the available energy resources (solar
and wind) in the location under consideration, this study proposed a hybrid system that
consists of PV panels, wind turbines, batteries and diesel generators (Figure 3). The diesel Hybrid power
generator and battery bank serve as backup energy sources in the case that renewable system
energy sources are insufficient to satisfy the energy demand. Although biomass plants can
also be used by the community, the quantification of the presently available biomass
resource for the community is not available. The optimal energy system that can serve the
community can be a combination of any of the available alternatives. For the purpose of
obtaining the optimal architectures, the Hybrid Optimization of Multiple Energy Resources 341
(HOMER) – a software for microgrid and distributed generation power system design and
optimization – is adopted (Ighravwe et al., 2018).
3.2.2 Electricity needs in a typical rural community. According to Akinyele and Rayudu
(2016), it is expected that the supply of energy in rural communities sufficiently meets the
30 7.00
25 6.00
20 5.00
15 4.00
3.00
10
2.00
5 1.00 Figure 1.
0 0.00 Average monthly
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec PSH and ambient
temperature for
Daily solar radiaon kWh/m2/d Air temperature °C Abadam
4
Wind speed (m/s)
2 Figure 2.
1 Monthly average
wind speed for
0 Abadam
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Figure 3.
Proposed HRES
model for the
community
IJESM energy needs of the community members. It is, therefore, important to make an accurate
14,2 valuation of the daily consumption, peak demand and annual energy growth to meet the
energy needs of the community. This will ensure that the hybrid power system components
such as the conductors and generating plants are properly and sufficiently sized. Energy
needs in rural communities usually range from cooking, irrigation, drinking,
communication, sanitation, health, and agriculture, among others. These needs are typically
342 divided into three, namely, basic needs, extended needs and normal needs (El Bassam and
Maegaard, 2004). The basic energy needs are usually the lowest because consumers are
usually encouraged and allowed to use some high priority and deferrable loads for fewer
hours of the day. Also, the size of the community-based loads for basic energy needs is
smaller compared to those of extended and normal energy needs. For example, the typical
energy requirement for water pumping for the three categories of loads includes: basic –
3,000 Wh, extended – 6,000 Wh, normal – 10,000Wh. While for basic energy needs, lighting
is only allowed for about 3 h daily, a designer may allow 4 h of daily lighting for both
extended and normal energy needs. When designing for basic energy needs, refrigerators
are usually not allowed. The extended energy needs allow for more demands to be met,
while the normal energy needs capture all the energy needs. Details of these are discussed in
El Bassam and Maegaard (2004).
Because of the limitations on the availability of adequate funding, an electrified
community may need to start its electrification process with an energy system designed
based on basic energy needs. Because of the modularity of emerging renewable energy
systems such as PV and wind, the energy system designed based on basic energy needs
can be expanded when the load increases (to extended or normal energy needs). The
target case study is remote and off-grid and, as such, only the basic needs of the rural
community are considered; this could be expanded as the need arises. Below list shows
an overview of basic energy needs for a typical rural community.
Electricity needs for a typical community of 40 households:
(1) Individual household appliance:
lighting (4, 15 W lamp/household for 3 hours daily), fan (1, 25 W fan/household
for 3 hours daily), TV (1, 30 W TV per household for 4 hours daily), Radio (1.5
W radio/household for 4 hours daily ), phone charger.
(2) Community service needs:
Water pumping (3 kW), water treatment (1.5 kW), others (1.5 kW).
It is assumed that the community is composed of 40 typical households that consume
electricity. Equation (1) is used to determine the daily demand for the basic needs of the
community (Figure 4):
X
Hourly energy ¼ ðNo of appliance kW rating of appliance duration of useÞ
(1)
3.2.3 Photovoltaic system. The capacity of the PV panel needed for the energy system is
estimated using equation (2) (Akinyele and Rayudu, 2016):
2 X XC 3
h
4 E þ
1 h
E
1 C 5
Scap ¼ (2)
SHpeak
18 Hybrid power
16 system
14
12
Load (kW)
10
8
6 343
4
Figure 4.
2
The daily demand for
0 the basic needs of the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
community
Hour of the day
where Eh, h, Ec and SHpeak are the individual household energy demand, number of houses,
energy consumed by community load “c” and the area’s lowest monthly peak sun hours,
respectively. In this case, h is equal to 40. The Scap power output can be calculated using
equations (3) and (4) (Samson et al., 2019):
!
GT
Ppv ¼ Ypv fpv 1 þ aP TC TC;STC (3)
GT;STC
!
NOCT 200 C
TC ¼ Ta þ (4)
Gr
where:
Ypv = threated power of PV array;
fpv = PV derating factor (per cent);
GT = solar irradiation incident on the PV array (kW/m2);
GT,STC = solar irradiation incident at standard condition (1 kW/m2);
aP = temperature coefficient of power (per cent/°C);
TC = PV cell temperature (°C);
TC,STC = PV cell temperature under standard test conditions (°C);
NOCT = nominal operating cell temperature; and
Gr = reference irradiance.
According to Akinyele (2017) and Markvart et al. (2003), the values of GSTC, Gr, NOCT are
1 kW/m2, 0.8 kW/m2, and 45 6 20C, respectively.
3.2.4 Wind turbine. Performance curves are used to determine the power output of wind
turbine generators. According to Bhandari et al. (2015), the performance curves can either be
quadratic, linear or cubic. The interpolation of the data values given by the data sheets is
used to calculate the average output power. Equation (5) is used to estimate the output
power of the turbine:
8
> 3ð Þ ðÞ
< bw t cPR ; wci < w t < wr
>
ð Þ
Pwt t ¼ PR ; wr < wðtÞ < wco (5)
>
>
:
0; otherwise
IJESM where PR represents the wind turbine rated power, wco represents the cut-out wind speed, wci
14,2 represents the cut-in wind speed, wr represents the rated wind speed, w(t) represents the
hourly data of wind speed.
The speed of the wind is proportional to the height of the wind turbine; therefore, the
data available on wind speed at several positions will be measured at different levels of
height. The amount of energy supplied by the wind turbine is usually dependent on the
344 wind turbine height of installation. The wind profile of any installation height can be
modified using an equation for the adjustment of installation height, as shown in
equation (6):
b
H
w ¼ wo (6)
Ho
Where w is the speed of the wind obtained at the height of the hub H, wo is the speed of the
wind measured at the height of the reference Ho and b is the exponent of the power-law
which has a variation with the wind speed, elevation, season, nature of the terrain and time
of day (Akinyele and Rayudu, 2016).
3.2.5 Diesel generator. The fuel that the proposed diesel generator will consume depends
on the operating power of the generator (PoDG), the rating of the generator (PrDG), fuel curve
slope (X) and fuel curve intercept (Y). It is estimated using equation (7) (HOMER, 2016). The
operation of the diesel generator to a level close to the full load, i.e. 80 to 100 per cent of the
power rating, would yield high performance and efficiency:
3.2.6 Battery capacity. The battery system is used to store excess energy from the renewable
sources, which is used to meet the energy demands in case of insufficient energy from the
renewable sources (Ighravwe, 2019). In this study, equation (8) is used to calculate a system
storage capacity (Babatunde et al., 2018):
DL BAd
Bsc ¼ (8)
h Ba DoBD Vsn
where DL, BAd, h Ba, DoBD and Vsn are the demands of the load, days of battery autonomy,
round-trip efficiency of the battery, depth of battery discharge and nominal voltage of the
system, respectively.
Equations (9) and (10) are used to address a battery system over-charge or over-
discharge problem:
where Bs.min, Bs, Bs.max and SoCmin denote the minimum battery size, battery size, maximum
battery size, maximum depth of discharge and minimum state of charge at a given time,
respectively.
In this study, the minimum and maximum values of the state of charge are 30 and 100
per cent, respectively (HOMER, 2016). The surplus electricity generated by the energy
system will be stored by the battery bank, which will complement the community’s energy Hybrid power
requirement when necessary. Equation (11) is used to constraint the battery state of charge: system
SoCmin # SoC ðiÞ # SoCmax (11)
where Eannren is the renewable energy totally generated annually and the total amount of
energy generated.
TCann represents the total cost obtained annually, Fcr represents the factor for capital
recovery, i is the interest rate (per cent) and Xproj is the lifetime of the project. For this work,
the annual real interest rate used is 12 per cent, while the project lifetime is 25 years.
3.3.2 Levelized cost of energy (LCOE). The levelized COE (LCOE) is the average cost of
valuable electrical energy which the system produces. LCOEis computed using equation (14)
(Babatunde et al., 2019):
TCGEann
LCOE ¼ (14)
TDEM
where TCGEann represents the total cost of generating electricity annually, while TDEM is
the total demand for electricity met by the source of electricity generation. Table III shows
the technical details of the energy system components.
rates
Table III.
348
IJESM
Table III.
Annual real interest PV Wind turbine Wind turbine Diesel Converter Dispatch Initial Operating cost TNPC COE Renewable Diesel Diesel
rate (%) (kW) (10 kW) (3 kW) (kW) Battery (kW) strategy capital ($) ($/yr) ($) ($/kWh) fraction (L) operation (h)
Power (kW)
1 1.5
0.8
0.6 1
0.4
0.5
0.2
0 0
349
Jan
Jan
Feb
Feb
Apr
Sep
Nov
Dec
Apr
Sep
Nov
Dec
Mar
May
Aug
Mar
May
Aug
Jun
Jul
Oct
Jun
Jul
Oct
PV Wind Diesel PV Wind Diesel
(a) (b)
2.5 3
8% interest rate 6% interest rate
2 2.5
2
Power (kW)
Power (kW)
1.5
1.5
1
1
0.5 0.5
0 0
Jan
Jan
Feb
Nov
Dec
Feb
Apr
Sep
Apr
Sep
Nov
Dec
Mar
May
Aug
Mar
May
Aug
Jun
Jul
Oct
Jun
Jul
Oct
PV Wind Diesel PV Diesel
(c) (d)
3 3
4% interest rate 2% interest rate
2.5 2.5
2 2
Power (kW)
Power (kW)
1.5 1.5
1 1
0.5 0.5
0 0
Jan
Feb
Apr
Sep
Nov
Dec
Mar
May
Aug
Jun
Jul
Oct
Jan
Feb
Apr
Sep
Nov
Dec
Mar
May
Aug
Jun
Jul
Oct
PV Diesel PV Diesel
(e) (f)
3
0% interest rate
2.5
2
Power (kW)
1.5
0.5
Figure 5.
0 Electricity production
Jan
Feb
Apr
Sep
Nov
Dec
Mar
May
Aug
Jun
Jul
Oct
350 0
–10,000
–20,000
Figure 6.
Nominal cash flows
through the lifetime
–30,000
of the project 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Year Num ber
30,000
25,000
Net prsent cost ($)
20,000
15,000
10,000
5,000
Figure 7. 0
Cash flow summary PV Wind turbine 3kW Diesel Batery (6CS25P) Converter
by component
PV Wind turbine 3kW Diesel Batery (6CS25P) Converter
make efforts to come up with a cheaper source of energy storage that can bring down the
TNPC. Because diesel generator also contributes a large portion of the TNPC, a reduction in
its pump price will reduce the TNPC of the entire system. The rest of this section presents
the effects of fluctuations in annual real interest rate on the various economic indices such as
initial cost, operating cost, TNPC and COE. Also presented in this section is the effect of
changing annual real interest rates on CO2 emission and renewable fraction.
4.3.1 Effects of change in annual real interest rates on levelized cost of energy and total
net present cost. It can be seen from Figure 8 that the levelized COE has a linear relationship
with the annual real interest rate. At lower annual real interest rates, the COE is also lower,
but the COE increases with an increase in annual real interest rates. By implication,
government and policymakers must concentrate on how to reduce the annual real interest
rates on goods and services related to deploying an HRES for rural electrification. This will
make the electricity cheaper for rural consumers, and can, in turn, improve the quality of life
as well as reduce the poverty level among rural dwellers. For this case study, the minimum
COE for the best system based on the change in annual real interest rate is 0.377 $/kWh,
while the maximum is 0.768 $/kWh. The TNPC is shown to decrease as the annual real
interest rates increases. To maintain a balance between the TNPC and COE, the annual real
interest rate should be close to 7 per cent.
4.3.2 Initial cost and operating cost. Figure 9 shows the plot of the operating cost of the Hybrid power
optimal system against the annual real interest rate. Initially, the operating cost remained system
approximately constant up to about 6 per cent before increasing to US$3474/year at 12 per
cent. The initial cost of the system was constant from 0 per cent annual real interest rate to 6
per cent before finally dropping to US$29,433, at 12 per cent. To reach a compromise and
maintain a constant relationship between the initial capital and the operating costs, the
annual real interest rates must not go beyond 6 per cent (Figure 9).
4.3.3 Relationship between CO2, renewable energy (RE) and interest rate. At higher 351
renewable energy (RE) fraction, the CO2 emission was low due to the diesel generator operating
at fewer hours (Figure 10). To keep emission low and maintain high renewable penetration, the
annual real interest rate must not exceed 6 per cent. Figure 11 shows the relationship between
the diesel annual operational hours and the annual real interest rate. Between 0 and 6 per cent
annual real interest rate, the fuel cost was constant, but sharply increased for the rest of the
incremental annual real interest rate. Based on the environmentalist point of view, the
preferable annual real interest rate that can eliminate the use of diesel generator and clip down
emission is between 0 and 6 per cent. Apart from eliminating or reducing emissions, the
operating cost of diesel generator and TNPC are reduced.
4.4 Comparison of standalone diesel generator and hybrid renewable energy system
This sub-section presents a comparison of an off-grid HRES and standalone diesel generator
for meeting the energy demand of the community. The initial cost comparison of the HRES
$100,000 0.9
$90,000 0.8
$80,000 0.7
$70,000
COE ($/kWh)
Total NPC ($)
0.6
$60,000
0.5
$50,000
0.4
$40,000
$30,000 0.3
$20,000 0.2
$10,000 0.1 Figure 8.
$0 0 Relationship between
0 2 4 6 8 10 12
NPC, LCOE and
annual real interest rate (%)
annual real
Total NPC ($) COE ($/kWh) interest rate
$60,000 4,000
3,500
$50,000
Operang cost ($/yr)
3,000
Inial capital ($)
$40,000
2,500
$30,000 2,000
1,500
$20,000
1,000
$10,000
500 Figure 9.
$0 0 Relationship between
0 2 4 6 8 10 12 initial cost, operating
annual real interest rate (%) cost and annual real
Inial capital ($) Operang cost ($/yr)
interest rate
IJESM and diesel generator shows that it is cheaper to procure the diesel generator as compared to
14,2 the HRES (Figure 12). However, as shown in Figure 13, the TNPC of the standalone diesel
generator for supplying the community is higher than that of the HRES at all annual real
interest rates. This is due to the cost associated with the annual operating cost of the diesel
5,000 1.2
352 4,500
1
4,000
3,500
0.8
3,000
CO2 (kg)
RE
2,500 0.6
2,000
0.4
1,500
1,000
0.2
500
Figure 10. 0 0
Relationship between 0 2 4 6 8 10 12
CO2, RE and annual annual real interest rate (%)
real interest rate
CO2 (kg) RE
3,000
Anual diesel gen operaon (hrs)
2,500
2,000
1,500
1,000
60,000
50,000
Inal investment ($)
40,000
30,000
20,000
10,000
Figure 12. 0
Comparison of initial 0 2 4 6 8 10 12
cost for diesel annual real interest rate (%)
standalone and HRES
HRES Inial capital ($) DG Inial capital ($)
generator. Figure 14 shows that the operating cost of the HRES is lower than that of a Hybrid power
standalone diesel generator; this makes the HRES the best option at all annual real interest system
rates over the lifespan of the project. The comparison of the LCOE also indicates that HRES
has cheaper LCOE as compared to the standalone diesel generator (Figure 15). Emission
resulting from optimal models for both DG only and HRES is presented in Figure 16; it
shows a significant reduction in CO2 emission for the HRES model when compared to the
DG standalone system for all annual real interest rates considered. 353
5. Conclusions
This study has presented the optimization of an off-grid HRES for a remote community.
Also, the likely effects of variation in annual real interest rates on techno-economic and
emission optimization of the HRES for a rural community in Nigeria were studied.
The results show that variations in annual real interest rates affect the choice of the optimal
system architecture. For instance, at lower annual real interest rates (0-6 per cent), a hybrid
combination of PV, wind turbine and battery is identified as the best system while higher
annual real interest rates (8-12 per cent) favors the implementation of PV/Wind/diesel
generator/battery energy system. By implication, as soon as annual real interest rates rise
above 6 per cent, an investor would need to bring in wind turbine into the power plant mix, to
350,000
300,000
Total net present cost ($)
250,000
200,000
150,000
100,000
50,000
0 Figure 13.
0 2 4 6 8 10 12 Comparison of NPC
annual real interest rate (%) for diesel standalone
HRES Total NPC ($)HRES DG Total NPC ($)HRES
and HRES
14,000
12,000
operang cost ($/year)
10,000
8,000
6,000
4,000
2,000
Figure 14.
0 Comparison of
0 2 4 6 8 10 12 operating cost for
annual real interest rate (%)
diesel standalone
HRES Operang cost ($/yr) DG Operang cost ($/yr)
and HRES
IJESM 1.6
14,2 1.4
1.2
COE ($/kWh)
1
0.8
0.6
354
0.4
0.2
Figure 15. 0
Comparison of COE 0 2 4 6 8 10 12
for diesel standalone annual real interest rate (%)
and HRES HRES COE ($/kWh) DG COE ($/kWh)
20,000
18,000
16,000
14,000
12,000
CO2 (kg)
10,000
8,000
6,000
4,000
2,000
Figure 16. 0
CO2 emission 0 2 4 6 8 10 12
annual real interest rate (%)
comparison
HRES CO2 (kg) DG CO2 (kg)
adequately meet the energy demands of the community. This study was also able to establish
that 100 per cent renewable fraction of energy at an affordable cost of energy can only be
achieved at lower annual real interest rates. Hence, lower annual real interest rates will
encourage significant reductions in emission levels as compared to higher annual real
interest rates. Therefore, to reduce emission attributed to energy generation for this case
study, it will required the conscious efforts of government to make sure that the interest rates
charged on equipment (PV panel, wind turbine, batteries, converters, diesel generators, etc.)
and service related to RE facilities are maintained between 0 and 6 per cent. In all optimal
systems returned for the various annual real interest rates, the TNPC of the battery bank is
the highest as compared to other components. A cheaper and more efficient storage system
will reduce the life cycle cost of putting up a HRES (on which has battery storage). Also, a
direct relationship exists between COE and annual real interest rates. To maintain this
relationship the annual real interest rate must be maintained at close to 7 per cent.
Although this study is case-specific, its methodology can be used to make an informed
decision as regards rural electrification in SSA, especially in Nigeria. This study’s findings
will assist stakeholders to make the right policies for rural electrification. For example, as
the investments in the battery bank is responsible for the largest share of the TNPC,
policymakers and researchers can direct research efforts to find cheaper sources of energy
storage with a longer lifespan. Also, the government and policymakers may need to work on
reducing annual real interest rates on goods and services related to an HRES for rural
electrification. This will make the cost of electricity cheaper for rural consumers.
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Corresponding author
Olubayo Moses Babatunde can be contacted at: olubayobabatunde@gmail.com
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