Renewable Energy and Energy Efficiency

Symbols, Units and Abbreviations ix About the Companion Website xv 1 Introduction 1 1.1 Background 2 1.2 Aim 4 1.3 Aspects of renewable energy project appraisal 6 1.4 Book layout 8 References 10 2 Technologies 11 2.1 Introduction 11 2.2 Key concepts 11 2.2.1 Heat of combustion 12 2.2.2 Efficiency 12 2.2.3 Rated power and energy 12 2.2.4 Capacity and availability factors 13 2.2.5 Technology learning 13 2.3 Electrical power generation 14 2.3.1 Natural-gas-fired power plant 14 2.3.2 Coal-fired power plant 15 2.3.3 Hydropower 17 2.3.4 Wind power 19 2.3.5 Ocean energy 22 2.3.6 Photovoltaics 25 2.4 Heat generation 28 2.4.1 Boilers 28 2.4.2 Solar water heaters 30 2.5 Combined heat and power 34 2.5.1 Micro-CHP 36 2.5.2 CHP engines 37 2.5.3 CHP turbines 37 2.5.4 Combined heat, power and cooling 38 2.6 Energy storage 39 2.6.1 Electrical 40 2.6.2 Pumped hydroelectric storage 40 2.6.3 Compressed air energy storage 42 2.6.4 Thermal energy storage 44 2.7 Energy efficiency 45 2.7.1 Thermal insulation 46 2.7.2 High-efficiency lighting 48 References 50 3 Modelling Energy Systems 53 3.1 Introduction 53 3.2 System, model and simulation 54 3.2.1 Systems 54 3.2.2 Models 58 3.2.3 Simulation 71 3.3 Modelling and simulating energy systems 76 3.3.1 Steps in simulating energy projects 76 3.3.2 Simulation tools 79 3.3.3 Data sources 79 3.4 Case studies 83 3.4.1 Office PV system 83 3.4.2 Gas heat pump for data room cooling 87 3.4.3 Compressed air energy storage 90 3.5 Conclusions 93 References 95 4 Financial Analysis 97 4.1 Introduction 97 4.2 Fundamentals 98 4.2.1 Investor perspective 98 4.2.2 Types of projects and decisions 99 4.2.3 Cash flows 100 4.2.4 Real and nominal prices 104 4.2.5 Present value 106 4.2.6 Discount rates 109 4.2.7 Taxation and depreciation 112 4.2.8 Unequal project lifespan 114 4.3 Financial measures 116 4.3.1 Payback and discounted payback periods 117 4.3.2 Return on investment 120 4.3.3 Profitability index and savings-to-investment ratio 121 4.3.4 Net present value 123 4.3.5 Internal Rate of Return 127 4.3.6 Life cycle cost 131 4.3.7 Levelised Cost of Energy 132 4.3.8 Uncertainty and risk 134 4.3.9 Financial measures compared 136 4.4 Case studies 139 4.4.1 Municipal bus fleet conversion to compressed natural gas 139 4.4.2 New wind farm development 142 4.5 Conclusion 148 References 149 5 Multi-Criteria Analysis 151 5.1 General 151 5.2 Simple non-compensatory methods 152 5.2.1 Introduction 152 5.2.2 Dominance 153 5.2.3 Satisficing methods 155 5.2.4 Sequential elimination methods 157 5.2.5 Attitude-oriented methods 158 5.3 Simple additive weighting method 160 5.3.1 Basic simple additive weighting method 160 5.3.2 Sensitivity analysis of baseline SAWresults 163 5.3.3 Assigning weights to the decision criteria 164 5.4 Analytic hierarchy process 168 5.4.1 Introduction 168 5.4.2 Hierarchies 169 5.4.3 Establishing priorities within hierarchies 169 5.4.4 Establishing and calculating priorities 171 5.4.5 Deriving priorities using an approximation method 172 5.4.6 Deriving exact priorities using the iterative Eigenvector method 173 5.5 Concordance analysis 181 5.5.1 Introduction 181 5.5.2 PROMETHEE I 184 5.5.3 ELECTRE TRI 188 5.6 Site selection for wind farms - a case study from Cavan (Ireland) 189 5.6.1 Introduction 189 5.6.2 National and international guidance 189 5.6.3 Decision framework chosen 194 5.6.4 Decision model utilised to categorise each of the 18 sites 195 5.6.5 Selection of potentially suitable sites 198 5.6.6 Concluding comment on case studies 198 5.7 Concluding comments on MCDA models 200 References 202 6 Policy Aspects 203 6.1 Energy policy context 203 6.2 Energy policy overview 206 6.2.1 Policy instruments and targets 206 6.2.2 Designing policy instruments 208 6.3 Marginal abatement cost 210 6.3.1 Environmental life cycle assessment 211 6.3.2 Estimating marginal abatement costs 221 6.4 Subsidy design 224 6.4.1 Types of energy subsidies 224 6.4.2 Calculating feed-in-tariffs 226 6.5 Social cost-benefit analysis 230 6.5.1 Define the objective and identify base case 231 6.5.2 Identify costs and benefits 231 6.5.3 Value costs and benefits 233 6.5.4 Discount the costs and benefits 235 6.5.5 Interpret results 237 6.5.6 Assess who bears the costs and benefits 237 6.5.7 Uncertainty 238 6.5.8 Make decision 238 6.6 Case studies 238 6.6.1 Marginal abatement costs of emission mitigation options in a building estate 238 6.6.2 PV feed-in-tariff design 243 6.7 Conclusions 248 References 248 Appendix A: Table of Discount Factors 251 Index 253