Economic and regulatory uncertainty in renewable energy system design: a review

Renewable energy is increasingly mobilizing more investment around the globe. However, there has been little attention to evaluating economic and regulatory (E&R) uncertainties, despite their enormous impact on the project cashflows. Consequently, this review analyzes, classifies, and discusses 130 articles dealing with the design of renewable energy projects under E&R uncertainties. After performing a survey and identifying the selected manuscripts, and the few previous reviews on the matter, the following innovative categorization is designed: sources of uncertainty, uncertainty characterization methods, problem formulations, solution methods, and regulatory frameworks. The classification reveals that electricity price is the most considered source of uncertainty, often alone, despite the existence of six other equally influential groups of E&R uncertainties. In addition, real options and optimization arise as the two main approaches researchers use to solve problems in energy system design. Subsequently, the following aspects of interest are discussed in depth: how modeling can be improved, which are the most influential variables, and potential lines of research. Conclusions show the necessity of modeling E&R uncertainties with currently underrepresented methods, suggest several policy recommendations, and encourage the integration of prevailing approaches.Peer ReviewedObjectius de Desenvolupament Sostenible::7 - Energia Assequible i No Contaminant::7.2 - Per a 2030, augmentar substancialment el percentatge d’energia renovable en el con­junt de fonts d’energiaObjectius de Desenvolupament Sostenible::7 - Energia Assequible i No ContaminantPostprint (published version

Renewable energy auction prices: near subsidy-free?

The latest trend of low record bid prices in renewable energy auctions has raised concerns on the effective deployment of the winning projects. A survey of recent auction data from several countries, technologies and remuneration designs is analysed and compared with the corresponding levelised costs of energy (LCOEs) to draw first insights on their viability. A critical assessment of the ability of the LCOE for determining the adequate bid level is then performed and the preliminary unviable results of selected mature technologies are further investigated using improved profitability metrics as the project and equity net present value (NPV) and internal rate of return (IRR). As representative examples, the analysed Danish 2019 onshore wind and photovoltaics (PV) auctions require very specific scenarios to become viable, which cast doubts on their effective implementation. Under the assumptions of a realistic base case, the sensitivity analysis revealed that either 59% of decrease in the weighted average cost of capital (WACC), or 37% of discount on the investment cost or a 3.6% annual increment in the mean market price is needed for achieving the NPV break-even in the onshore wind case. Likewise, the PV case is unprofitable whatever the WACC may be, and either a 60% discount on the investment cost or a 6.8% annual increment in the mean market price is needed for the NPV to break-even. Although some projects could be relying on indirect revenues or additional sources of incomes beyond the auction support, it remains to see if they are finally materialised.Peer ReviewedPostprint (published version

A comprehensive model for the design of a microgrid under regulatory constraints using synthetical data generation and stochastic optimization

As renewable energy installation costs decrease and environmentally-friendly policies are progressively applied in many countries, distributed generation has emerged as the new archetype of energy generation and distribution. The design and economic feasibility of distributed generation systems is constrained by the operation of the microgrid, which has to consider the uncertainty of renewable energy sources, consumption habits and electricity market prices. In this paper, a mathematical model intended to optimize the design and economic feasibility of a microgrid is proposed. After a search in the state-of-the-art, weaknesses and strengths of existing models have been identified and taken into account for building the present model. The present model should be seen as a basis on which other models can be built upon, hence a complete definition of the different sub-models is stated: uncertainty modelling, optimization technique, physical constraints and regulatory framework. One of the main features presented is the generation of synthetic data in uncertainty modelling, employed to enhance the reliability of the model by taking into account a longer time horizon and a shorter time step. Results show significant details about energy management and prove the suitability of using a stochastic approach rather than deterministic or intuitive ones to perform the optimization.Peer ReviewedPostprint (published version

Gestió òptima de l'energia en microxarxes amb incertesa a la producció i a la demanda

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Gestió òptima de l'energia en microxarxes amb incertesa a la producció i a la demanda

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Gestió òptima de l'energia en microxarxes amb incertesa a la producció i a la demanda

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Impact of different regulatory structures on the management of energy communities

The following paper aims to prove the importance of embedding the regulatory framework when analyzing the distributed generation activity of an energy community. At present, most of the scientific literature has focused on distributed energy, and energy communities address the issue of regulatory frameworks qualitatively. In this paper, the most representative regulatory frameworks devoted to the promotion of energy communities were analyzed and synthesized, namely, feed-in tariffs, net metering, and the self-consumption scheme. As a result, an algebraic model able to represent the essence of the regulatory structures related to those remuneration mechanisms was obtained. Next, this model was embedded into a physical model, based on real data, previously created. The resulting Mixed Integer Linear Program (MILP) was used to identify the implications of these frameworks. The results demonstrate the impact of regulatory schemes on energy management and economic results of an energy community. Indeed, profitability changes drastically depending on which remuneration scheme is applied to an energy community.Peer ReviewedPostprint (published version

Individual vs. community: Economic assessment of energy management systems under different regulatory frameworks

In the context of the increasing popularity of self-sufficient communities around the globe, this study aims to compare the economic performance of energy management in two distinct situations: whether it is conducted individually or collectively within a community. After setting the context and completing a literature review, a research gap concerning the influence of regulatory frameworks in the economic results is identified. Therefore, this work presents this comparison under several frameworks employed to promote renewable energy, in order to provide a more realistic point of view and deliver insights in policy making. To this end, a mixed integer linear program (MILP) is developed, and the formulation of three key regulatory schemes is embedded into it: feed-in tariff, net metering, and self-consumption schemes. A what-if analysis is performed in order to take into account different combinations of rewarding parameters for each regulatory framework, as well as different profiles of consumption for the individual case. Results show that energy management within a community improves the overall average benefit of the customers up to 0.44 €/day·dwelling, for all of the studied frameworks except feed-in-tariff and some instances of type-B self-consumption, which can reduce it up to -0.87 €/day·dwelling. The conclusions determine fundamental differences between regulatory schemes and their suitability to promote collective or individual facilities, and emphasize the need to design a set of policies that take into account the habits of consumption of the individuals to foster effectively energy communities.Peer ReviewedObjectius de Desenvolupament Sostenible::7 - Energia Assequible i No Contaminant::7.2 - Per a 2030, augmentar substancialment el percentatge d’energia renovable en el con­junt de fonts d’energiaObjectius de Desenvolupament Sostenible::11 - Ciutats i Comunitats SosteniblesObjectius de Desenvolupament Sostenible::11 - Ciutats i Comunitats Sostenibles::11.3 - Per a 2030, augmentar la urbanització inclusiva i sostenible, així com la capacitat de planificar i gestionar de manera participativa, integrada i sostenible els assentaments humans a tots els païsosObjectius de Desenvolupament Sostenible::12 - Producció i Consum ResponsablesObjectius de Desenvolupament Sostenible::12 - Producció i Consum Responsables::12.2 - Per a 2030, assolir la gestió sostenible i l’ús eficient dels recursos naturalsObjectius de Desenvolupament Sostenible::7 - Energia Assequible i No ContaminantPostprint (published version