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Levelized cost of electricity for solar photovoltaic, battery and cogen hybrid systems

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  • Mundada, Aishwarya S.
  • Shah, Kunal K.
  • Pearce, J.M.

Abstract

The technological development and economic of scale for solar photovoltaic (PV), batteries and combined heat and power (CHP) have led to the technical potential for a mass-scale transition to off-grid home electricity production for a significant number of utility customers. However, economic projections on complex hybrid systems utilizing these three technologies is challenging and no comprehensive method is available for guiding decision makers. This paper provides a new method of quantifying the economic viability of off-grid PV+battery+CHP systems by calculating the levelized cost of electricity (LCOE) of the technology to be compared to centralized grid electricity. The analysis is inherently conservative as it does not include the additional value of the heat form the CHP unit. A case study for residential electricity and thermal demand in an extreme worst case environment (Houghton, Michigan) is provided to demonstrate the methodology. The results of this case study show that with reasonable economic assumptions and current costs, PV+battery+CHP systems already provide a potential source of profit for some consumers to leave the grid. A sensitivity analysis for LCOE of such a hybrid system was then carried out on the capital cost of the three energy sub-systems, capacity factor of PV and CHP, efficiency of the CHP, natural gas rates, and fuel consumption of the CHP. The results of the sensitivity provide decision makers with clear guides to the LCOE of distributed generation with off-grid PV+battery+CHP systems and offer support to preliminary analysis that indicated a potential increase in grid defection in the U.S. in the near future.

Suggested Citation

  • Mundada, Aishwarya S. & Shah, Kunal K. & Pearce, J.M., 2016. "Levelized cost of electricity for solar photovoltaic, battery and cogen hybrid systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 692-703.
    • Handle: RePEc:eee:rensus:v:57:y:2016:i:c:p:692-703
    DOI: 10.1016/j.rser.2015.12.084
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