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Determining the optimal long-term service agreement period and cost considering the uncertain factors in the fuel cell: From the perspectives of the sellers and generators

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  • Kang, Hyuna
  • Hong, Juwon
  • Hong, Taehoon
  • Han, Dongsu
  • Chin, Sangyoon
  • Lee, Minhyun

Abstract

Due to its high efficiency and low environmental impact, fuel cell is regarded as one of the key alternative energy sources. As the fuel cell for power plants is a relatively expensive and specialized product compared to other renewable energy systems, it is important to enter a long-term service agreement (LTSA), a contract in which the generators pay a certain fee to the sellers for guaranteed electricity generation, so that generators can operate the fuel cell power plant without anxiety. The sellers and generators with trade-off relationships in their profits, however, suffer economic losses due to the uncertain factors (e.g., stack life, stack replacement cost, etc.) of the fuel cell system. Therefore, this study aimed to determine the optimal LTSA period and cost considering (i) the economic feasibility of the two participants (i.e., sellers and generators); and (ii) the uncertain factors of the fuel cell system (i.e., the 2.5 MW molten carbonate fuel cell (MCFC) system). Towards this end, this study selected uncertain factors affecting the profitability of sellers and generators using sensitivity analysis, and conducted probabilistic life cycle cost (LCC) analysis using Monte Carlo simulation (MCS). As a result, the range of the optimal LTSA for sellers and generators was determined to be as follows: (i) LTSA period: 6–20 years; and (ii) LTSA cost: US$510,204/year to US$1,623,377/year. The analysis results of this study showed that the proposed optimal LTSA range could be used for sellers and generators as a decision support tool in the fuel cell market. The novel method that was used in this study could be applied in various fields for selecting the optimal LTSA period and cost considering the profitability of each stakeholder and the uncertain factors.

Suggested Citation

  • Kang, Hyuna & Hong, Juwon & Hong, Taehoon & Han, Dongsu & Chin, Sangyoon & Lee, Minhyun, 2019. "Determining the optimal long-term service agreement period and cost considering the uncertain factors in the fuel cell: From the perspectives of the sellers and generators," Applied Energy, Elsevier, vol. 237(C), pages 378-389.
    • Handle: RePEc:eee:appene:v:237:y:2019:i:c:p:378-389
    DOI: 10.1016/j.apenergy.2018.12.070
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    References listed on IDEAS

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    1. Hong, Taehoon & Kim, Daeho & Koo, Choongwan & Kim, Jimin, 2014. "Framework for establishing the optimal implementation strategy of a fuel-cell-based combined heat and power system: Focused on multi-family housing complex," Applied Energy, Elsevier, vol. 127(C), pages 11-24.
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    3. Daeho Kim & Jimin Kim & Choongwan Koo & Taehoon Hong, 2014. "An Economic and Environmental Assessment Model for Selecting the Optimal Implementation Strategy of Fuel Cell Systems—A Focus on Building Energy Policy," Energies, MDPI, vol. 7(8), pages 1-22, August.
    4. Bollapragada, Srinivas & Gupta, Aparna & Lawsirirat, Chaipat, 2007. "Managing a portfolio of long term service agreements," European Journal of Operational Research, Elsevier, vol. 182(3), pages 1399-1411, November.
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    2. Jung, Seunghoon & Jeoung, Jaewon & Kang, Hyuna & Hong, Taehoon, 2021. "Optimal planning of a rooftop PV system using GIS-based reinforcement learning," Applied Energy, Elsevier, vol. 298(C).

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