Evaluation criteria of independent hybrid

energy systems
..............................................................................................................................................................

Tae Yong Jung, Donghun Kim*, SeoKyung Lim and Jongwoo Moon†
Graduate School of International Studies, Yonsei University, South Korea
............................................................................................................................................
Abstract

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Based on actual measurement data from a resort in the Maldives, this paper explores the criteria for the
optimal off-grid renewable energy systems that contribute to greenhouse gas mitigation and climate adapta-
tion efforts from three perspectives: technical, economic and environmental. Using Hybrid Optimization
of Multiple Electric Renewables software, the optimal technical combination of hybrid energy system is
determined. Moreover, indicators such as levelized cost of energy and net present cost are considered as
economic criteria to determine the financial feasibility of the off-grid renewable energy systems. Finally,
CO2 emission level and renewable shares are reviewed from environmental perspective.

Keywords: hybrid energy system; energy storage system; off-grid system; LCOE; HOMER
∗ Corresponding author:
dhkim2@yonsei.ac.kr Received 20 November 2018; revised 8 May 2019; editorial decision 8 May 2019; accepted 26 May 2019
................................................................................................................................................................................

1 INTRODUCTION Fiji. According to an economic analysis based on HOMER

Record-breaking heat waves, wildfires and floods that hit all parts
of the world in 2018 have been pointed out as the consequence
of the global warming, climate change caused by humans. The
impact of global warming on climate change is occurring in real
time and is no longer ambiguous. The International Renewable
Energy Agency (IRENA) argued that two-thirds of global green-
house gas (GHG) emissions come from the production and use
of energy from fossil fuels [1]. Although electricity has been
generated mainly by fossil fuels over many decades, new power-
generating technologies are being developed, which are more flex-
ible and allow for the integration of a variety of renewable sources,
such as solar and wind energy. According to IRENA’s global
energy roadmap, the share of wind and solar power is expected
to increase from 25% to 85% by 2050 worldwide, assuming that
a variety of flexible options will be developed to ensure grid
stability, including time-of-use electricity pricing, adaptation of
market designs and new business models [2]. Indeed, the renew-
able energy market has made remarkable progress, achieving a
worldwide investment of $200 billion in 2017 [3]. In particular, the
world installed more new solar power projects than the combined
net additions of coal, gas and nuclear plants in 2017.
Reflecting the growing importance of renewable energy,
various researches on the application of independent renewable
energy systems in remote areas have been conducted. For
instance, Jung et al. [4] conducted an economic analysis on the
feasibility of a hybrid PV-diesel-ESS system on Mavuva Island,
† Jongwoo Moon, http://orcid.org/0000-0003-3147-3102
International Journal of Low-Carbon Technologies 2019, 14, 493–499
© The Author(s) 2019. Published by Oxford University Press.
This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/
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doi:10.1093/ijlct/ctz036 Advance Access publication 1 August 2019
software, the hybrid solar PV-diesel-ESS energy system claimed
to be economical for the Maldives government as well as
for its users. In addition, Vendoti et al. [5] found that the
hybrid renewable energy systems are sustainable and found
economical power supply in southern India (Chittoor) through
an optimization analysis using HOMER simulation. Based on
simulation results as well as the cost optimization process, the
paper concluded that the installation of wind solar hybrid system
configuration is most suitable for stand-alone loads around
Chittoor. Moreover, Phurailatpam et al. [6] investigated the
planning and optimization of DC microgrids for India context.
The paper considered different scenarios of rural and urban
microgirds to derive optimized and reasonable cost of electricity
for reliable supply of power. Also, Chouaib et al. investigated
the optimal sizing of renewable resources available in south-
western Algeria and concluded that the usage of 2500 kW solar
photovoltaic (PV) energy, two wind turbines, 1400 kW diesel
generator and 2400 kW storage system (battery) could be the best
configuration that is both ecological and economical based on
HOMER PRO simulations. Furthermore, Mei et al. [7] assessed
the economic viability of a hybrid PV/wind turbine/diesel system
in the southern city of Malaysia, Johor Bahru. Using HOMER
simulation, the technical feasibility of the system was evaluated
and the economic analysis of the system was performed. The
paper concluded that the configuration of 80 kW PV, 8 units of
wind turbines and 50 units batteries has the greatest potential to
replace the stand-alone diesel system in Johor Bahru, Malaysia.
493
T. Y. Jung et al.

With reasonable cost of energy and system installation, such Table 1. Input assumptions
system configuration was also proved to reduce the emission of
Parameters Value
CO2 gases the most [8].
In this paper we aim to investigate the evaluation criteria of Diesel price $1.06/L
renewable energy system using solar PV in particular, which is PV/ESS/diesel O&M 2% of system cost
Inflation rate 2.2%
considered as a suitable solution for electrification in remote areas Discount rate (weighted average cost of capital) 8%
where the grid extension is difficult and uneconomical. With Rate of return (debt) 6%
declining costs and increasing performance of solar PV as well Rate of return (equity) 12.67%
as declining costs and technological improvements in electricity
storage and control systems, adopting hybrid renewable energy

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systems could serve as an optimum option to diversify the source
of energy supply. Based on data from one of the resorts located
in the Maldives, the criteria for the optimal off-grid renewable
energy systems will be examined from three perspectives: tech-
nical, economic and environmental. Using HOMER, technical
criteria will be investigated to determine which combination of
renewable energy systems could result in the most optimal sys-
tem configuration among all possible combinations of renewable
energy systems. Moreover, based on HOMER results, indicators
such as investment cost, operation and maintenance cost, lev-
elized cost of energy (LCOE) and net present cost (NPC) will be
considered as economic criteria to determine the financial fea-
sibility of deploying the independent renewable energy systems.
Finally, environmental criteria such as CO2 emission level and
renewable shares will be reviewed to determine that adopting Figure 1. HOMER system configuration.
independent hybrid energy systems could contribute to GHG
mitigation and climate adaptation efforts. petroleum, gas or coal resources, and hydropower is not feasible
due to the inappropriate topography [11]. As a result, Small Island
Developing States (SIDS), including the Maldives, depend highly
2 OPTIMIZATION METHODS AND on petroleum imports for their power generation. As such, the
Maldives is extremely vulnerable to oil price changes and is subject
SIMULATIONS to fluctuating international oil prices. Thus, solar PV can be an
attractive option for the Maldives with its strong solar resource.
2.1. System simulations Meanwhile, due to the dispersed habitation in the Maldives,
HOMER, the energy modeling software, is used in this paper to
the conventional, large-scale, fossil fuel-based grid system is no
determine criteria from technical, economic and environmental
longer a sustainable option. In this regard, this paper examines the
perspectives to replace diesel generators in the Maldives with solar
independent hybrid system incorporating the use of PV, energy
PV hybrid systems. Based on the input parameters such as hourly
storage system (ESS) and existing diesel generators to assess the
and monthly load variations as well as system costs, HOMER
feasibility of an independent hybrid renewable energy system in
performed an hourly simulation of all possible combination of
the Holiday Inn Resort located on Kandooma Island, the Mal-
components entered and ranked the system configurations that
dives. The load pattern and system costs are based on the data
satisfy the technical constraints at the lowest life-cycle cost [9].
collected from the Holiday Inn Resort and the corresponding data
Hence, multiple optimizations under a range of input assumptions
will be investigated using HOMER software.
to measure the effects or changes in the model inputs could be
examined.[10].
2.3. Input assumptions
The project in the Maldives is designed to replace the existing
2.2. Independent solar PV + ESS project in the diesel generators with solar PV and ESS. It is assumed that there is
Maldives no limit for the size of solar PV to be installed and HOMER opti-
The Maldives, a small island developing country in the Indian mizer decides the optimal size of solar PV panels. ESS installed
Ocean, is selected for our research purpose to assess the technical, in this project is a vanadium redox flow battery (VRFB) type and
economic and environmental viability of independent hybrid its standard size is 250 kWh. Likewise, a HOMER simulation of
renewable energy systems. The Maldives is one of the most all possible combination of system configurations is performed to
vulnerable countries to climate change impacts such as rising present the optimal number of ESS to be deployed that satisfies
sea levels and extreme weather conditions. It has no indigenous the technical constraints at the lowest cost of electricity.

494 International Journal of Low-Carbon Technologies 2019, 14, 493–499


Figure 2. Load profile. (a) Daily load; (b) monthly load. Source: Jung and Kim [15]
Table 2. HOMER result of system configurations a
ST 2 System Architecture
configuration
PV (kW) DIESEL
GENSET (kW)
ST1 DIESEL-PV-ESS 462 500
ST2 DIESEL-PV 546 500
ST3 DIESEL only - 500
a Source: HOMER optimization 2 system type.
The electric load pattern is based on the data provided by
the Holiday Inn Resort. Since Kandooma Island is located in a
tropical region where the building’s cooling system is essential, the
electric load shows a relatively stable pattern with daytime peaks.
It also shows relatively stable daily and monthly loads, as shown
in Figure 2, as tourists visit the island all year round.
The cost of solar panels and ESS are based on the prices pro-
vided by WonGwang Electric Power Corporation and H2 Inc.,
respectively. The operation and management (O&M) costs of each
system are estimated to be 2% of the system costs. The project
lifetimes as well as the system lifetimes of solar PV and VRFB are
assumed to be 20 years. The inverter will be replaced every 7 years
and the diesel generator is assumed to be replaced after operating
60 000 h. In order to calculate LCOE, this paper assumes that
the inflation rate is expected to be 2.2% on average, the average
inflation rate of the Maldives between 2013 and 2017. Also, the
average diesel price is assumed to follow the world average, which
is $1.06/L [12]. Also, this paper assumes that 70% of the capital
costs are financed by debt and the rest of them are raised using
equity as other typical renewable energy projects assume [13].
Moreover, this paper assumes the discount rate to be 8%, which
is considered to be a conservative rate to be used for renewable
energy projects [14]. Given the ratio of debt and equity as well as
the discount rate, the rates of return for debt and equity are 6%
and 12.67%, respectively. The debt is assumed to be amortized in
8 years.
Evaluation criteria of independent hybrid energy systems
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Cost
ESS CONVERTER COE ($/kWh) NPC ($) Renewable
(kW) fraction (%)
1 1184 0.311 4.55 M 44.0
- 786 0.332 4.86 M 36.1
- - 0.367 5.37 M 0
3 RESULTS AND DISCUSSION
3.1. Technical criteria
In terms of technical criteria, the most optimal system configu-
ration at the Holiday Inn Resort is evaluated using HOMER soft-
ware. It was found that the system configuration combining ESS-
PV-diesel (System Type 1) generates electricity at the lowest cost
as shown in Table 2. The optimal size of PV to support the existing
500 kW diesel generator is 462 kW and one ESS (250 kW) will
be needed to back up electricity production by PV. Meanwhile,
the system configuration deploying PV-diesel (System Type 2) is
found to be a less efficient system setting because its COE is higher
than ST1 (System Type 1), which is 0.332$/kWh. ST2 will use a
larger PV size (546 kW) than ST1 to meet the electricity needs,
because it does not have a storage system to store electricity at
night.
As shown in Figure 3 below, when PV panels and diesel gen-
erators are used together, the amount of electricity produced by
PV accounts for almost half of the total electricity production.
When installing a hybrid system, the total amount of electricity
production becomes greater than when using a diesel generator
alone as shown below. In the case of ST1, the renewable fraction
turns out to be as high as 44%, the largest percentage among
the three options. Meanwhile, the renewable fraction of ST2 is
36.1%, slightly lower than that of ST1. This means that without
ESS, the hybrid system cannot save PV-generated electricity at
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T. Y. Jung et al.

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Figure 3. Monthly average electric production by system configurations.

Table 3. Cost comparisons from HOMER a

ST System Cost IRR (%) Simple Discounted
configuration payback (yr) payback (yr)
COE ($/kWh) NPC ($) Initial capital ($) Operating cost ($)

ST1 DIESEL-PV-ESS 0.311 4.55 M 1.14 M 558 341 13.5 6.49 7.83
ST2 DIESEL-PV 0.332 4.86 M 1.02 M 565 604 11.3 6.74 11.23
ST3 DIESEL only 0.467 5.37 M - 515 904 0 N/A N/A
a Source: HOMER optimization.

night and electricity loss is inevitable. Therefore, per the graphs
shown below, when ST1 and ST2 are compared, diesel generators
generate slightly more electricity when there is no ESS to store
the electricity produced during the daytime. Diesel-only case is
used as a base case to compare how different it would be when
renewables are installed in the resort.
3.2. Economic criteria
The sensitivity analysis showed that among the three system type
options, the PV-diesel-ESS hybrid system (ST1) is found to be the
most economical option. As shown in Table 3 below, ST1 showed
the lowest COE, NPC and operating cost among three system
configurations. Although installing PV and ESS requires an initial
capital cost of ∼$1.14 M, which is greater than that of ST2, this
is due to high ESS unit cost and installation cost of ESS at the
beginning of the project. Meanwhile, the Internal Rate of Return
(IRR) of ST1, the discount rate that makes the net present value
of all cash flows in the project zero, is found to be the highest of
the three options. However, both simple and discounted payback
periods of ST1 calculated were the shortest of the three system
settings. These results are aligned with the findings in the previous
section evaluating technical criteria, suggesting that ST1 is the
most optimal option in terms of economic criteria as well.
A direct comparison between ST1 and ST3 (base case) tells us
that in 6.5 years the cumulative cash flow of ST1 starts to fall below
that of ST3, implying that after 6.5 years, installing PV-ESS-diesel
hybrid systems (ST1) becomes practically a cost-effective option.
From the seventh year after the project initiation, the accumulated
cash flow of ST1 becomes constantly greater than that of ST3 as
displayed in Figure 4.
Moreover, ST1 shows a larger annual nominal cash flow than
ST3 throughout the whole project years as shown in Figure 5
below, indicating that ST3 is more economical option than ST3.
Due to the replacement cost, ST3 shows increased cash flows
in the 10th and 19th year. On the other hand, ST1, which is

496 International Journal of Low-Carbon Technologies 2019, 14, 493–499


Figure 4. Cumulative cash flow of ST1: diesel-PV-ESS vs. ST3: diesel only.
Figure 5. Annual nominal cash flows ST1: diesel-PV-ESS vs. ST3: diesel only.
Figure 6. Cost summary of ST1.
composed of only a diesel generator, shows drastic increases in
the 7th and 14th year due to the replacement cost of the inverter.
ST3’s large cash flow in the first year is owing to the initial capital
cost of installing PV and ESS in the Maldives.
The cost summary of ST1 shows that resource cost, which refers
to the fuel cost, accounts for the largest portion of all cost items.
Regarding capital and operating cost, PV and ESS require quite
a large investment at the beginning, but the operating cost of the
two is much smaller than that of the diesel generator as shown in
the second bar graph below.
The cost summary of ST2 also shows a similar pattern to that of
ST1. The resource cost accounts for the largest portion of all cost
Evaluation criteria of independent hybrid energy systems
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Figure 7. Cost summary of ST2.
Figure 8. Cost summary of ST3.
items and the operating cost of PV is far smaller than that of the
diesel generator.
The existing diesel generator requires operating, replacement
and fuel costs. Compared with the previous two system types, ST3
has the largest fuel costs among the three options.
In the Maldives, a state-owned company named STELCO cur-
rently produces electricity at a price of $0.5/kWh for the res-
idents. Under the electricity policy of the Maldivian govern-
ment, producing electricity using renewable energy allows the
stakeholders to receive a feed-in tariff of $0.25/kWh. According
to the HOMER simulation, ST1 could produce 751 750 kWh
of electricity per year using PV. This allows the resort to earn
751 750 kWh × 0.25$/kWh = $187 938 per year. The present value
of the entire project revenue for 20 years is $1 845 207 (discount
rate of 8%). The fuel cost from ST1’s diesel generator ($228 332)
is much less than ST3 ($388 276) as shown in Table 4. Therefore,
it is possible to conclude that deploying ST1 is the best choice for
the project developer from an economic point of view.
3.3. Environmental criteria
In terms of environmental criteria, ST1 is found to consume the
smallest amount of fuel while at the same time showing the highest
percentage of renewable fraction, which is 44%. ST2, which does
not have ESS to minimize the loss of electricity, shows slightly
less percentage of renewable fraction 36.1% and consuming more
fuels than ST1. ST3, which uses diesel generator alone, turned
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T. Y. Jung et al.

Table 4. Monetary benefits from RE system

ST System Generator [STELCO] PV [Project developer]
configuration
Hours Production (kWh) Fuel (L) O&M cost Fuel cost ($) Capital cost ($) Production Revenue ($/yr)
($/yr) (kWh/yr)

ST1 DIESEL-PV-ESS 6496 696 458 215 408 47 403 228 332 96 585 751 750 187 938
ST3 DIESEL only 8760 1 249 910 366 298 43 800 388 276 0

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Figure 9. Environmental benefits from RE system.

Table 5. Emission comparisons a

Pollutants (kg/yr) ST1 ST2 ST3

Carbon dioxide 564 848 642 874 960 516

Carbon monoxide 2922 3326 4969
Unburned hydrocarbons 155 177 264
Particulate matter 25.0 28.4 42.5
Sulfur dioxide 1139 1296 1937
Nitrogen oxides 560 637 952
a Source: HOMER optimization.

out to be the most inefficient system type, consuming the largest

amount of fuel.
Furthermore, when comparing the emission levels of the three
system configurations, ST1 is found to be the most environment-
friendly option of the three system types. For instance, ST1 emits
564 848 kg of carbon dioxide per year, while ST2 emits 642 874 kg
and ST3 emits 960 516 kg of carbon dioxide per year. As shown
in the Table 5 below, the emission amount of other types of
pollutants from ST1 is found to be the smallest among the three
system configurations. This also supports claim that ST1 is the
most environmentally optimal system type to be installed.
4 CONCLUSION
In terms of technical criteria, as the HOMER simulation has sug-
gested, ST1 that combines PV, diesel generator and ESS was found
Figure 10. CO2 emissions.
to be the optimal technical option considering COE, NPC and
monthly average electricity production. Moreover, we provided
annual nominal cash flows, cumulative cash flows, IRRs, payback
periods and NPCs to assess the most cost-effective system types
of the three options on an economic basis. Despite significant
investment in the first year of the project, it has been found
economically most beneficial to deploy renewable energy systems
than to maintain current diesel-only system. Considering the
IRR, payback period and NPC, installing ST1 rather than ST2
would be the best option for the project developer to adopt in the
Maldives. Finally, from the environmental point of view, choosing

498 International Journal of Low-Carbon Technologies 2019, 14, 493–499


ST1 over ST2 and ST3 will be the most environment-friendly
option for the project developer. This option keeps the highest
renewable fractions while minimizing CO2 emissions. From these
three perspectives, it is possible to conclude that deploying off-
grid renewable energy systems, especially utilizing ESS, could be
technically, economically and environmentally beneficial to the
Holiday Inn Resort in the Maldives.
FUNDING
This work was supported by Korea Institute of Energy Technology
Evaluation and Planning grant funded by the Korea government
(MOTIE) (20162010103860, Development and Demonstration of
Multiple Linked ESS for Special Environmental Areas).
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