Journal of Energy & Environment

Journal homepage: journal.uniten.edu.my/jee

ISSN: 1985-7462

Cost Optimization and Economic Analysis of a standalone

Hybrid Renewable Energy Storage System in Malaysia
Safat Bin Walia , M A Hannana , Pin Jern Kera,b , Md. Murshadul Hoquec
a Dept of Electrical Power Engineering, Universiti Tenaga Nasional, 43000, Malaysia
b Instituteof Sustainable Energy, Universiti Tenaga Nasional, 43000, Malaysia
c Dept of Electrical and Computer Systems Engineering, Monash University, VIC 3800, Australia

Keywords Abstract

Photovoltaic The rapid increase of fossil fuel burning, and scarcity of fossil fuel force the industry
Wind power to move on to alternative energy resources such as; Photovoltaic Power (PV), Wind
Hybrid Energy Storage System Power (WP), and Battery Energy Storage System (BESS). The main purpose of this
Net present Cost article is to develop an optimal, cost-effective, reliable standalone Hybrid Renewable
Energy Storage System (HRES) for a residential area in Malaysia using HOMER
software. Initially, for the base case, four energy resources such as; Photovoltaic
(PV), Wind turbine (WT), Battery, and Diesel generator (DG) are considered. After
the optimization process, the PV-battery-DG-converter-based system showed the
lowest Net Present Cost (RM 3.13M) which is 57.19% and 69% less than the
PV-battery-converter and PV-wind-battery-converter system respectively. The analysis
also includes the cost summary of the overall system and individual components. The
paper also presented the economic analysis including the rate of emission from the
energy resources which can influence the realization of the optimal solution.

© 2020 Universiti Tenaga Nasional. All rights reserved.

1. INTRODUCTION energy resources is a tedious job due to factors such as; cost
minimization, high lifetime, reliability, and lower environ-
In this era of industrialization, energy is considered as one of
mental impact. Different researchers have developed several
the key inputs. Previously, fossil fuels are the key resources
optimization methods to optimize cost [4], capacity [5], bat-
for generating electrical energy. Due to global warming,
tery lifetime [6], power quality, and power flow [7], [8] of
greenhouse gas (GHG) emission caused by the widespread
the energy storage systems. The two key factors that are
use of diesel, petrol and other fossil fuels, which emits
affecting the cost optimization are peak shaving [9] and load
tons of CO2, world approaches towards decarbonization
shifting [10]. In [4], BESS scheduling is solved through
through low-carbon emission while expanding the utiliza-
Mixed Integer Linear Programming (MILP) whereas in [11],
tion of sustainable power sources [1]. Renewable energy
two objective functions have been considered such as; total
sources are becoming a promising alternative source be-
cost and loss of load expectation (LOLE). Hybrid Optimiza-
cause of the advantages such as; fast response, adaptability,
tion Model for Electric Renewable (HOMER) software is a
and environmental friendliness.
popular simulation software that is used by researchers to
Hybrid Renewable Energy Storage System (HRES) is a
develop a comparative economic analysis model of HRES
combination of several renewable sources along with tra-
[12]. In [13], the energy management system (EMS) of
ditional energy resources together not only to improve the
an isolated microgrid is developed and a cost-effective siz-
system efficiency but also to ensure energy balancing [2].
ing simulation is conducted using MATLAB and HOMER.
Battery energy storage system (BESS) and diesel generator
Homer is also used in [14] to analyze the sustainability of
(DG) can be used as backup sources along with the HRES
the renewable energy-based off-grid system and the out-
to mitigate the power outage due to various environmen-
come suggested the system as a cost-effective alternative to
tal conditions. The system can be designed in such a way
grid extension.
that, BESS can be charged with the extra output from the
HRES from the normal condition or in the off-peak hours. In this study, HOMER is used to develop a conceptual
HRES can be connected in both grid-connected and off-grid system configuration which consists of Photovoltaic (PV),
(standalone system) ways [3]. wind, battery, diesel generator, and converter. Cost opti-
Developing HRES along with BESS and other traditional mization and economic analysis of the developed model are
Wali et al.

presented to find out the most optimal model with less Net from 5.096 kWh/m2 /day to 5.897 kWh/m2 /day and the an-
present cost (NPC), more reliable, and has an overall low nual daily radiation average is 5.42 kWh/m2 /day whereas
rate of emission. the annual average clearness index is 0.543. The real-time
wind speed data was collected from the NASA Prediction
2. METHOD AND SYSTEM of Worldwide Energy Resources database for a year. The
monthly average wind speed varies from 2.3 m/s to 3.2
HOMER is a simulation and optimization tool that is used m/s and January month has the overall highest wind speed
to analyze and optimize the economic feasibility analysis average obtained in January.
of the system. To construct an optimized system, HOMER
can be used for modeling, simulation, optimization, and
sensitivity analysis. In this paper, HOMER is used to de-
sign the HRES system to optimize the cost and size of the
system. The proposed consists of PV, wind, battery, and
diesel generators to act as an isolated microgrid. Before
designing the model, the solar radiation data, wind speed
data, and load profile of the area are needed.

A. Load Profile
The area that is considered for load profiling is the Cendiki-
awan apartment, Universiti Tenaga Nasional (UNITEN)
which consists of 3 blocks and 499 students. The hourly
outline of electricity usage is during the weekdays and week-
ends is considered and applied as the input of HOMER. The
average value of the load is 81.48 kW, the peak load is
137.94 kW and the annual average load is 1955.63 kWh/day.
Figure 1(a) shows the daily load profile from January and
Figure 1(b) shows the monthly average load for a complete Figure 2. (a) Monthly Average daily Solar Radiation; (b)
year. Monthly Average daily Wind Speed

C. HOMER Simulation Model

To design the proposed system, HOMER is used because
of its capability to optimize the system cost and operate the
sensitivity analysis. The proposed system standalone HRES
system model configures with the combination of PV, wind,
battery, and diesel generator. The schematic diagram of the
proposed HRES system is given in Figure 3 where the PV
and battery are connected in the AC bus whereas the Diesel
generator (DG) and wind turbine (WT) are connected in the
DC bus.

Figure 1. (a) Daily load profile of January; (b) Monthly average

load for a complete year

B. Solar Radiation and Wind speed Data

The real-time solar radiance data and for a complete year Figure 3. Schematic diagram of the proposed HRES system
was collected from the National Solar Radiation database
from the selected area. Figure 2(a) shows the solar radiance For the HOMER simulation, each component has to be
and clearness index data for a year. The solar radian ranges selected and designed individually to construct the overall
Wali et al.

system. The detailed input parameters of the components

are shown in Table 1. For the PV, a Generic flat-plate PV is
chosen for our system with a capacity of 50 KW. Currently,
in the market, the cost for PV panel installation is about $
2100/kW, and the operation and maintenance cost is about
5% of the capital cost. For WT, Eocycle E025 with an output
of 25kW has been taken into consideration according to the
wind speed at Cendikiawan Apartment. All other losses
have been neglected except environmental and electrical
losses. A total loss factor of 6.2% is considered in this study.
The current market installation cost for a wind turbine is
about $5000/kW. The operation and maintenance (O&M)
cost is about 2% of the total capital cost. As the availability
of renewable energy sources is uncertain, to ensure system
security and reliability DG has been incorporated with the
HRES system. For the proposed system, Generic 50kW
fixed capacity Genset DG is used with a capital cost of
$40000 with an O&M cost of 5% of the total capital cost
and a lifetime of 15000 hours [15].
The batteries can be operated as a backup system to
ensure the reliability of the system. In the proposed system
Surrette 6CS25P battery is considered which is a 6V battery Figure 4. (a) Cost Summary of the system (component) (b) Cost
with a nominal capacity of 1156 Ah (6.94 kWh). The per- Summary of the system (cost type)
unit capital cost is considered as $1000 and a replacement
cost of $800 with an O&M cost of 5% of the capital cost
[14]. The capital cost, replacement cost, and O&M costs of
the converter for 1 kW systems were considered as $300,
$210, and $50/ year respectively with a lifetime of 15 years
and efficiency of 90%.
Figure 5. Monthly average Electricity production
3. RESULT AND DISCUSSION
The proposed model simulation, cost optimization, and eco-
nomic analysis results are presented in this section. After 59.17% but the CO2 emission will reduce to 100%. A
providing necessary inputs to HOMER, a range of configu- 21.12% reduction of O&M cost will also observe whereas
ration of components considering different constraints are the COE will increase to 69.32%. As the fuel price is con-
provided as an optimization output. For the proposed system sidered as $0.5/L Total emission data and the total operating
the project lifetime is assumed as 25 years with a 2% infla- cost vs CO2 emission outcome is provided in Table 3 and
tion rate and an 8% discount rate. Table 2 shows the differ- Figure 6 respectively.
ent combinations of optimization output of HOMER consid-
ering different constraints. The PV-DG-Battery-converter
combination shows the lowest Net Present Cost (NPC) and
Levelized Cost of Energy (COE).
The Optimization result provided by HOMER tends to
reduce the system cost (CSYSTEM ) which is defined as;

CSY ST EM = CPV +CDG +CBAT +CCONV (1)

Where, the cost of solar, cost of diesel generator, cost
of the battery, and cost of the converter is defined as CPV ,
CDG , CBAT, and CCONV . For the proposed, PV-DG-Battery-
converter based system has an NPC of RM 3.13M with a per
year operating cost of RM 95,287. The total cost summary
of the system in terms of component and cost type is shown
in Figure 4(a) and 4(b) respectively. The monthly electricity
production is shown in Figure 5.
From the MOMER result, it can be observed that, If we
consider 100% renewable energy, the NPC will increase
Figure 6. Total operating cost vs CO2 Emission
4. CONCLUSION
In this paper, system modeling, optimization, and effective
cost and economic analysis of a standalone HRES system
are designed and analyzed using HOMER. The analysis
showed that the PV-DG-Battery-Converter-based system is
the optimal choice for the standalone HRES system as it has
Wali et al.

Table 1. Proposed HRES system components input parameters

Component Capacity Capital cost ($) Replacement cost ($) O & M cost ($/year) Lifetime
PV 50 kW 105000 5250 20 25 years
WT 25 kW 125000 0 2500 20 years
DG 50 kW 40000 10000 2000 15000 hours
Battery 2850 kWh 1000 800 50 20 years
Converter 180 kW 54000 37800 9000 15 years

Table 2. Optimization output from HOMER considering the different configuration

System type PV EO25III Surrette Generic Converter NPC COE Operating cost CO2 Emission
(kW) 6CS25P 50kW (kW) (RM) (RM) (RM/year) (kg/year)

673 - 413 50 103 3.13M 0.339 95,287 190644

1048 - 1427 202 4.92M 0.553 95,261 0

1565 1 864 151 5.29M 0.574 75,164 0

Table 3. The Overall Emission data [3] M. Hannan, M. Faisal, P. J. Ker, R. Begum, Z.
Type Value Unit
Dong, and C. Zhang, “Review of optimal methods
and algorithms for sizing energy storage systems to
Carbon Dioxide 190,644 kg/yr
Carbon Monoxide 1,190 kg/yr
achieve decarbonization in microgrid applications,”
Unburned Hydrocarbons 52.4 kg/yr Renewable and Sustainable Energy Reviews, vol. 131,
Particulate Matter 7.14 kg/yr p. 110 022, Oct. 2020. DOI: 10.1016/j.rser.
Sulfur Dioxide 467 kg/yr 2020.110022.
Nitrogen Oxides 1,119 kg/yr
[4] K. Takahashi, T. Masuta, R. Udawalpola, K. M.
Liyanage, and H. Ohtake, “Simultaneous operation
the lowest NPC of RM 3.13M and COE of RM 0.339. For scheduling of generators and battery energy storage
achieving 100% green energy, the NPC will increase 59.17% system based on actual and forecasted photovoltaic
of the optimal choice. Moreover, the monthly average elec- power outputs,” in 2019 International Conference
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ACKNOWLEDGMENT Smart Grid Technologies - Asia (ISGT Asia), IEEE,
May 2019. DOI: 10.1109/isgt-asia.2019.
The authors are thankful for the financial support pro-
8881502.
vided by Universiti Tenaga Nasional under grant no
20190101LRGS. [6] T. Mesbahi, F. Khenfri, N. Rizoug, P. Bartholomeus,
and P. L. Moigne, “Combined optimal sizing and con-
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