Levelized cost of electricity of renewable energy technologies as a criterion for project prioritization
Durakovic, Faris (2021)
Diplomityö
2021
School of Engineering Science, Kemiantekniikka
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2021092847305
https://urn.fi/URN:NBN:fi-fe2021092847305
Tiivistelmä
In the recent years, the society is witnessing growing share of renewable energy projects as an effort towards decarbonised economy and more sustainable future. In evaluation of different renewable energy technologies, Levelized Cost Of Electricity (LCOE) is most common measure that investors use a criterion for project prioritization. The aim of this work is to analyse LCOE method as an investment decision criterion on the ground of calculating LCOE for three real life projects in Bosnia and Herzegovina.
There are several studies that investigate theoretical background of LCOE, its weaknesses and strengths, with some of them discussed in this work. How ever, LCOE even it has certain drawbacks, it is still most comprehensive energy cost metric. In the first part of this work, a theoretical background is discussed on hydro, wind, and solar power technologies as selected technologies, with following research on LCOE and other similar energy cost metric. The LCOE calculating method is applied on the collected data for three real renewable energy projects in Bosnia and Herzegovina.
Calculated LCOE for these three projects correspond with global trends for LCOE. In the LCOE calculation investment costs represented the most significant factor that had largest single impact on the resulting numbers of LCOE. According to the calculated LCOE results in the Practical part, wind and solar projects are most economic competitive and desirable from investors perspective, which matches with booming development and enormous cost decrease for these two technologies in the recent decade. As it is indicative on the base of statistical data for solar and wind power technologies, these trends will continue into the future as well.
Renewable energy technologies are investment intensive, and it is understandable that investment costs are impacting LCOE significantly. Future development of renewable energy technologies will contribute to further cost decrease for certain technologies, as it is seen for solar and wind power technologies. More mature technologies like hydropower have reached their technological peak, and significant research and innovations breakthroughs are required to further cost decrease for this these technologies. Significant factor is availability and quality of input data that determines possibilities in the research of LCOE, and in many cases lack of available data represent obstacle in conducting more detailed LCOE calculations.
There are several studies that investigate theoretical background of LCOE, its weaknesses and strengths, with some of them discussed in this work. How ever, LCOE even it has certain drawbacks, it is still most comprehensive energy cost metric. In the first part of this work, a theoretical background is discussed on hydro, wind, and solar power technologies as selected technologies, with following research on LCOE and other similar energy cost metric. The LCOE calculating method is applied on the collected data for three real renewable energy projects in Bosnia and Herzegovina.
Calculated LCOE for these three projects correspond with global trends for LCOE. In the LCOE calculation investment costs represented the most significant factor that had largest single impact on the resulting numbers of LCOE. According to the calculated LCOE results in the Practical part, wind and solar projects are most economic competitive and desirable from investors perspective, which matches with booming development and enormous cost decrease for these two technologies in the recent decade. As it is indicative on the base of statistical data for solar and wind power technologies, these trends will continue into the future as well.
Renewable energy technologies are investment intensive, and it is understandable that investment costs are impacting LCOE significantly. Future development of renewable energy technologies will contribute to further cost decrease for certain technologies, as it is seen for solar and wind power technologies. More mature technologies like hydropower have reached their technological peak, and significant research and innovations breakthroughs are required to further cost decrease for this these technologies. Significant factor is availability and quality of input data that determines possibilities in the research of LCOE, and in many cases lack of available data represent obstacle in conducting more detailed LCOE calculations.