Renewable Energy Economic Analysis Offers Starting Point
A renewable energy economic analysis investigates the range of possible alternative energy sources that you can use in your community and provide the information needed for you to make a technology judgment and / or an investment decision. This is where communities should start when they are ready to incorporate renewable energy into their portfolio.
All the main types of renewables, such as solar, wind, geothermal, heat pumps, and others are considered in an economic analysis. Technologies are evaluated with respect to a community’s needs and its natural resources to determine constraints and suitability. Through this technical evaluation, technologies that will work are identified and ones that will not are eliminated. For example, your community might be well suited to use solar PV and geothermal, but might not be a good option for wind technologies. Or, your community might get the most efficiency and output with an integration of all three technologies.
An integrated renewable energy system usually consists of two or more renewable energy sources paired to increase overall efficiency and balance in energy supply. One example of an integrated system is solar photovoltaic (PV) coupled with wind power. This scenario creates more output from wind during winter months and solar during the summer months. Benefits of this approach are a higher level of energy security and reliability through the mix of complementary generation methods, including existing fossil fuel power generation sources. Other examples of commercial, utility-scale integrated renewable energy systems include:
- Geothermal coupled with solar PV and / or concentrated solar power (CSP),
- Biomass coupled with CSP,
- Solar PV coupled with fuel cells,
- Wind coupled with solar PV, and
- Biofuels coupled with wind.
An analysis can determine which renewable energy and storage technologies are cost-effective and offer optimal capacity. A streamlines process reduces expenses and risk by narrowing concepts early in the process .
The purpose and scope of the renewable energy economic analysis is established at the outset because this will prescribe the course to follow. The most complete analysis of an investment in a technology or a project involves the analysis of each year of the life of the investment, taking into account relevant direct costs, indirect and overhead costs, taxes, and returns on investment, plus my externalities, such as environmental impacts, that are relevant to the decision to be made. The ultimate use of the results of an analysis will influence the level of detail undertaken. Once preformed, the economic analysis allows your organization to make informed decisions .