Temporal cross-over points for renewable energy technology project investment with consideration for energy pricing, carbon tax credits, and implied socio-political value

摘要

This study explores the technological, economic and socio-political conditions surrounding the world's first installation of a wind-hydro-diesel hybrid electrical generating system on the Island of el Hierro, Spain. A modified levelized cost of energy (LCOE) model is presented for both existing diesel energy systems and the renewable energy hybrid closed-loop system to determine the economic crossover point of project selection. By comparing the projected economic cross over point against the oil price at which the decision to build the hybrid system was made, the socio-economic value of risk avoidance can be quantified. It can also be used to represent the system's ability to hedge against future petroleum price rises and mitigate the effects of climate change. This inference has the unique advantage that it can be used to illustrate an inherent value of the system that can be difficult to quantify otherwise. The economic cross-over analysis also represents a method for comparing multiple energy options in discounted and non-discounted cash flow scenarios that indicate potential socio-political value applied to projects that are initiated at an input energy cost point well below their equilibrium economic cross-over point. A graduate student spent time on site to collect data for the cost build up models presented in this paper.