Optimal Investment Strategies for Solar Energy Based Systems

Solar energy, as an inexhaustible renewable energy, can be used to produce heat and electricity. It is of great importance to examine the strategy for investment on solar energy technology. In response to varying electricity price in the electricity market, the battery energy storage system (BESS) c...

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Main Authors: Yuchen Song, Weihao Hu, Xiao Xu, Qi Huang, Gang Chen, Xiaoyan Han, Zhe Chen
Format: Article
Language:English
Published: MDPI AG 2019-07-01
Series:Energies
Subjects:
Online Access:https://www.mdpi.com/1996-1073/12/14/2826
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spelling doaj-128b1fa9f8e54699a7a42ba26ae2cf9c2020-11-24T21:28:36ZengMDPI AGEnergies1996-10732019-07-011214282610.3390/en12142826en12142826Optimal Investment Strategies for Solar Energy Based SystemsYuchen Song0Weihao Hu1Xiao Xu2Qi Huang3Gang Chen4Xiaoyan Han5Zhe Chen6School of Mechanical and Electrical Engineering, University of Electronic Science and Technology of China, No. 2006, XiYuan Avenue, Chengdu 611731, ChinaSchool of Mechanical and Electrical Engineering, University of Electronic Science and Technology of China, No. 2006, XiYuan Avenue, Chengdu 611731, ChinaSchool of Mechanical and Electrical Engineering, University of Electronic Science and Technology of China, No. 2006, XiYuan Avenue, Chengdu 611731, ChinaSchool of Mechanical and Electrical Engineering, University of Electronic Science and Technology of China, No. 2006, XiYuan Avenue, Chengdu 611731, ChinaState Grid Sichuan Electric Power Research Institute, Chengdu 610041, ChinaState Grid Sichuan Electric Power Company, Chengdu 610041, ChinaDepartment of Energy Technology, Aalborg University, Pontoppidanstraede 101, DK-9220 Aalborg, DenmarkSolar energy, as an inexhaustible renewable energy, can be used to produce heat and electricity. It is of great importance to examine the strategy for investment on solar energy technology. In response to varying electricity price in the electricity market, the battery energy storage system (BESS) can be used to get price arbitrage. This paper proposes an optimal configuration model for a photovoltaic (PV) system, solar heating system, and BESS in order to obtain maximum profit for investors. The investment potential of these systems is compared and analyzed based on return on investment (ROI) index which is defined to evaluate economic profitability. A bi-level programming is adopted to optimize the operation strategy of batteries (inner layer), the size of PV system and solar heating system, and the size of batteries (outer layer) including their maximum discharge/charge power and capacity. Sequential quadratic programming (SQP) method and particle swarm optimization (PSO) are used as optimization methods. In the case study, five investment strategies are investigated in order to decide how to invest in PV modules, batteries, and solar thermal collectors. The results show that the BESS may be a preferable choice for the investors if the investment cost of BESS goes down a lot in the future. Investing in solar energy for both heat and power may be not reasonable because the ROI of this strategy is always higher than either investing in heat or in power. The optimal strategy may be changed with the fluctuation of heat and electricity prices.https://www.mdpi.com/1996-1073/12/14/2826solar energyinvestment strategiesbi-level optimizationbatteriesreturn on investment (ROI)
collection DOAJ
language English
format Article
sources DOAJ
author Yuchen Song
Weihao Hu
Xiao Xu
Qi Huang
Gang Chen
Xiaoyan Han
Zhe Chen
spellingShingle Yuchen Song
Weihao Hu
Xiao Xu
Qi Huang
Gang Chen
Xiaoyan Han
Zhe Chen
Optimal Investment Strategies for Solar Energy Based Systems
Energies
solar energy
investment strategies
bi-level optimization
batteries
return on investment (ROI)
author_facet Yuchen Song
Weihao Hu
Xiao Xu
Qi Huang
Gang Chen
Xiaoyan Han
Zhe Chen
author_sort Yuchen Song
title Optimal Investment Strategies for Solar Energy Based Systems
title_short Optimal Investment Strategies for Solar Energy Based Systems
title_full Optimal Investment Strategies for Solar Energy Based Systems
title_fullStr Optimal Investment Strategies for Solar Energy Based Systems
title_full_unstemmed Optimal Investment Strategies for Solar Energy Based Systems
title_sort optimal investment strategies for solar energy based systems
publisher MDPI AG
series Energies
issn 1996-1073
publishDate 2019-07-01
description Solar energy, as an inexhaustible renewable energy, can be used to produce heat and electricity. It is of great importance to examine the strategy for investment on solar energy technology. In response to varying electricity price in the electricity market, the battery energy storage system (BESS) can be used to get price arbitrage. This paper proposes an optimal configuration model for a photovoltaic (PV) system, solar heating system, and BESS in order to obtain maximum profit for investors. The investment potential of these systems is compared and analyzed based on return on investment (ROI) index which is defined to evaluate economic profitability. A bi-level programming is adopted to optimize the operation strategy of batteries (inner layer), the size of PV system and solar heating system, and the size of batteries (outer layer) including their maximum discharge/charge power and capacity. Sequential quadratic programming (SQP) method and particle swarm optimization (PSO) are used as optimization methods. In the case study, five investment strategies are investigated in order to decide how to invest in PV modules, batteries, and solar thermal collectors. The results show that the BESS may be a preferable choice for the investors if the investment cost of BESS goes down a lot in the future. Investing in solar energy for both heat and power may be not reasonable because the ROI of this strategy is always higher than either investing in heat or in power. The optimal strategy may be changed with the fluctuation of heat and electricity prices.
topic solar energy
investment strategies
bi-level optimization
batteries
return on investment (ROI)
url https://www.mdpi.com/1996-1073/12/14/2826
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