“The Potential of Decentralized Photovoltaic · “The Potential of Decentralized Photovoltaic ... Longitude 30.85oE Elevation (m) 153 ... GP) ) OPEX Rate

“The Potential of Decentralized Photovoltaic Applications in Egypt - Technical and

Economic Analysis”

By:

Karim Emam

Under the Supervision of:

Prof. Dr. Dirk Dahlhaus

Prof. Dr. Hany Elghazaly

Dr. Christoph Kost

13/7/2016 1Master Thesis - Karim Emam

Outlines

1. Introduction

2. Methodology

3. Performance and Economic Model Indicators

4. Literature Review

5. Application (1): Roof-Top PV System for an On-Grid Villa

6. Application (2): PV-Diesel Hybrid System for an Off-Grid Hotel

7. Conclusion and Recommendations

8. References


1. Introduction: Thesis Scope and Motivation

• Scope of Thesis Research Work:– Identifying the electricity consumption purposes that have a promising

potential towards the implementation of decentralized photovoltaicapplications.

– Assessment of the implementation potential of these promisingapplications through a technical and economic analysis.

– Developing an excel-sheet tool to calculate the performance andeconomic model indicators.

• Motivation:– Addressed country: Egypt (as a developing country example)

– Addressed RE technology: Photovoltaic technology

– Addressed applications: Decentralized photovoltaic applications


1. Introduction: Examples of Decentralized Photovoltaic Applications

• Supermarket:

• Quick Service

Restaurant:


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2. Methodology

• Data Collection:– Through literature review

– Through phone calls

– Through the used tools (databases)

• Performance Model:– SAM performance model

– Self developed power flow tool (excel-sheet)

• Economic Model:– Self-developed economic tool (excel-sheet)

• Implementation Potential Assessment of Decentralized Photovoltaic Applications:– Application selection criteria

– Ranking of electricity consumption purposes potential


2. Methodology: Performance and Economic Model Simplified Approach Overview

• Performance Model Simplified Approach:

• Economic Model Simplified Approach:


Load Demand PV System Sizing

PV Generated Power from the SAM Tool

+

Saved Energy or Power Fed to Grid

from the Self Developed Power

Flow Tool

Performance Model Indicators

Energy Savings or Revenues

+Economic Inputs

Cash FlowEconomic Model

Indicators

2. Methodology: Implementation Potential Assessment of Decentralized Photovoltaic Applications

• Application Selection Criteria:1. Degree of application commercialization

2. Degree of economic competitiveness

3. Degree of dependence on a vulnerable energy supply

4. Degree of fulfillment to the PV system requirements

• Ranking of Electricity Consumption Purposes Potential:– On-Grid:

1. Heavy residential

2. Heavy commercial

3. Industrial

4. Agriculture (irrigation)

– Off-Grid:1. Petroleum and mining

2. Tourism (hotels)

3. Agriculture (irrigation)

4. Remote communities/rural electrification


3. Performance Model Indicators

• Capacity Factor (CF):

• Specific Annual Yield (SAY):

• Performance Ratio (PR):

Source: (NREL, 2015)


3. Economic Model Indicators

• Net Present Value (NPV):

• Internal Rate of Return (IRR):

• Simple Payback Period (SPB):

• Discounted Payback Period (DPB):

• Nominal Levelized Cost of Electricity (LCOEnominal):

• Real Levelized Cost of Electricity (LCOEreal):

Source: (Short, Packey, & Holt, 2010)13/7/2016 9Master Thesis - Karim Emam

4. Literature Review: Socio-Economic Comparison between Egypt and South Africa (as Examples of Developing Countries)

Source: (CIA, 2016) and (IEA, 2012)13/7/2016 10Master Thesis - Karim Emam

Egypt South Africa

National Flag

Continent Africa Africa

Major Urban Areas – Inhabitants (Millions) Cairo – 18.8 Johannesburg – 9.4

Land Area (km2) 1,001, 450 1,219,090

Population - 2014 Est. (Millions) 88.4 54.9

Unemployment Rate - 2015 Est. (%) 12.88% 25.37%

Illiteracy Rate (%) 26.2% 5.7%

Electrification Rate - 2015 (%) 99.6% 85%

Inflation Rate - 2015 Est. (%) 11% 4.59%

National Currency Egyptian Pound South African Rand

Nominal GDP – 2015 Est. (USD) 330.8 312.9

GDP – Real Growth Rate (%) 4.2% 1.3%

GDP –PPP per capita - 2015 Est. (USD) 11,850 13,165

Exchange Rate – 2015 Est. (National

Currency/USD)

7.72 12.76

4. Literature Review: Growth of Electricity Generation Installed Capacity in Egypt• Power Plants Connected to

the National Electricity Grid:– The total installed capacity in 2014

was about 32 GW.– Thermal Power plants constitutes

around 90% of the total electricity generation installed capacity.

• Renewable Energy Installed Capacity Growth till April 2016:– Hydro power plants constitutes

around 80% of the total renewable energy installed capacity.

– The solar PV installed capacity has risen to 45 MW (less than 1.3% of thetotal renewable energy installed capacity).

Source: (EEHC, 2014), (EEHC, 2008) and (Whiteman, Rinke, Esparrago, & Elsayed, 2016)


05,00010,00015,00020,00025,00030,00035,000

05,000

10,00015,00020,00025,00030,00035,000

Pe

ak L

oad

(M

W)

Inst

alle

d C

apac

ity

(MW

)

Fiscal YearSteam Combined Cycle GasHydropower Wind Power CSPPeak Load

0

1

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100

1,000

10,000

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alle

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apac

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)

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Hydro Power Wind Energy Solar PV CSP

4. Literature Review: Global Solar Energy Potential & Regional Installed Capacity of Solar PV

• Global Solar Energy Potential:– Egypt -as the majority of

developing and emerging countries- is located withinthe sunbelt region.

• Regional Installed Capacity of Solar PV (in Africa and the Middle East):– Egypt is ranked seventh.

Source: (CEOS, 2011) and (Whiteman, Rinke, Esparrago, & Elsayed, 2016)


0

500

1,000

1,500

2,000

2,500

3,000

2010 2011 2012 2013 2014 2015

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alle

d C

apac

ity

(MW

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Year

South Africa Israel Algeria TurkeyU.A.E Jordan Egypt K.S.AKenya Uganda

5. Application (1): Villa Brief Description


Brief Data about the Villa-(1)

Location

Region Sheikh Zayed – 6 of October City

Governorate Giza

Latitude 30.05oN

Longitude 30.85oE

Elevation (m) 153

Solar Radiation & Weather Data

Global Horizontal Irradiance (kWh/m2/day) 5.54

Direct Normal (Beam) Irradiance

(kWh/m2/day)

5.69

Diffuse Horizontal Irradiance (kWh/m2/day) 1.89

Average Ambient Temperature (oC) 22

Average Wind Speed (m/s) 3.5

Brief Data about the Villa-(2)

Hotel Capacity & Loads

Number of Floors 2

Number of Swimming

Pools

one

Heavy Electric loads Electric water heaters, air

conditioning

Energy Consumption and Bills

Electricity Consumption (kWh/year) 25,934.52

Highest Monthly Consumption (kWh/month) 3,273

Hot Summer Electricity Bill (EGP./month) 2,360

5. Application (1): PV System Sizing and Configuration

• PV System Sizing Conditions:– Matching with load demand profile-(covering minimum noon time load)

– Connection to the existing power supply lines (3L-N)

– Specific price per kWp – (especially for feed to grid purpose)

– Compliance with the Egyptian regulations (minimum system sizing requirement)

• PV System Configuration:

Source: (EgyptERA, 2014) and (Gridconnectedinverter, n.d.)


5. Application (1): Load Demand and Solar Energy Profile

• Application Purpose: Self Consumption and Feed into Grid:– Load Demand and Solar Energy Profile in a Cold Winter Week


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• Application Purpose: Self Consumption and Feed into Grid:– Load Demand and Solar Energy Profile in a Hot Summer Week


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5. Application (1): Performance Analysis Results


Performance Indicator PV System(1)-5kWp PV System(2)-7 kWp PV System (3)-10kWp

Capacity Factor (%) 19.8% 18.7% 19.8%

Performance Ratio 0.78 0.77 0.78

Specific Annual Yield in

First Year (kWh/kWp)

1738.1 1636 1737.74

PV Generated Energy

share of First Year Energy

Consumption (%)

28% 33.2% 38.2%

Percentage of the Lost

Energy -Fed to the Grid

without Remuneration -

(%)

15.3% 28.4% 43.4%

5. Application (1): Economic Analysis Results

• Self-Consumption Purpose:

• Feed into Grid Purpose:


Economic Indicator System(1)–5 kWp System(2)–7 kWp System(3)–10 kWp

NPV (EGP) 44,024.3 48,441.1 35,453.3

IRR (%) 14.89% 14.35% 12.81%

Simple PB (Year) 9.83 10.27 11.48

Discounted PB (Year) 16.71 17.67 20.51

Nominal LCOE (EGP/kWh) 1.65 1.49 1.36

Real LCOE (Egyptian pt./kWh) 64.7 58.48 53.59

Economic Indicator System(1)–5 kWp System(2)–7 kWp System(3)–10 kWp

NPV (EGP) -55,691 -62,637.2 -73,457.6

IRR (%) N/A N/A N/A

Simple PB (Year) N/A N/A N/A

Discounted PB (Year) N/A N/A N/A



5. Application (1): Sensitivity Analysis

• OPEX Sensitivity:– Breakeven point=5%

• Discount Rate Sensitivity:– Breakeven point=14.89%

• Rise Rate of Electricity Tariff Sensitivity:– Breakeven point=-25.3%


0.00%

5.00%

10.00%

15.00%

20.00%

-EGP 10,000

EGP 0

EGP 10,000

EGP 20,000

EGP 30,000

EGP 40,000

EGP 50,000

2.0% 2.8% 3.6% 4.4% 5.2% Inte

rnal

Rat

e o

f R

etu

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(%)

Ne

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Val

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(EG

P)

OPEX Rate Percentage(%)

NPV IRR Discount Rate

0.00%

5.00%

10.00%

15.00%

20.00%

-EGP 20,000

-EGP 10,000

EGP 0

EGP 10,000

EGP 20,000

EGP 30,000

EGP 40,000

EGP 50,000

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

IRR

an

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(%

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P)

Percentage Change of Discount Rate (%)


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10%

15%

20%

-EGP 20,000

-EGP 10,000

EGP 0

EGP 10,000

EGP 20,000

EGP 30,000

EGP 40,000

EGP 50,000

0% -7% -14% -21% -28% -35%

IRR

an

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P)

Percentage Change of Electricity Tariff (%)


5. Application (1): FiT Scheme Adjusted Scenario

• Scenario Principal Conditions:– Offering a lower rate of tariff rise than that endured by the Egyptian government.

– Achieving a maximum IRR (best case through the optimum PV system size) lower than thatachieved by the self-consumption of optimum PV system size (worst case).

– Achieving a maximum IRR (for the best case) higher than that obtained by the bank risk-free investment certificates (10.75%).

There after, The proposed scenario is based on a remuneration tariff of 0.68 EGP/kWh

and a tariff rise rate per annum of 11.5%.

• Economic Results Achieved through the Proposed Scenario:


Economic Indicator System (1)–5 kWp System(2)–7kWp System(3)–10kWp

NPV (EGP) 13,793.238 34,812.6 68,324.541

IRR (%) 12.214% 13.556% 14.753%

Simple PB (Year) 11.352 10.379 9.6

Discounted PB (Year) 21.37 18.63 16.58



6. Application (2): Hotel Brief Description


Brief Data about the Hotel - (1)

Location

Region Marsa Alam

Governorate Red Sea

Latitude 25.055oN

Longitude 34.889oE

Elevation (m) 76

Solar Radiation & Weather Data

Global Horizontal Irradiance (kWh/m2/day) 6.29

Direct Normal (Beam) Irradiance

(kWh/m2/day)

7.1

Diffuse Horizontal Irradiance (kWh/m2/day) 1.59

Average Ambient Temperature (oC) 24.9Average Wind Speed (m/s) 3

Brief Data about the Hotel - (2)Hotel Capacity & Facilities

Number of Rooms 331

Number of Restaurants five

Number of Swimming

Pools

Three

Other Facilities Gym, Diving center, Private beach

Energy Consumption

Electricity Consumption (kWh/year) 7,088,506

Diesel Consumption (liter/year) 1,852,619


• Application Purpose: Self Consumption – High Solar Fraction:– Load Demand and Solar Energy Profile in a Cold Winter Week


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• Application Purpose: Self Consumption – High Solar Fraction:– Load Demand and Solar Energy Profile in a Hot Summer Week


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6. Application (2): PV System Sizing and Configuration

• Sizing Conditions:– Fulfilling 30% of the noon time load demand ( LSF purpose).

– Fulfilling 60% of the noon time load demand (HSF purpose).

– Minimum Spinning reserve constraint (20%-30% of the total connected generators installed capacity).

– Minimum Generator loading constraint (30% of the total connected generators installed capacity).

– No excess (wasted) energy above the allocated PV penetration permissible (30% or 60%)

Source: (SMA, 2013) and (SMA, 2015)


6. Application (2): Performance Analysis Results


Performance Parameter Low Solar Fraction -

170 kWp

High solar Fraction –

345 kWp

Capacity Factor (%) 21.6% 21.6%

Performance Ratio 0.76 0.76

Specific Annual Yield in First

Year (kWh/kWp)

1892 1,889

PV Energy share of First Year

Energy Consumption (%)

4.52% 9.18%

Percentage of Solar Energy

Lost -(%)

0% 0%

6. Application (2): Economic Analysis Results

Low Solar Fraction Purpose:

High Solar Fraction Purpose:


Parameter Value

NPV (EGP) 1,038,501.2

IRR (%) 15.21%

Simple PB (Year) 11.28

Discounted PB (Year) 17.19

Nominal LCOE (EGP/kWh) 2.00

Real LCOE (Egyptian pt./kWh) 76.64

Parameter Value

NPV (EGP) 1,966,612.8

IRR (%) 15.02%

Simple PB (Year) 11.39

Discounted PB (Year) 17.46

Nominal LCOE (EGP/kWh) 2.06

Real LCOE (Egyptian pt./kWh) 78.83

6. Application (2): Sensitivity Analysis

OPEX Sensitivity:Breakeven point (LSF)= 4.30%

Breakeven point (HSF)= 4.16%

Discount Rate Sensitivity:Breakeven point (LSF)= 15.21%

Breakeven point (HSF)= 15.02%

Rise Rate of Diesel Price Sensitivity:Breakeven point (LSF)=10.30%

Breakeven point (HSF)=10.42%


10.00%

12.00%

14.00%

16.00%

3.00% 3.50% 4.00% 4.50% 5.00%

No

min

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, W

AC

C,

IRR

-LSF

an

d IR

R-

HSF

(%

)

OPEX Percentage (%)

Discount Rate WACC IRR-LSF IRR-HSF

10%

12%

14%

16%

18%

0% 14% 28% 42% 56%

No

min

al D

isco

un

t R

ate

, W

AC

C,

IRR

-LSF

an

d IR

R-H

SF

(%)

Percentage Change of the Nominal Discount Rate (%)

Discount Rate WACC

IRR-LSF IRR-HSF

10%

11%

12%

13%

14%

15%

16%

9.75% 10.22% 10.68% 11.15% 11.61%

No

min

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, W

AC

C,

IRR

-LSF

an

d IR

R-H

SF

(%)

Rise Rate of Diesel Price (%)

Discount Rate WACC IRR-LSF IRR-HSF


Conclusion:1. Grid Parity have been reached at least for the highest two

consumption slabs of residential and commercial users.

2. Feed into grid purpose through the current FiT scheme (with a fixedremuneration in Egyptian currency) is not feasible.

3. Self consumption purpose for the off-grid touristic hotels and otheroff-grid applications depending on diesel generators through PV-Diesel hybrid systems have a high promising PV potential.

4. LCOE(real) for residential applications was in range of 53.6 to 65.1Egyptian pt./kWh (below consumption tariff of slab-6). While, it wasfor the off-grid hotel application in range of 76.6 to 78.8 Egyptianpt./kWh.

5. An adjusted FiT scheme was elaborated and showed a satisfactoryeconomic results on the light of the proposed conditions. It basicallydepend on a tariff of 0.68 EGP/kWh and an annual rate of tariff riseequals to 11.5%. It achieved an acceptable IRR value of 14.75%.



Conclusion (Continued):

6. IRR for residential–self consumption applications can reach up to14.89%. (39% higher than the bank’s interest ). While, it was for theoff-grid hotel application in range of 15% to 15.2%. But such a highIRR rate is burdened by the financing costs for the off-grid hotelapplication.

7. Developing countries in general are having a promising solar PVpotential. As have been investigated that the top six countries in theannual installations growth rate were including five developingcountries and emerging economies. Egypt -indeed- is expected tohave a PV installed capacity of 2.3 GW by 2018.



Recommendations:

1. Adopting public awareness campaigns about the benefits of self-consumption using solar PV systems.

2. Revising the issued FiT scheme for systems with an installed capacitybelow 500 kWp.

3. Re-activation of the net-metering policy.

4. Activation of the soft loan concession that have been previouslyannounced within the FiT scheme for systems below 500 kWp(through loan interests of 4% and 8%).

5. Investigating the barriers faced by the PV systems deployment inoff-grid electricity consumers especially the petroleum and miningcompanies.


8. References

1. CEOS-ESA. (2011). CEOS EO Handbook – Case Studies: Satellite Observations inSupport of Climate Challenges. Retrieved May 17, 2016, from The Earth ObservationHandbook Website: http://www.eohandbook.com/eohb2011/casestudy_energy.html

2. CIA. (2016). The World Factbook: Egypt. Retrieved July 11, 2016, from The CentralIntelligence Agency Website: https://www.cia.gov/library/publications/the-world-factbook/geos/eg.html

3. CIA. (2016). The World Factbook: South Africa. Retrieved July 12, 2016, from TheCentral Intelligence Agency Website: https://www.cia.gov/library/publications/the-world-factbook/geos/sf.html

4. EEHC. (2008). Annual Report (2007/2008). Retrieved July 12, 2016, from Ministry ofElectricity and Renewable Energy Website:

http://www.moee.gov.eg/english_new/EEHC_Rep/2007-2008en.pdf

5. EEHC. (2014). Annual Report (2013/2014). Retrieved July 12, 2016, from Ministry ofElectricity and Renewable Energy:http://www.moee.gov.eg/english_new/EEHC_Rep/REP-EN2013-2014.pdf


8. References (Continued)

6. EgyptERA. (2014). the Technical Requirements for connection Small-Scale PVsystems to LV Distribution Networks . Retrieved February 20, 2016, from EgyptianElectric Utility and Consumer Protection Regulatory Agency (EgyptERA) Website:http://egyptera.org/Downloads/taka%20gdida/PV-%20LV%20code5.pdf

7. GridConnectedInverter. (n.d.). Grid-Tied, Off-Grid and Hybrid Solar Systems EnergyInformative. Retrieved June 21, 2016, from GridConnectedInverter Website:http://gridconnectedinverter.com/images/Grid-Tied-Off-Grid-and-Hybrid-Solar-Systems-Energy-Informative-203028

8. IEA. (2016). WEO 2015 Electricity Access Database. Retrieved July 12, 2016, fromWorld Energy Outlook Organization Website:

http://www.worldenergyoutlook.org/media/weowebsite/2015/WEO2015Electricityaccessdatabase.xlsx

6. PV Magazine . (2016, January 26). Egypt Preps Tender for 30 GW of Energy Projects.Retrieved July 12, 2016, from PV Magazine Website: http://www.pv-magazine.com/news/details/beitrag/egypt-preps-tender-for-30-gw-of-energy-projects-_100022952/#axzz4E7SOuZkc


8. References (Continued)

10. NREL. (2015, July 6). System Advisor Model (SAM) - Help. Retrieved February 25,2016, from System Advisor Model (SAM)National Renewable Energy Laboratory :https://sam.nrel.gov/sites/default/files/content/help/sam-help-2015-5-30.pdf

11. Short, W., Packey, D. J., & Holt, T. (2010, May 19). Financial Model Documentation.Retrieved March 15, 2016, from National Renewable Energy Laboratories (NREL):http://www.nrel.gov/docs/legosti/old/5173.pdf

12. SMA. (2013, April). PV-Diesel-Hybrid Systems for Industrial Applications - Why itmakes sense to combine Diesel systems with PV. Retrieved February 19, 2016, fromDeutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Website:https://www.giz.de/fachexpertise/downloads/giz2013-en-fischmann-pep-workshop-indonesien-pv-hybridsysteme.pdf

13. SMA. (2015). User Manual: SMA Fuel Save Controller 2.0M. Retrieved June 20,2016, from SMA Solar Technology AG: http://files.sma.de/dl/26900/FSC20-BA-en-10.pdf

14. Whiteman, A., Rinke, T., Esparrago, J., & Elsayed, S. (2016). Renewable CapacityStatistics. Retrieved May 10, 2016, from International Renewable Energy Agency(IRENA) Website:

http://www.irena.org/DocumentDownloads/Publications/IRENA_RE_Capacity_Statistics_2016.pdf


Thank you for your attention!

Questions and Discussion

Source: (PV Magazine, 2016)


Documents

“The Potential of Decentralized Photovoltaic · “The Potential of Decentralized Photovoltaic ... Longitude 30.85oE Elevation (m) 153 ... GP) ) OPEX Rate