Comparative study of economic viability of rural electrification using renewable energy resources versus diesel generator option in Saudi Arabia

Abstract

The objective of this paper is to assess the economic viability of Saudi Arabia's renewable energy resources in electricity production in the rural and remote areas as against the use of diesel generators (DG). The methodology employed is to pick an existing isolated DG electric station for a rural community and assess the levelized cost of energy (LCOE) generated for incremental generation by adding either DG, wind electric conversion system(WECS), or solar Photo Voltaic (PV) electric system. Cost figures are derived from current technology price indices and consultancies studies as contained in the National Renewable Energy Laboratory cost report of November 2012. The existing power station of Addfa in the Southern region is analyzed based on the requirement to increase its current capacity to cater for surrounding smaller communities. An annual extra energy requirement of 4 GWh is to be met by scenarios of using DG, WECS, PV or a hybrid system. Two ownership structures are considered namely a public utility that pays no tax and a private independent power producer (IPP) that pays tax. Both the constant and current LCOE generated are determined for each ownership structure. The results indicate that the WECS is the first investment choice with a constant LCOE of $0.0922/kWh and $0.1090/kWh for the public utility and the IPP, respectively. The DG is the second choice with LCOE of $0.1082/kWh and $0.1175/kWh, the third is a hybrid DG plus WECS with LCOE of $0.1102/kWh and $0.1234/kWh for each ownership structure, respectively. Finally, the PV electric system ranks fourth with LCOE of $0.2791/kWh and $0.3279/kWh, respectively. The results of sensitivity analysis show that these values of LCOE are more sensitive to the initial capital cost and less sensitive to the operation and management costs.