Exogenous-spatial scale techno-economic methodology for energy application assessment based on levelized cost of electricity: A case study in Norway

Abstract

Amidst the escalating electricity prices in Norway and Europe, a compelling need arises for alternative and sustainable energy solutions. This study introduces a novel techno-economic method to assess micro-combined heat and power (m-CHP) systems, specifically those powered by Micro Gas Turbines (MGTs). Employing both numerical and experimental analyses, the investigation focuses on the techno-economic viability of MGT-based m-CHP systems fueled by natural gas (NG) and a blend of NG-H2 (23 % Vol.%). A 20-year operational lifespan serves as the basis for calculating the Levelized Cost of Electricity (LCoE) and comparing it with grid-based electricity costs. The technical model relies on 3 kW MGT experiments and numerical system modelling using IPSEPro® software. Economic modelling involves developing a cost model and employing a unique Techno Economic Analysis (TEA)-rooted methodology for LCoE calculation. Through 16 techno-economic scenarios, substantial cost-benefit advantages of m-CHP systems over grid-based electricity are demonstrated, supported by point LCoE values. To address uncertainties, a “Risk and Uncertainty” analysis is conducted using Monte-Carlo Simulation, generating a LCoE distribution. This method incorporates the standard deviations and mean values of key parameters, ensuring economic consistency and reliability with minimal fluctuations. Findings reveal negligible variation from the expected LCoE at 100 % power with NG, providing 98 % accuracy in assessing cost-benefit. The final result yields a Ceq, LCoE of 1.42 Current NOK/kWh (0.13 USD/kWh) and 1.19 constant NOK/kWh (0.11 USD/kWh). In contrast to grid electricity costs (2.54 NOK/kWh (0.24 USD/kWh) with current NOK and 1.78 NOK/kWh (0.17 USD/kWh) with constant NOK, the analysis underscores the significant and sustained cost benefits of m-CHP systems. Moreover, the proposed methodology offers flexibility for transitioning to a “carbon-neutral” operation with hydrogen (H2) as its prices decrease.