Stochastic financial analysis of diesel generation extension vs investment in hybrid photovoltaic-diesel-battery in a microgrid in the Amazon indigenous community

Abstract

Due to environmental, operational, and regional restrictions, Brazil still has a lot of communities that do not have an integrated electricity supply, however, the government aims to promote universal access to electricity in the country. In this way, diesel oil generators are the main electricity source for these isolated indigenous communities, but in the generation expansion planning, renewable energy sources are an important way to promote a more sustainable generation in these Amazon regions. This article aims to present an economic analysis based on a Cost-Effectiveness Analysis and Cost-Benefit Analysis, using the Monte Carlo Simulation that compares the extension of the diesel capacity versus a PV-diesel-battery (PVDB) system in the Maruwai indigenous community that is located in the state of Roraima (Brazil). The photovoltaic system and the battery storage system are considered an alternative instead of repowering the electricity supply of the increase in on-site diesel generator operation. The results show that the diesel breakeven price is far below the current diesel oil spot price, which indicates that the hybrid system with photovoltaic cells and batteries is more economically feasible. In turn, the stochastic analysis, the results indicate that the hybrid PVDB system is economically attractive, but needs political incentives to mitigate the uncertainties about the average return for the investor.