ASHRAE OR-16-C082-2016 University Investments in Solar Photovoltaics - The Solar Endowment.pdf

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1、 William Hutzel is a Professor in the Department of Mechanical Engineering Technology, Purdue University, West Lafayette, Indiana. Samuel Landry is a research assistant in the Department of Engineering Technology, Purdue University, West Lafayette, Indiana. Daniel Schuster is the Senior Energy and S

2、trategy Risk Engineer for the Purdue Power Plant. Matthew Lynall is the director of experiential learning at Purdues Krannert School of Management. University Investments in Solar Photovoltaics The Solar Endowment William Hutzel, PE Samuel Landry ASHRAE Member ASHRAE Student Member Daniel Schuster,

3、PE Matthew Lynall, PhD ASHRAE Student Member ABSTRACT A project supported through the U.S Department of Energys Sunshot Initiative is looking at the technical and economic viability of utility scale solar electricity at several universities in the Midwestern U.S. The technical aspect is relatively s

4、traightforward in that most universities have sufficient demand for electricity and also energy infrastructure to support a utility scale solar photovoltaic array. The more challenging part of the project is developing financial strategies to make solar electricity a fiscally responsible investment.

5、 This paper explores one particularly challenging case study at a university in West Lafayette, IN, which enjoys an exceptionally low cost for electricity due to its on-campus combined heat power plant. However, innovative public private partnerships are being developed that will help financially ju

6、stify investments in solar energy. This project also provides unique educational opportunities for multidisciplinary student teams who are anxious to learn about renewable technologies. INTRODUCTION The global demand for electrical energy is increasing as a result of population growth and a higher s

7、tandard of living that is enjoyed by many people. However, the availability of electricity is often limited by fuel supplies and/or infrastructure for generating and distributing power. In addition, the looming threat of greenhouse gas emissions and the collateral damage to the environment has encou

8、raged efforts to diversify methods of electricity production. These factors have led to the increased use of renewable energy, particularly solar and wind, to help meet the demand for energy. In particular, the shift towards solar energy has been accelerating due to the decreasing cost of solar phot

9、ovoltaic panels (PV). Figure 1 shows the global average price of photovoltaic (PV) modules ($/watt) versus the total capacity for shipping from 1977 to 2013. From just above $76/W from the first recorded data on the graph, to just above $0.74/W, the trend shows a consistent price decline. Not only h

10、as the price come down, the efficiency of the panels have increased for all PV technology types. The combined effect of the two patterns is a market that is rapidly growing to fill the demand for clean energy. As noted in The Economist, Figure 1 shows “The Swanson effect” which states that for every

11、 doubling of global PV manufacturing capacity, the price of the cells in $/W is reduced by 20%. Figure 1 Decline in PV module prices with increasing cumulative global manufacturing capacity Despite the reduction of photovoltaic cell cost, solar energy is still more expensive than traditional sources

12、 of electricity that rely on fossil fuels, but that is beginning to change. The Solar Market Pathways is a new initiative funded through the U.S. Department of Energys Sunshot Initiative to address some of the non-technical impediments for the broader deployment of solar photovoltaics. Beyond the co

13、st of solar panels, many “balance of system” challenges remain. These include achieving economies of scale with installation, interconnect agreements, inspection, and long term maintenance agreements. Another key impediment is a lack of financing to get utility-scale solar photovoltaic projects comp

14、leted. The technology is still new enough that it is viewed as a risk by many investment organizations. Some of the investment uncertainty comes from the fact that a solar array can have variable performance from day to day. Additionally, many investors arent familiar, or confident, with their knowl

15、edge of this technology and thus, have their reservations. One way to overcome this is to work with the investors to educate them on the process as well as give them one of the many successful projects as an example. Minimizing the perceived risk is crucial to moving a solar PV project forward. UNIV

16、ERSITY INVESTMENTS IN SOLAR The Solar Endowment is one of the projects for the DOEs Solar Market Pathways initiative. It is a consortium of four Midwestern universities to demonstrate educational/technical/financial leadership in the growing solar photovoltaic sector. The strategy is to create a rep

17、eatable method for guiding solar PV projects on university campuses and to elucidate the steps in a way that can be executed by a collaborative effort between students, educators, university stakeholders, and experts in the solar energy field. There are several reasons to target universities for uti

18、lity scale solar photovoltaic installations. First of all, universities tend to have relatively large 24-hour electric load that peaks in the afternoon when solar electricity is also at its peak. For a university, the electric loads tend to be lower at night and in the morning, but reach their highe

19、st point during the middle of the day, when the energy of the sun is at its peak. For many universities, this brings into questions whether peak shaving, the reduction of peak consumption, is an option for them. Universities also have a unique financial picture that has advantages and drawbacks for

20、large scale projects. Universities have endowments that are actively managed for profits as well as successful alumni who are interested in providing financial support to their home institution. Thus, solar investments are an intriguing option that universities can compare for competing endowment fu

21、nding. Opportunities are constantly presenting themselves in the solar photovoltaic market and the technology is quickly improving. Still, the development of solar power projects must be economically, socially, or environmentally validated, and many times all three. Universities match well with all

22、of these considerations as they typically cultivate progressive technology, especially ones that are economically sound and help the environment. SOLAR PVS OPPORTUNITY A solar array is only as valuable as the rate of the traditionally generated power that it is offsetting. A residence will typically

23、 pay a flat rate for their energy, where a larger institution such as a university, will likely be charged at a rate based on their peak demand. Since a university will use a great deal of energy during the middle of the day, providing power to classrooms and offices, the total cost seen by the univ

24、ersity is typically greatest during this time. If there was a way to reduce this consumption of energy at these peak hours, it would decrease their total cost. This is where the addition of a utility-scale solar array presents itself as an opportunity for investment. A solar array will generate the

25、most energy during the middle of the day when the sunlight is the most intense. Since the university consumption and the solar array production happen at the same time, the production value of the solar array is increased by generating energy at this time of peak demand. This relationship requires a

26、ttention and has potential to gain the interest of the universitys investment office, which can begin presenting investors with opportunities to reduce the universitys carbon footprint, increasing the universitys energy diversity and flexibility. Some universities are eligible to claim a 30% Investm

27、ent Tax Credit (ITC) if the solar array is managed and owned through their commercial/taxable entities. This policy is meant to support the development of the solar energy markets in the United States and makes large investments attractive to high capital volume investors. Through clever financial s

28、tructure, many organizations that are not taxable entities are finding ways to finance the installation and operation of these large investments. One example of clever solar array design is the increasing popularity of utility scale installments at airports, where some of the land would be otherwise

29、 unused. Indianas Electricity Rates Electricity in Indiana is relatively inexpensive. According to the U.S. Energy Information Administration (EIA), the average retail price of electricity by the end user (in all sectors) is $0.0885/kWh. The “all sectors” data from EIA was selected because the unive

30、rsity in this case study supplies energy for residential, commercial, industrial, and transportation use and thus is represented as a conglomeration of loads. With this in mind, the university also has an agreement with the local utility so that they can make flexible economic decisions on when to i

31、ncrease production, or purchase more energy. This drives the average price down to nearly $0.06/kWh, which is what the university uses to determine the payback of energy conservation and improvement measures. To justify the cost of solar photovoltaic electricity, the cost of electricity ultimately h

32、as to be designed around the total production value. (Energy Information Administration 2015) UTILITIES FRAMEWORK Within the Solar Endowment consortium, the case study university in West Lafayette, IN poses a unique set of challenges for demonstrating technical/financial viability. The university is

33、 unique because it operates its own cogeneration power plant. This Combined Heat and Power (CHP) facility uses fossil fuels to generate steam and run turbines. Figure 2 is the Environmental Protection Agencys basic representation of a combined heat and power system (EPA, 2015). The steam turbine run

34、s a generator that produces electricity. In addition, the turbine exhausts steam which provides for campus heating and cooling. Cooling is accomplished using steam driven centrifugal chillers and chilled water pumps. Figure 2 A combined heat power plant provides heating, cooling, and electricity to

35、the university Although the university greatly benefits from owning this power plant, the power plant doesnt have the capacity to provide all of electricity. Annually, the CHP plant supplies around 36% to 50% of the total campus electricity. This means that the remainder is met by the local utility.

36、 The local utility will interact with the campus buildings and facilities to supply the remaining power to meet their needs. Real Time Pricing The scenario explained above creates the challenge for valuing solar production in that, the university has a real time pricing (RTP) agreement with the loca

37、l utility. These rates are given the day before as a list of 24 separate $/kWh prices. These prices may be lower than residential rates, but they also have the potential to significantly reach above these. As a result, the possibility of increasing electricity production when the RTP cost is high wi

38、ll allow the solar array to have a higher production value. The CHP plant does not have the capacity to meet all of its own demand and so it will still need to purchase power during these high RTP durations. Figure 3 is an analysis of the campus RTP consumption. The vertical axis represents the amou

39、nt consumed in kWh, while the horizontal axis is the time of day. Two sets of data are used in this graph. The blue bars represent the average consumption for each hour, while the orange line represents the maximum consumption reached at each hour. Figure 3 Real time pricing consumption averaged for

40、 one year (2014) -5,00010,00015,00020,00025,00030,00035,00012AM1 AM2 AM3 AM4 AM5 AM6 AM7 AM8 AM9 AM10AM11AM12PM 1 PM 2 PM 3 PM 4 PM 5 PM 6 PM 7 PM 8 PM 9 PM10PM11PMRTP Consumption(kWh)Time (Hour)Annual Average RTP Campus Consumption Annual Maximum RTP Campus ConsumptionThe average RTP consumption pr

41、ofile shows how the university manages RTP purchases. Although there is a peak at 5AM, the consumption increases to its average maximum by 1PM. This analysis is important in the overall comparison because it gives a volume the $/kWh rate given by the local utility. Keep this trend in mind as the tot

42、al consumption of energy on campus is analyzed further. University Consumption Figure 4 shows the consumption of electricity on campus during the same time-frame analyzed in the previous graph. The vertical axis in Figure 4 represents the consumption of electricity in kWh, while the horizontal axis

43、represents the time of day. As in Figure 3, the blue columns represent the average demand at each hour and the orange line represent the maximum demand seen at each individual hour. Figure 4 Annual average of total campus electricity consumption at the university in this case study Noticeably, the u

44、niversitys metered consumption follows a fairly smooth trend. Using the same analysis method as the previous graph, the average and peak values show their largest points between noon and 4 PM. Apart from the peak at 5 AM, consumption of energy in this graph is comparable to the peak hours seen by th

45、e RTP graph shown above. This could mean that the CHP plant is not capable of meeting these higher demand hours and must purchase energy at RTP rates, or that the energy is less expensive at this time and the CHP plant makes the economically driven decision to purchase at these RTP rates because it

46、would be more expensive to increase their own production to meet demand. The combination of the universitys load profiles and its unique rate structure makes the valuation of solar electricity much more involved, but also has the potential to make the output of a solar photovoltaic array more valuab

47、le. The goal is to determine whether this relationship opens up further opportunities for an investment in solar power and possible reduction of expensive consumption hours. -10,00020,00030,00040,00050,00060,00012 AM 2 AM 4 AM 6 AM 8 AM 10 AM 12 PM 2 PM 4 PM 6 PM 8 PM 10 PMCampusElectricityConsumpti

48、on(kWh)Time (Hour)Annual Average Total Consumption Annual Maximum Total ConsumptionSOLAR POTENTIAL Figure 5 shows the relationship between solar intensity and the time of day. It is clear that, on average, the suns intensity is the highest between 11:00am and 3:00pm. Since the production of a solar

49、array is directly related to the intensity of the sunlight, tracking the solar intensity over the course of the day allows for predictions based on expected solar intensity. The timing of this intensity is crucial in understanding the value of the arrays production as it relates to its value. Not all electrons are valued equally. The time of production will dictate the arrays final production offset cost, seeing as the RTP that it offets changes throughout the day, as discussed earlier. Figure 5 Solar intensity shown over time, illustrating the hourly averages and