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Net Present Value Analysis of a Hybrid Gas Engine-Energy Storage System in the Balancing Mechanism

Author

Listed:
  • Farhad Anvari-Azar

    (Viridis Power, 17 The Courtyard, Gorsey Lane, Coleshill B46 1JA, UK)

  • Dani Strickland

    (Wolfson School, Loughborough University, Loughborough, Leicestershire LE11 3TU, UK)

  • Neil Filkin

    (Viridis Power, 17 The Courtyard, Gorsey Lane, Coleshill B46 1JA, UK)

  • Harry Townshend

    (Viridis Power, 17 The Courtyard, Gorsey Lane, Coleshill B46 1JA, UK)

Abstract

There is the potential for hybridised gas engine-energy storage systems to participate in the Balancing Mechanism (BM) by offering a product that marries the advantages of both units. The higher price offerings are currently dominated by pumped storage (PS) assets. Given their high-flexibility, PS plants mostly offer at higher prices, but respond quicker and can run for a smaller minimum run time than a gas engine on its own. The operation of the hybrid system must match the operation of the pumped storage plants, to be able to claim a space in this part of the BM market including meeting a minimum run time and minimum start time. The business case is dependent on battery costs which in turn depend on size and operational strategy. This paper uses a case study approach to estimate Net Present Value of a hybrid system. The paper uses a mixture of publicly available data and industrially provided data within its analysis. The paper concludes that battery cost and lifespan are still issues and that battery-engine hybrids are not economic at present. There is indication in the modelling that under very favorable conditions such as low compound interest rates, an acceptance of offers above 7 times/day and low gas price, it is possible to see a return on investment of a lithium ion-based battery-gas engine hybrid.

Suggested Citation

  • Farhad Anvari-Azar & Dani Strickland & Neil Filkin & Harry Townshend, 2020. "Net Present Value Analysis of a Hybrid Gas Engine-Energy Storage System in the Balancing Mechanism," Energies, MDPI, vol. 13(15), pages 1-24, July.
    • Handle: RePEc:gam:jeners:v:13:y:2020:i:15:p:3816-:d:389590
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    References listed on IDEAS

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