Green mechanism: Opportunities for corporate investment in PV/battery/diesel hybrid systems with techno-economic and environmental analysis

Abstract

In rural areas, diesel generators are prevalent due to their lower initial cost, despite inefficiencies and carbon emissions. Transitioning to PV/Battery/Diesel systems offers a solution by reducing costs and emissions. However, the high upfront expenses present a significant barrier, particularly for rural communities, necessitating external financial support. This study evaluates the benefits of adopting a PV/Battery/Diesel hybrid system over traditional diesel generators in a rural community with 25 customers and a daily demand of 50 kWh. The proposed system includes a 12 kWp photovoltaic array and a 48 kWh battery bank, simulated using Hybrid Optimization of Multiple Energy Resources (HOMER) software. Results indicate a 91% renewable fraction and a cost of energy of 0.279 USD/kWh, substantially lower than the 1.05 USD/kWh of diesel-only systems, with CO2 savings of 25 t per year. The paper advocates for a case study approach to green mechanism, urging energy and environmental companies to invest in these systems. By replacing diesel generators with hybrid PV/Diesel/Battery systems, companies can offer electricity at a reduced cost, driving adoption. Selling carbon credits from emission savings can generate additional income, leveraging CO2 tax incentives. Under scenarios where investors cover 50% of diesel costs, selling electricity yields 9581 USD annually, and selling CO2 credits generates 500 USD annually. This leads to a payback period of 9.83 years without CO2 credits and 9.18 years with CO2 credits, totaling 46,848 USD without CO2 credits and 52,927 USD with CO2 credits over the project's lifespan. Meanwhile, adjusting electricity pricing to 75% of diesel costs, this increases annual income from electricity sales to 14,372 USD. This reduces the payback period to 5.89 years without CO2 credits and 5.66 years with CO2 credits, totaling 105,094 USD without CO2 credits and 111,174 USD with CO2 credits at the end of the project.