Worldwide, about 2 billion people living in rural areas do not have access to electricity, and another 2 billion suffer from severe power shortages.
Because of the role of traditional power generation methods in climate change and global warming, researchers, scientists and engineers around the world believe that traditional power generation methods are harmful to the environment.
According to the United Nations, if emissions continue to grow at the current rate, the global average temperature will rise by 5.8 degrees Celsius over the next century. As a result, many countries are using alternative energy sources and promoting zero- or low-carbon technologies.
International form
The fragility of oil prices and the bleak outlook for crude oil have influenced the strategies developed by different countries, which are focusing more on green technologies to meet their energy needs.
Governments around the world are keen to adopt energy pricing policies that favour renewable energy systems in order to provide them with a platform to compete with conventional energy systems. For example, the U.S. government has implemented policies and measures to encourage the use of photovoltaic systems.
One of the policies is to allow customers to export the electricity generated by their PV systems to the grid and offset consumption with the excess electricity generated at other times, effectively obtaining credit for all PV generation at the prevailing retail electricity price.
The Republic of Korea has prioritized the development of wind and photovoltaic power generation systems, adopted policies to encourage green power generation systems, including feed-in tariff compensation for renewable energy, and plans to increase the share of renewable energy to 11% by 2030.
The Government of India is making every effort to increase the share of renewable energy in the country through broad participation and organization of international conferences and attracting foreign investors into the renewable energy sector.
The country aims to increase grid-connected solar capacity from 20 GW to 100 GW by 2022. China is one of the fastest growing economies, not lagging behind in the global renewable energy race and has implemented various policies to ensure sustainable development.
The Republic's goal is to meet 15% of its energy needs through renewable sources. European countries have adopted a variety of equipment, including FIT, to promote renewable energy, which has proved very effective so far.
Currently, about 25% of the world's energy needs are met by renewable sources, which is expected to overtake coal as the largest energy source by 2030, with the potential to increase to 60% of the total energy share by 2070.
The Middle Eastern country's high dependence on fossil fuels has limited the use of renewable energy to about 1% in the region. However, this share is expected to increase to 16% by 2035.
Saudi Arabia is a country rich in energy resources, relying mainly on energy produced by petroleum products to generate electricity and develop industry. However, the use of unconventional energy sources to generate electricity has always been of interest to the Kingdom's research community.
Several studies on the implementation of renewable energy in the region are considered promising. Due to its location and topography, all areas of Saudi Arabia have sufficient solar radiation every year and can be used effectively as a clean energy source.
Photovoltaic (PV) technology directly converts solar radiation into electricity, which is a convenient and effective way to use solar energy. Recent developments related to photovoltaic technology have brightened the prospects for developing solar energy at economically competitive prices.
Saudi Arabia
The author believes that photovoltaic power plants have some limitations compared with traditional power generation methods. However, energy storage, system flexibility, integration of PV systems into the grid, and load shifting options can enable solar PV (PV) to overcome its limitations compared to traditional power systems.
In addition, the influence of the surface temperature of the PV panels and the dust deposits on them on the power output of the solar power plant cannot be ignored and an appropriate derating factor needs to be applied.
The prospects for renewable energy production have been extensively studied in terms of cost, capacity, savings and environmental benefits.
In addition, several comparative studies of photovoltaic power generation systems and diesel power generation systems show promising results and can be implemented with appropriate support and incentives for renewable energy.
In order to meet the load demand in remote areas, some attempts have been made to integrate diesel power plants and renewable energy. The cost of generating electricity for various combinations of stand-alone and hybrid solar power systems is calculated, ranging from 21 to 16/kWh in the region.
The studies also report on the environmental benefits that can be achieved by installing renewable energy projects in reducing greenhouse gas emissions.
Several other studies on solar PV and hybrid solar PV systems with other renewable energy sources, focusing on applications, simulation, engineering, monitoring and performance in different countries and regions, can be found in the paper.
Mathematical models for calculating the present and future values of levelized electricity costs have also been developed for photovoltaic systems. In addition, the use of tracking systems is economically feasible for solar PV systems due to reduced installation costs.
If the right sun tracking technology is selected in a hybrid PV-hydropower system, energy savings of up to 18.2% can be achieved.
In recent years, the prices of PV modules, tracking systems, inverters and system balancing (BoS) have decreased exponentially. The initial investment has a great influence on production costs and, therefore, is a decisive factor for the success of the project.
As the above discussion highlights the current and future technological growth of photovoltaic power generation systems around the world, an up-to-date analysis of this system is crucial for a country to develop a green and sustainable energy policy.
In addition, oil-based economies such as Saudi Arabia have been greatly affected due to the volatility of the global crude oil market. The Kingdom has reduced subsidies for domestic gasoline consumption, causing gasoline prices to rise about fourfold over the past few years.
Electricity bills are also rising by the same percentage, and the government is eager to use these measures to generate revenue in the near future. There is an urgent need to overhaul the country's economic structure and reduce its dependence on oil.
There should be a clearer picture of project feasibility for any policies developed in this regard. The review of the article shows that the technical-economic analysis of large-scale PV plants and the latest situation in the region are not yet available.
The renewable energy market has changed rapidly over the past few years, making it necessary to conduct up-to-date research to track the trends and feasibility of such projects.
In this study, two diesel power plants were selected as the basic scheme for the technical and economic analysis of photovoltaic power generation systems. For tilt fixed and single-axis tracking configurations, the cost of power generation is assessed with and without greenhouse gas reduction credits.
The system was studied considering that the electricity export rates (EERs) of the proposed power plant were equivalent to the calculated cost of electricity (COE) of the base scenario.
A subsidy of 10% of the total initial investment was considered to assess the feasibility of the project, and financial indicators for both proposed plants were listed.
In addition, the performance and feasibility of 144 MW PV plants with single-axis tracking systems in six cities located in different regions of the Kingdom were checked.
The choice of different cities is based on different climatic conditions, presenting a holistic view of the feasibility of a plant under similar conditions worldwide. Several scenarios for the combination of FIT, subsidies, and electricity export increment rates (EEERs) were considered, and sensitivity analyses were performed for the variables.
Meteorological data
The meteorological data was obtained from the RETScreen database, which is connected to NASA satellites and 6,700 ground stations worldwide.
The geographical location of the cities selected for this study is shown in the figure. The figure shows the monthly mean solar radiation on the horizontal plane of the two locations and the annual mean solar radiation on the horizontal and inclined planes.
The geographic location of the selected city
Bisha has the highest annual solar radiation at 2.56 MWh/m2 in the horizontal plane, followed by Medina with 2.11 MWh/m².
Among the selected cities, Dhahran had the lowest annual solar radiation at 2.05 MWh/m2 at the level of the spectrum. The panel is considered to be tilted to an angle equal to the latitude of the PV plant location.
Average monthly daily solar radiation at the level of selected cities in Saudi Arabia
Average annual solar radiation on horizontal and fixed inclined surfaces
Basic case description
These two basic case power plants were selected based on the highest cost of electricity production in the kingdom and the cities with the highest annual solar radiation. The cost of generating electricity from the diesel power plant (67 MW) located in Tabahar is indeed the highest in the Kingdom.
Tabahar is located at 30.5 degrees north latitude and 38.22 degrees east longitude. Since there is no environmental data for Tabahar in the RETScreen database, Jawf (29.8°N – 39.9°E) was chosen for analysis.
According to reports, Bisha, located at 20 degrees north latitude and 42.6 degrees east longitude, is the best city for solar power generation systems. As a result, Bisha's 144 MW diesel power plant was chosen as the second benchmark case. The following table provides details of the selected basic case power plant used in the analysis.
Basic information about the power plant
Financial assumptions
The total cost of a PV power plant can be subdivided into initial total cost, annual cost, cycle cost and end-of-life cost. The table below gives a breakdown of the costs of the two power plants.
Despite the cost estimates of PV power plants reported in various studies, the economics of PV are constantly changing. In recent years, significant advances have been made in technologies related to the manufacture of PV cells, resulting in significant reductions in production costs.
The cost of crystalline silicon PV modules fell below the $1/watt mark in 2011 and was reported to be as low as $0.71/watt. A study conducted by the U.S. Department of Energy predicts that module prices will be below $0.5/W by 2017.
Cost breakdown of PV power plant projects
Based on current market research, the cost of Canadian Solar's polycrystalline solar PV panels (model CS6X-300P) considered in this study is assumed to be $0.22/watt.
The total initial cost includes development, PV panels, inverters, installation system, installation, system balancing (BoS) and miscellaneous costs. For inclined fixed PV systems, the total initial investment for Jawf F is estimated at $60.3 million and Bisha at $129.6 million.
For Jov and Bisha, the initial total cost of a single-axis tracking PV panel system is estimated at $65.7 million and $141.1 million, respectively. In addition to the total initial cost, the annual operating and maintenance costs of the plant are included.
The life cycle of the inverter is assumed to be 10 years, and the cost of periodic inverter replacement at the Jawf and Bisa power plants is estimated at $4.02 million and $8.64 million, respectively. According to a study by the International Energy Agency, the life cost of a power plant is expected to be 10% of the total initial investment after 25 years.
Other hypothetical parameters for the financial analysis of power plants are shown in the table below. The annual growth rate of the cost of electricity production is considered to be 4%, and according to the country's current economic data, an annual inflation rate of 2.5% is assumed.
Due to the implementation of new policies and economic transformation, Saudi Arabia's inflation rate has changed greatly over the past few years. The data shows that inflation was 3.2% in 2020, 2.1% in 2019 and 2.5% in 2018.
Financial parameters
Based on previous studies of the region, the nominal discount rate for economic research is assumed to be 5%. All financial data in the study are expressed in US dollars, and the local currency (Saudi Arabian riyal) has an exchange rate of 3.75 against the US dollar.
Another key assumption is that the Saudi government will finance the entire project and will not require a loan.
Electricity production
The capacity factors of the inclined fixed installation configuration of the proposed Jawf and Bitha power plants are 21.9% and 25.5%, respectively. The capacity factor is the ratio of the actual power generation of a power plant to the rated power.
The calculated total annual power generation of the Jawf power plant is 128.7 GWh, which is 12.0% lower than the annual generation of the base diesel power plant (146.3 GWh).
The calculated annual output of the proposed plant is 321.6 GWh, which is 9.0% lower than the annual output of the benchmark plant (353.7 GWh). Due to Jov's lower annual solar radiation, the plant requires 16.4% more panels than the Bissa plant.
While solar panels that can track the sun can significantly increase a power plant's production capacity, installing and tracking systems requires additional investment.
Due to the high capital cost of tracking systems, most previous studies have considered fixed-mounted panels. However, the recent reduction in the cost of tracking systems has made its application feasible.
If the single-axis tracking board is used in the Jawf photovoltaic power plant, the power generation can be increased to 171.8 GWh, which is equivalent to 33.5% higher than in the fixed case.
The impact of Bisha's proposed plant is even more pronounced (436.7 GWh), with production 35.8% higher than in the fixed case. With the installation of the tracking system, the capacity factors of the Jawf and Bisa power plants were increased to 29.3% and 34.6%, respectively, which corresponds to an annual power generation of 17.4% and 23.5% more than the diesel power plant under the base case.
Overview of the characteristics of the proposed photovoltaic power plant
Sensitivity analysis
The performance of a 144 MW photovoltaic plant was compared at six sites in Saudi Arabia to determine the power generation and economic viability of such a plant.
Since the production cost of a single-axis tracking configuration is much lower than that of an inclined fixed configuration, a power generation equipment based on a single-axis tracking configuration is used in this comparison.
The chart below shows the average monthly power generation of the proposed power plant in six cities in Saudi Arabia. The maximum electricity generation in all cities is expected between May and August, with the exception of Bisha, which has a maximum power generation in October.
This is because the sand is closest to the equator (20° latitude), so when tilted to an angle equal to the corresponding latitude, the maximum daily mean solar radiation on the surface is received in October.
Average monthly electricity generation in different cities in Saudi Arabia
The chart below shows that the average solar radiation of the Pisa Moon is more evenly distributed at the level compared to other cities. In addition, Bisha's average annual ambient temperature is the second lowest of all cities, which directly affects the efficiency of the panels.
Bisha also has the highest generating capacity, with an average annual capacity of 436 GWh, followed by Medina, Al Jawf, Jeddah, Riyadh and Dhahran with annual production of 391, 369, 352, 348 and 338 GWh, respectively.
The capacity of the Bisha plant is 11.5% higher than the second-best plant and 29.0% higher than the lowest plant. Total cost of ownership is reduced by an average of 4622 per year, GWh is forecast if diesel power plants are replaced with renewable energy-based power generation systems.
144 MW of PV plants are proposed to be built annually in different cities in Saudi Arabia
COE production in six cities is shown in the figure. The calculated average cost of electricity generation is £2.22/kWh. Due to the significant reduction in the cost of photovoltaic systems, the average COE production is 91% lower than the estimate in previous studies.
30Bisha had the lowest production cost at £1.77/kWh, while Dhahran was the most expensive location for PV systems (£2.51/kWh) with COE production around 41.8% higher than Bisha.
The cost of electricity generation for the proposed 144 MW photovoltaic power plant in different cities in Saudi Arabia
When the internal rate of return is greater than the discount rate, the project becomes economically viable. Generally, the target IRR set by the investor is higher than the discount rate, and any value greater than the target IRR is considered favorable.
In the first case, the impact of government subsidies on the initial total investment and payback period of the project is evaluated, as shown in the figure below.
In this assessment, the assumed EER, EER and GHG emission reduction credits are set at 2/kWh, 2% and 16/tCO2, respectively.
The change in the internal rate of return as a percentage of the hypothetical subsidy for the total initial cost
As subsidies increase from 5% to 20%, Bisha is the most advantageous city for installing photovoltaic power plants, with internal rates of return ranging from 6.1% to 8.3%.
If the government subsidizes 20% of the initial total cost of renewable energy projects, the payback period is as low as 11.7 years. Dhahran is the least popular, and the project is only financially viable if the government provides subsidies of 25% or more.
The change in the payback period as a percentage of the assumed subsidy for the total initial cost
FIT is a policy mechanism under which governments pay producers of renewable electricity to the grid, often above normal costs, to make renewable technologies more attractive and encourage their production.
In the second case, when the FIT increased from 2 to 4/kWh, the impact on IRR and payback period was assessed and the results are shown in the figure.
The same EER, EER and GHG emission reduction values as in the first case were used, while the government subsidy was set to zero.
The internal rate of return varies with the assumed feed-in tariff
For Bisha, any FIT value above 2.0/kWh is feasible. For all other municipalities, the minimum FIT required for the project to be economically viable is 2.5/kWh.
The payback period can be as short as 7.1 years (for Bisha) when the FIT is 4/kWh and as long as 18.9 years (for Dhahran) when the FIT is 2/kWh.
The payback period varies with the assumed feed-in tariff
EEER is the projected average annual growth rate of the EER. Since Saudi Arabia's economy is heavily dependent on crude oil exports, recent oil price fluctuations are expected to affect future budgets.
Subsidies for petroleum products for domestic use have been significantly reduced and are expected to follow this trend, which has and will eventually increase the cost of electricity production. Therefore, in the third case, the impact of the increase in EER on the economic aspects of the project is assessed.
The impact of EER on IRR and equity payback period, EER of 2/kWh and GHG emission reduction benefit of US$16/tCO2 is shown in the figure.
With the exception of Bisha, power plants everywhere are uneconomical with an EER of 2%. If the expected EER is 4% or more, the power plant is beneficial for any city.
Similarly, the best location for PV plants is Bisha, with a maximum forecast IRR and a minimum payback period of 10.1% and 11.4 years, respectively, and an EER of 6%.
The payback period varies with the growth rate of assumed electricity exports
In the last case, the fitting effect was evaluated in three cases; (a) No subsidy, (b) 10 per cent subsidy for initial investment, and (c) 20 per cent subsidy for initial investment.
Use financial metrics to show best position (Bisha) and worst position (Dhahran) in the summer. Without subsidies, FIT increased by 100% from 2/kWh to 4/kWh, increasing the internal rate of return from 6.1% to 14.0% and from 9.9% to 3%.
The internal rate of return and payback period of the different subsidy options of the Bisha Power Plant change with the feed-in tariff
The value of Besa increased from 7.1% to 15.5%, the value of Dhahran increased from 3.9% to 11.2%, and the subsidy was 10%. When the subsidy increased from 0% to 20%, the internal rate of return for Bitha and Dhahran increased by 3.5% and 2.8%, or 4/kWh, respectively.
In the case of FIT 4/kWh and 20% subsidy, the payback period is as short as 5.9 years (Bisha) and as long as 7.8 years (Dhahran).
The internal rate of return and payback period of different subsidy schemes for Dhahran Power Plant vary with feed-in tariffs
conclusion
The results show that the dramatic reduction in the cost of photovoltaic systems in recent years has significantly reduced the cost of electricity production, allowing solar production to compete with the Kingdom's diesel power plants without any incentives.
Global efforts and national targets, particularly to reduce the share of fossil fuels, require policymakers to have a clearer understanding of the latest trends.
The technical and financial indicators of the photovoltaic panel power generation system presented in this study indicate the feasibility of solar projects in Saudi Arabia's dry thermal climate.
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