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Title: The quest for carbon-neutral industrial operations: renewable power purchase versus distributed generation
Integrating renewable energy into the manufacturing facility is the ultimate key to realising carbon-neutral operations. Although many firms have taken various initiatives to reduce the carbon footprint of their facilities, there are few quantitative studies focused on cost analysis and supply reliability of integrating intermittent wind and solar power. This paper aims to fill this gap by addressing the following question: shall we adopt power purchase agreement (PPA) or onsite renewable generation to realise the eco-economic benefits? We tackle this complex decision-making problem by considering two regulatory options: government carbon incentives and utility pricing policy. A stochastic programming model is formulated to search for the optimal mix of onsite and offsite renewable power supply. The model is tested extensively in different regions under various climatic conditions. Three findings are obtained. First, in a long term onsite generation and PPA can avoid the price volatility in the spot or wholesale electricity market. Second, at locations where the wind speed is below 6 m/s, PPA at $70/MWh is preferred over onsite wind generation. Third, compared to PPA and wind generation, solar generation is not economically competitive unless the capacity cost is down below USD1.5 M per MW.
Authors:
; ;
Award ID(s):
1704933
Publication Date:
NSF-PAR ID:
10296948
Journal Name:
International journal of production research
Volume:
56
Issue:
17
Page Range or eLocation-ID:
5723-5735
ISSN:
0020-7543
Sponsoring Org:
National Science Foundation
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