Hybrid Photovoltaic System and Sustainability:

economic aspects
Fernando Iannone, Sonia Leva, Member, IEEE, Dario Zaninelli, Senior Member, IEEE
1
Abstract - The paper introduces hybrid photovoltaic/diesel that is part of all human activities. The availability of energy,
generation systems for supplying remote power plant taking into the cost and the impact of energy choices on the environment,
account the enhancement of the sustainable energy on the economic are factors that influence the community development.
point of view. In particular, a cost investment evaluation is performed Sustainability and environmental balance are real problems.
on a real plant showing the effect and the weight of the sustainability
economical saving.
The proposed solutions, as a large spread of alternative energy
sources to ingrate the classical ones, represent the deep
Keywords - New/alternative source of energy, photovoltaic consciousness of the need of cultural changes with the support
systems, sustainable energy, system costs. of the technology, essential tool making possible new strategic
solution for energy production.
I. INTRODUCTION Nowadays, for determining the cost of energy source the main
factors are its availability and the charges for its introduction
The continuous decreasing of technology costs of associated on the market. The costs for the environmental impact due to
to renewable energy sources together with a consolidated the energy use are missing at the present. This fact permits that
know-how of the relevant industry, bring to an increasing the energy sources from gas or oil or fossil result today
application of these new/alternate generation units in isolated economically convenient and widely used [1].
electric plants. Renewable energy sources, and in particular solar technology,
In particular, the combination of renewable electric generation are considered in the actions to promote a sustainable
systems with diesel generators can reduce the battery size for development both for the environmental advantages that they
energy storage and increase the reliability of the supply. offer, and for the trend of their costs that continue to decrease.
These systems so-called “hybrid” permit to decrease the fuel In spite of this, from the point of view of the possible spread
consumption of the diesel-machine in the range of 70÷90% as of the photovoltaic in the energetic market, the cost of the
regards to the only battery-diesel supply architecture. systems and consequently of the energy that they produce
Therefore, the primary source of electric energy for the plant constitutes still today the more important limit. In fact, from
becomes the renewable one, while the diesel machine the point of view of the customer who can choose between
constitutes the auxiliary source in case of emergency, loss of various sources of energy the photovoltaic offers some indirect
the main supply or battery charge. advantages.
The hybrid systems can be very effective in terms of The photovoltaic (PV) plants, on the cost point of view, are
sustainable energy development, permitting a generation of penalized in respect to other conventional energy resources
electric energy with a minor environmental impact. [2]. In fact, without specific public incentives which calculate
After a discussion on the update topic of sustainable energy the social advantages offered by PV technology, the
programs, the paper presents an economical evaluation of PV photovoltaic is not yet competitive with other resources. The
application for stand-alone plants where sustainability assumes thermal conventional technologies are actually more expensive
an important role. in term of social costs, but users no directly pays this social
In fact, political decisions and people sensibility are going costs that are in charge on the society.
towards the recognition of the economical burden associated Real resource costs should include both the private costs
to “environmental” and “social” costs that can ransom incurred to provide power and the external costs of damage (or
renewable energy also from the economic point of view. deterioration in quality) to the environment caused by power
generation.
II. SUSTAINABLE ENERGY FOR THE DEVELOPMENT Even if there is not a standard application of the external costs,
their progressive introduction in the energy price evaluation
The world energy scenario is deeply changed in these last should improve the possibility to use renewable sources and
years and the attention has been moved on the environmental their efficiency on the economical point of view.
effects of the energy cycle trying to establish a connection
between energy, development and sustainability. A. Evaluation of the external environmental costs applied to
The sustainability concept has its roots in a correct use of electric energy production
sources and-among they particularly important is the energy,
A typical approach for the evaluation of the external
1
environmental costs applied to electric energy production is a
S. Leva is with the Electrical Engineering Department of the Politecnico di methodology so called “impact pathway” [2] that evaluates the
Milano, Milano, Italy (e-mail: [email protected])
F. Iannone is with the Electrical Engineering Department of the Politecnico
dispersion, deposition and effect of the pollution. This
di Milano, Milano, Italy (e-mail: mailto:[email protected] methodology summarizes the impact of the system in a money
D. Zaninelli is with the Electrical Engineering Department of the indicator of the global performance. Anyway, this method
Politecnico di Milano, Milano, Italy (e-mail: [email protected])

0-7803-8465-2/04/$20.00 ©2004 IEEE.

does not take into account social factors neither environmental carbon dioxide emissions will grow with the same behavior of
aspect that is difficult to quantify in costs. Considering the the last twenty years. This is a conservative hypothesis, while
limitations of that methodology, the evaluation of the total considering the emissions of the numerous Underdeveloped
costs remains a useful method that still needs further Countries, the growth of CO2 in the atmosphere could become
improvement by means of research and development of at least of parabolic type. This would surely influence the
models [3]. economic value of the environmental aspects, making them to
Already in the last twenty-years of the past century thanks to a remarkably increase their value.
study performed by the Fraunhover Gesellschaft - Institut fur The evaluated sustainability costs are applied to the
Solarenergiesysteme (FhG-ISE) of Friburg, on behalf of the economical evaluation of a real hybrid plant in the following
European Union some values have been supplied [4]. sections.
The job of the FhG-ISE makes reference to the existing
situation in the Federal Republic of Germany in 1984 and III. STUDY OF REAL PHOTOVOLTAIC HYBRID PLANT
takes in consideration the production of thermo-electrical,
conventional or nuclear systems. The conclusions of the study In the following the problem of design a real plant for electric
demonstrate that, also using the prudential criteria the medium power generation is summarized [3]. This design concerns the
indirect labor costs associate to the fossil fuel use (converted feasibility and the realization study of the photovoltaic hybrid
in euro) are of the order of 0.04 €/kWh, while those associate plant of a mountain hut in the Lombardia Alps.
to the nuclear are of 0.06 €/kWh. This study, for its innovative This hybrid system has to meet the following requirement:
character and its importance, has been taken to model in - reduce the run-time, and then the cost regarding fuel and
successive analyses. maintenance, of the diesel generator (Gen-Set) currently
The European project THERMIE [5] leads to a cost for used;
producing energy with fossil sources that can be estimated in - have an electric power generation system that respects and
0.20€/kWh. protects, as far as possible, the mountain environment where
The increase of this value can be correlated to an increase of the hut is located;
the emissions in gas atmosphere of carbonic greenhouse gas as - have a system able to control and monitoring, from a remote
carbon dioxide (Fig.1). It is possible to assume that the CO2 station, the hybrid photovoltaic plant (and/or more plants
emission into the atmosphere will continue to increase, in the positioned in different places).
next years, with linear shape. Since the gas emissions of
greenhouse gases in the atmosphere are directly tied to the A. Radiation data
monetary value of the sustainability, it can be supposed that
also these costs linearly increase. The radiation data of the hut site are reported in Fig.2.
An esteem of the economic value of the sustainability for the Starting from this data it is possible to evaluate the daily
next years can be made, starting from the economic data irradiation value on an inclined PV array. The optimum
previously indicates, in the following way1: inclination for the PV array in the site corresponds to a tilt
angle of 40° and an azimuth angle of 0°. The real inclination
S € = 0.022857142 ⋅ t − 45.56 (1) used, imposed by the provisions on the environments impact,
is 20° of tilt angle and 70° degree of azimuth angle that
The proposed equation is based on the hypothesis that the corresponds to the installation of the photovoltaic modules on
the hut roofing.

B. Load data

The loads present in the hut, optimized from the energy

point of view, are subdivided in two different groups:
• “Batteries loads ”, powered by the batteries directly (dc
loads Vdc), or by the inverter (low power ac loads Vac), as
lights, refrigerator, alarms, etc.. The required total energy
per day is 15.2kWh/d;

Fig.1. CO2 emissions over past fifty years

1
The proposed equation was derived by a linear interpolation of two
economic values for sustainability, related to two different years. The used Fig.2. Daily radiation of the hut site.
values are respectively 0.04 €/kWh for 1995 and 0.20 €/kWh for 2002.
• “Direct loads” powered directly by the diesel machine, A. Evaluation of the hardware plant’s cost
including dishwasher, hot plate and microwave oven, for a
total of 13.6kWh/d. The first step for the economic analysis consists in the
Furthermore the dc loads are divided on the basis of their evaluation of the overall costs of the two plants under
importance for the customer needs and the safety. In case of examination: GS type and HIHS type.
energy deficit and battery low charge level, the control device Diesel generator, fuel and maintenance costs. The used GS
provides a scheduled load shedding for assuring the supply of has and indicative cost of about 5100 €. Focusing on the fuel
the main loads only. costs, in the GS plant the generator works 16 hours per day for
110 days. The fuel consumption is about 1 l/h and its cost is
C. The photovoltaic hybrid system about 1.02 €/l. The yearly fuel cost amounts to 1795.20 €. In
the HIHS type plant the diesel generator works only 2 hours
The photovoltaic array is designed, starting from irradiation, per day with an yearly fuel cost of 224.40 €. The diesel
load and PV electric characteristic data, for a maximum power generator maintenance costs are calculated on the number of
of 4kWp. This power is obtained using 72 PV modules fixed maintenance events per year. Maintenance has to be done
on the hut roof, and 8 PV modules of 50Wp each one, fixed on every 150 working hours for the diesel generator. As a result
the vertical wall of the south front of the house. The 8 PV the GS type plant needs 11 maintenances per year with an
modules fixed on the front serve to keep charged the batteries overall cost of 5500 €, while HIHS type plant needs only 2
in the wintertime, when the primary 72 PV modules on the maintenances per year with an overall cost of 1000 €.
roof could be covered with snow. The battery rank is designed Photovoltaic modules. The system under analysis is built of 80
to power all the dc and ac loads for 4 days during low- modules of 50Wp each made up of 36 solar cells. The mean
irradiation or no-sun period. Instead, the diesel generator price of each module is 171 €. So the PV modules cost is
allows both to charge the battery and to supply directly the ac about 13700€. The PV have to be installed on support
users for longer no-sun periods (more then 4 days). structures in order to obtain the design inclination, for a total
Taking into account the total consumption of energy related price of 878€.
to battery loads (631Ah/day), considering the energy received Batteries. The used batteries has a capacity of 3100 Ah and the
during the month with the lowest sunshine (4.87kWh/m²/day) cost is about 6800 €. The chemical protection system price is
and considering a reduction coefficient of the 20% on the assumed equal to 1275€. The inverter has an overall cost of
estimate data, the photovoltaic system is be able to produce an 2346€. The battery charger on the basis of the market analysis
energy contribution of 69% (434Ah/day) of the batteries is evaluated in about 850€.
energy consumption. Installation. The evaluation of the installation costs is done
The inverter for the power supply of the battery loads have with the labor price taken from Milan’s Chamber of
nominal power of 5kW, 150% overcharge for 3s., and Commerce in 2001. It is assumed that three persons compose
efficiency of 90%. the team involved in the installation of the plants. The
Using the hybrid system it is possible to reduce the diesel installation of the GS type plant can be done in about five
generator run-time from about 16h/day to 2h/day. This means working days, three of them in which is present the whole
that we can save about 14 h/day of diesel generator work that team and two of them in which the most qualified worker is
correspond to about 1400 h/year and to approximately 1400 not present. The HIHS type plant needs, for installation, the
litre of diesel fuel saved per opening season. presence of the whole team for twelve working days.
From the environmental impact point of view this means that In Tables I and II the costs of the two considered plants are
the emission of carbon dioxide (CO2) in the atmosphere is cut summarized.
down of about 3 tons/year. A comparison of the two tables shows that the installation of a
HIHS plant needs a sum of money larger than the GS one.
IV. ECONOMIC ANALYSIS This is due substantially to the PV modules costs. This
amount, despite its value, will be reduced in the next years
Scope of this section is to estimate the cost and therefore the because of the increase of the number of PV producer
economic convenience to install a photovoltaic system in place
of electricity-generating groups for an isolated load. The TABLE I. GE PLANT COSTS
analysis is performed comparing the hybrid plant (HIHS) Installation [€] 1871
shown in section III and the same plant, which uses as energy Hardware [€] 6138
Operation and mainteinance [€] 7295
source a stand-alone Generator Set (GS). The analysis uses the
Total [€] 15305
actualized Cash Flow (CF) both economic and financial2.
Then the produced kWh cost is calculated using the Unit
Electricity Cost (UEC) method referring to the two plants
solution analyzed.

2
The purely economic approach considers hardware, installation and
operation costs only, neglecting taxes and subsides. The financial approach,
instead, considers taxes subsides, interest on the payments, etc.
company. This lead to a greater market competion, which example the batteries have a life time of about ten years, so
TABLE II. HIHS PLANT COSTS their substitution at the end of the 10th and the 20th year.
Installation [€] 5227 In the first part of Table III the expenses are reported, it can be
Hardware [€] 32838 observed that at year 0 they are related only to the installation
Operation and maintainance [€] 1224 costs. Other expenses, evaluating the amortization of the
Total [€] 39290 various components, have been distributed among the lifetime.
The components whose expected-life is different than 25 have
been evaluating in a way to take into account the remaining
value at the end of the 25th year. For example batteries that
have normally a 10 years life have been evaluated taking into
account the complete use of two sets of them and the
remaining value of the third set as reported in table III at the
fifth row3.
The incomes have been added every year to various expenses.
The profit is then obtained subtracting at the incomes, the
amortization items and the expenses.
In the second part of Table III the CF analysis is reported with
involves costs reduction. reference to the different components The next step consists in
the actualization of the CF and then in the calculation of the
B. Cash Flow analysis (CF) and Net Present Value (NPV) NPV. This analysis method lead to a positive evaluation about
the use of a hybrid PV plant instead of a plant with a generator
The scope of this analysis is to evaluate, on the mean lifetime set only. This is evidenced by the positive NPV at the 25th
of the components, the HIHS plant investment with respect to year. This result, which is already rather high, could be greater
if the analysis is conducted upon a larger period of time or if
the GS plant investment. This comparison can be done in
the plant would be used for more of 110 days in a year.
order to find out particular convenience of using an HIHS
Table IV shows the NPV and the Break Even Point (BEP)
plant instead of a GS one in order to supply the stand-alone
derived by the CF analysis in different conditions. These
load.
conditions differs each other only for the way of evaluation of
The HIHS plant is regarded as an economic activity with a
the sustainability. Three different sustainability values are
capital investment and yearly corresponding income
proposed: a null value of the environmental aspects, a constant
associated to:
- the fuel saved quantity: 14 l/day of fuel are saved; value [5] and a linear increasing value as proposed by equation
(1). Moreover, the values of BEP and NPV are analyzed from
- the maintenance expense of the diesel generator: nine
a company point of view, calculating taxes on profit with a
maintenance per year not done that permits to save 4500 €
rate of 50%, and evaluating sustainability as a government
per year;
subsidy.
- environmental benefits: economic value due to the reduction
of greenhouse gases emitted in the atmosphere.
C. Produced energy cost
- the life period of diesel generator: the mean life of the diesel
electric machine is about 10000 working hours.
The analysis is completed with the evaluation of the cost of
The initial investment will be concentrated in year “0” (2001).
The CF are evaluated summing up the gains end the expenses. the produced energy by the real plant, using the Life Cycle-
Costing (LCC). The parameters for LCC evaluation are [6]:
The evaluated CFs are actualized using the money cost rate
- period n: the period of time, n, during which the system is
and the discounted cash flows are calculated. Then the NPV is
under analysis, that is, the greatest expected lifetime of the
determined as:
component;
- inflation i;
∑ (1CF
n
NPV = CF0 + k (2) - discount rate d: the applied active rate on d=2-5%;
+ d)
K
K =1 - cost of money and the overall hardware and installation
costs;
where: - operation and maintenance costs;
-CF0 is the cash flow at year 0 and evaluates all the investment - fuel costs;
done; - substitution costs of every part at the end of its operative
-d represents the discount rate; life.
-CFk is the cash flows at year k; The LCC evaluation needs that all costs and benefits, present
- n is the lifetime of the plant. and future, are brought back to present value or Present Worth
The investment is favorable if the NPV is positive. The (PW). The present value of the amounts is calculate, as
comparison between the two plants type is done in terms of function of the period of the payment, using two different
their NPVs. Table III reports the CF, assuming a life time of updating factors:
25 years, that is the guaranteed life time of PV modules. Not
all the plant components have the same mean life time, for 3
This approach is not applied, in general, to all the electrical parts because
they are subjected to technical obsolescence.
 TABLE III. COST, REVENUES AND CASH FLOW OF HIHS SOLUTION
Year 0 1 2 … 7 8 9 10 … 24 25
Hardware [€] -985 -985 … -985 -985 -985 -985 … -985 -985
Batteries 1st set [€] -680 -680 … -680 -680 -680 -680 …
Batteries 2nd set [€]
Batteries 3rd set [€] … -680 -680
Surplus batteries 3rd
Costs

[€] 3400
set
Generator set [€] -112 -112 … -112 -112 -112 -112 … -112 -112
Surplus generator set [€] 2295
Fuel [€] -224 -224 … -224 -224 -224 -224 … -224 -224
Installation [€] -5227
Generator set
[€] 4500 4500 … 4500 4500 4500 4500 … 4500 4500
Revenues

maintenance
Fuel [€] 1571 1571 … 1571 1571 1571 1571 … 1571 1571
Sustainability [€] 634 706 … 1068 1140 1213 1285 … 2299 2371
Generator set 5100 -2186
Profit [€] -5277 4702 4775 … 10237 5209 5282 5354 … 6368 9950
Hardware [€] -20938 985 985 … 985 985 985 985 … 985 985
Batteries 1st set [€] -6800 680 680 … 680 680 680 680
Batteries 2nd set [€] -6800 …
Batteries 3rd set [€] … 680 680
Cash Flow

Surplus batteries 3rd

[€] -3400
set
Generator set [€] -5100 112 112 … 112 112 112 112 … 112 112
Surplus generator set [€] -2295
Cash flow [€] -38065 6480 6552 … 12014 6987 7059 332 … 8145 6032
Discounted cash flow [€] -38065 6171 5943 … 8538 4729 4550 204 … 2526 1781
Net present value [€] -38065 -31894 -25951 … 4230 8959 13510 13713 … 61850 63631

N
ALCC  € 
- single payment PW = C ⋅  1 + i 
 = Cr ⋅ Pr (3) UEC = = 
(6)
1+ d E  kWh 
r r

- annual payment
N The UEC reported in Table V is a very significant indicator
1 + i    1 + i    1+ i 
PWa = Ca ⋅  ⋅   − 1  − 1 = Ca ⋅ Pa (4) for performance evaluation of energy generation systems and
1+ d   
1+ d  
 1+ d  gives, practically, the kWh generated cost. In particular, the
where Cr is the cost at year r and N is the expected life-time of UEC for different plant type with a range of ±20% around the
the part. The Ca is the recurrent annual cost. The sum of all normal produced energy, and with different evaluation of the
PW gives the LCC. The produced energy cost is so calculable sustainability costs are reported in Fig.3.
by means of the Annualized life-cycle costing (ALCC):
LCC  €  (5)
ALCC = = 
Pa  year 
which leads to the Unit Eletricity Cost (UEC) by means of the
annual poducted energy given by the ratio between the ALCC
and the annual energy E produced by the plant:

TABLE IV. NET PRESENT VALUE AND BREAK EVEN POINT OF THE
INVESTMENT WITH DIFFERENT CRITERIA ON THE ECONOMIC EFFECT OF
THE SUSTANIBILITY
Economical analysis Financial analysis
BEP NPV BEP
NPV [€]
[year] [€] [year] TABLE V HIHS UNIT ELECTRICITY COST
No sustainability th th th th UEC with UEC with
44982 7 –8 11775 14 –15 Opening Energy UEC without
evaluation constant linear
period consumption sustainability
Constant sustainability sustainability
[days] [kWh/year] [€/kWh]
sustainability 53912 6th –7th 16240 13th –14th [€/kWh] [€/kWh]
evaluation 88 2534 0.98 0.73 0.46
Linear sustainability 110 3168 0.79 0.59 0.37
63631 6th – 7th 21100 12th –13th
evaluation 132 3802 0.65 0.49 0.31
 VII. ACKNOWLEDGMENT

The Authors thank the Gechelin Group – Italia and Ing. W.

Dalbon for the assistance and support in the design of the
hybrid photovoltaic plant

VIII. REFERENCES
[1] Landau Network-Centre Volta School International UNESCO Science
for the Peace. Energetic political and Strategies for the future: Scientific,
Technological and Economic aspects Vol.1 Como - Villa Olmo
Settembre 1998 (In Italian)
[2] European Commission, “ExternE-Externalities of Energy, Vol. 10:
National Implementation “, EUR 18528,Directorate-General XII,
Science, Research and Development, Luxembourg (1999).
[3] W. Dalbon, S. Leva, M. Roscia, D. Zaninelli, Hybrid Photovoltaic
System Control for Enhancing Sustainable Energy, Proc. IEEE PES
Fig.3. Energy costs. Summer Meeting, Chicago (IL), USA, July 21-25, 2002, n.pp. 6
[4] http://members.xoom.virgilio.it/solardesign/eco_fot.html
VI. CONCLUSIONS [5] http://europa.eu.int/comm/dg12/joule1.html
[6] T. Markvart, Solar Electricity, England: John Wiley & Sons, 1997

The paper present an economic study of possible photovoltaic IX. BIOGRAPHIES

hybrid systems studied for improving sustainable energy
development. The result is the significance and validity of
hybrid systems in isolated plants where solar energy is Fernando Iannone, received M.S. degree (1997) and he is PhD student in
effective and the respect of the environment is important. Electrical Engineering at the “Politecnico di Milano”, Milano, Italy. His areas
of research include Energy and Environment, Sustainable Development and
The proposed method represents a valid reference determining
renewable sources.
the economic evaluation of a stand-alone PV system where the
following factors can be highlighted: Sonia Leva, received M.S. degree (1997) and the Ph.D degree (2000) in
- the social and environmental benefits because of the no Electrical Engineering from the “Politecnico di Milano”, Milano, Italy. Since
1999 she is Assistant Professor in Elettrotecnica in the Electrical Engineering
polluting and no noise operation of the PV system,
Department of the Politecnico di Milano. Her current research interests are
together with the possibility to integrate the PV modules concerned with the electromagnetic compatibility, the power quality and the
in the structure of the building; foundation of electromagnetic theory of electric network. Dr. Leva is a member of
- the independence form the fuel use. IEEE.
Taking into account these costs, meanly related to the
Dario Zaninelli, received the Ph.D degree in Electrical Engineering from the
sustainable development, the economical factor as BEP and Politecnico di Milano, in 1989, and he is now Full Professor in the Electrical
NPV become of interest in PV application for isolated users. Engineering Department of the Politecnico di Milano. His areas of research
include power system harmonics and power system analysis. Dr. Zaninelli is a
senior member of IEEE, a member of AEI and a member of the Italian
National Research Council (C.N.R.) group of Electrical Power Systems.