A Novel Framework for Cost Optimization of Renewable Energy Installations: A Case Study of Nigeria

Abstract

The merits of utilizing renewable energy sources (RESs) in electricity generation, especially in the developing countries, are to improve the electricity access, economic development and energy sustainability. Nigeria is a developing country with an acute electricity problem. The country is blessed with rich renewable energy (RE) resources. However, most of these resources are yet to be exploited. A look at the energy sector in Nigeria suggests that for the country to be energy sufficient, it must embrace domestic RESs in its energy mix. However, RE technologies are capital intensive. Hence, by using Nigeria as a motivation, this study aims at developing a general framework that can be used for any country or region in determining the optimal total capacities of RESs to be installed in different locations, to increase the use of RE in a cost-effective manner. The designed optimization problem aims to minimize the total cost of installing RE technologies while satisfying some predetermined constraints that include demand and supply, RE potential, area and system reserve requirement. To this end, three different scenarios, namely prospective off-grid, on-grid, and all-off-grid are introduced. The first scenario aims at finding the optimal cost of installing RESs in order to improve electricity access at each off-grid installation location (a distribution company (DISCO) location with electricity access level below 50%). The second scenario optimizes cost of installing RESs for on-grid installation locations (DISCO locations (DLs) with electricity access level of 50% and above). The third scenario finds the optimal cost of installing off-grid RESs for all the DLs. Linear optimization technique is used to solve the problem. The results show that the total installation costs of the first and second scenarios (which means having off-grid installations for some DLs and having on-grid installations for other DLs) are $97.46 billion and $114.03 billion respectively, with a total cost of $211.49 billion. On the other hand, the result of third installation scenario (only off-grid installations for all DLs), is found to be $244.33 billion. These results reveal that the combination of off-grid and on-grid installations (first and second scenarios) has the minimum installation cost, for the case study of Nigeria. As the framework presented in this study is used to provide the minimum RE related total installation cost and related RE planning in Nigeria, it can also be useful for other countries or regions considering RE planning.