The Effect of Fuel Price on the Economic Analysis of Hybrid (Photovoltaic/Diesel/Battery) Systems in Iran

Diesel power technology has been utilized worldwide, especially in remote regions, because of its low initial capital cost. But it has negative effects on the surrounding environment and causes global warming. On the other hand, depleting oil and fuel resources has made it inevitable to seek alternative/renewable energy resources. In Iran, the cost of fuel is highly subsidized. If Iran removes the fuel subsidy, the cost of diesel fuel would increase and the photovoltaic (PV) or hybrid PV/diesel systems would become more attractive. Hybrid photovoltaic/diesel/battery (PV/diesel/bat) systems which use PV energy, combined with diesel generation power and battery bank storage are an excellent solution to decrease diesel generator costs, pollution, and electrification of remote rural areas. In this article, a study using PV/diesel/bat power systems to meet typical load requirements in a remote region in Kerman, Iran is investigated under four different diesel generator fuel price scenarios. A simple optimization method is used to determine the systems with high reliability and low costs. The method used, which is based on annual electrical demand, solar radiation data, and rated power of the diesel generator consists of two parts: The model of loss of power supply probability and the model of the levelized cost of energy. Results show that only under a subsidized diesel fuel price scenario, the diesel-only system has the minimum cost, but by the elimination of diesel fuel price subsidies, the role of the diesel generator decreases in hybrid (PV/diesel/bat) energy systems.