A techno-economic calculation method for the implementation of an autonomous solar and storage system to electrify Vopak’s storage terminals

Abstract

Vopak has the vision to become climate neutral by 2050 (Scope 1 and 2 emissions). Currently, over 99% of its CO2 emissions originate from storage terminal activities. Action must be taken to reduce these emissions by converting the current (fossil fuel-based) generation of electricity to sustainable energy.

This study aims to research how we can develop a methodology to evaluate the cost-effectiveness of an autonomous solar and storage system to electrify Vopak’s storage terminals? The objective of the method is to develop a system that is clean, reliable, autonomous, and payable (cheap). The selected autonomous system comprises a photovoltaic (PV) system, a battery energy storage system (BESS) and a hybrid inverter to satisfy the energy load of the storage terminal.

The developed method is a techno-economic model using three interlinked components. First, a PV model uses meteorological data and specific technical characteristics to simulate different PV systems. Second, based on the cost of different components of the PV system and BESS, a grid-search system selection method is used to determine the lowest-cost sizing of an autonomous PV and battery
system. Third, the sizing of the system is used to calculate the levelized cost of solar plus storage (LCOSS).

The method is evaluated for three selected storage terminals located in different climates. The lowest cost developed system for Vopak Fujairah Horizon terminal (desert climate), which has a LCOSS of 0.33 [$/kWh]. For Vopak Terminal Laurenshaven (maritime climate), a LCOSS of 0.96 [$/kWh] is calculated. Vopak Panama (tropical climate) has a designed system with a LCOSS of 0.53 [$/kWh]. The calculated LCOSS shows that these autonomous systems are not cost-effective, as they are 3 to 14 times more expensive than average energy prices from the grid for the storage terminal locations. A sensitivity analysis of the system costs and the weighted average cost of capital shows that a 50% decrease in battery costs results in a 38% decrease in the LCOSS. Furthermore, a decrease of 2% of the WACC has the same effect as a total system cost reduction of 10%–15%. Ultimately, enabling the system to
use its dumped energy by selling it to the grid shows the most significant reduction in the LCOSS.

This study clarifies that the cost-effectiveness of an autonomous PV and battery system strongly depends on the climate and seasonal variation of the location as it affects the energy yield of the PV-generating technology and the sizing of the system. Furthermore, the battery system costs are currently two to three times more expensive than a PV system; therefore, to size the lowest-cost system, the sizing strategy rather increases the (cheaper) PV system size to satisfy the load than install an additional battery. This results in oversized PV systems generating a large amount of unused energy. A solution is to enable the system to sell its unused electricity to the grid. An alternative solution would be to add a secondary “clean” energy source, such as a hydrogen generator, to combat these oversized systems and thus reduce the lifetime system costs.