Cost minimization for fully renewable electricity systems: A Mauritius case study

• Published in: Energy policy Vol. 133; p. 110895
• Main Authors: Timmons, D., Dhunny, A.Z., Elahee, K., Havumaki, B., Howells, M., Khoodaruth, A., Lema-Driscoll, A.K., Lollchund, M.R., Ramgolam, Y.K., Rughooputh, S.D.D.V., Surroop, D.
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01-10-2019; Elsevier Science Ltd
• Subjects: Accounting; alternative energy; Case studies; Climate change; cost analysis; Cost engineering; Costs; Decarbonization; Economic analysis; Economic models; Electric energy storage; Electricity; Electricity pricing; electricity supply; Energiteknik; Energy costs; Energy efficiency; Energy policy; Energy storage; Energy Technology; Environmental changes; Environmental impact; Environmental problems; Feasibility; Fossil fuel combustion; Fossil fuels; Fuel combustion; Identification methods; Levelized cost of electricities; Marginal costs; Mascarene Islands; Mauritius; Minimization; modeling; National electricity system; Optimization; OSeMOSYS; Policy analysis; Policy making; Portfolios; Renewable electricity; Renewable energies; Renewable energy; Renewable energy economics; Renewable energy resources; Renewable energy systems; renewable resource; Renewable resources; Storage; Variability; Mauritius; Renewable energy economics; Climate change; Decarbonization; OSeMOSYS; Energy storage
• ISSN: 0301-4215; 1873-6777; 1873-6777
• DOI: 10.1016/j.enpol.2019.110895

Climate change is the world's most prominent environmental problem, and fossil-fuel combustion is its primary cause. To set carbon reduction goals, policy makers require information on feasibility and cost of renewable energy systems. In this study, we describe an economic approach to modeling a national electricity system based entirely on renewable sources, using the island-nation of Mauritius as a case study.
Many renewable electricity studies consider levelized costs of electricity (LCOE), which represents average cost of electricity, but cost minimization requires equalizing marginal costs. With variable sources, marginal costs change over time. Minimizing cost thus requires a model incorporating variability at high time resolution (daily or hourly), with the objective of minimizing the levelized cost of electricity for an entire electricity system (LCOES).
In Mauritius, the minimum-cost renewable electricity portfolio includes roughly equal proportions of solar, wind, and biomass electricity, along with electricity storage. Policy issues include setting renewable energy targets, selecting policy instruments to incentivize optimum renewable energy portfolios, incorporating energy efficiency, determining appropriate discount rates, ensuring land availability, and accounting for non-cost considerations. Many of the economic and policy issues identified apply universally, and methods demonstrated in this study could be used anywhere in the world.
•To inform energy policy, we model a fully renewable electricity supply.•Marginal costs for variable electricity sources change with ambient conditions.•Economic theory suggests the use of a specific modeling approach.•Minimizing cost requires an integrated system model incorporating source variability.•Several policy approaches are needed to minimize cost of renewable electricity.