Cost-benefit analysis of renewable energy systems under uncertainties

National Center for Scientific Research « DEMOKRITOS» 15310 Agia Paraskevi Attikis, Greece

^a Corresponding author: math@ipta.demokritos.gr

Abstract

Despite the continuously increasing tension in the field of energy supply, suspicion still remains as regards the renewable energy sources (RES) applications, especially on the level of the actual installation cost and its comparison to the expected benefits. Within this framework, the well-known Cost-Benefit Analysis (CBA) technique is widely used. The problem with the usual, conventional way for the implementation of CBA lies in the fact that the values of the cost - benefit parameters are not known precisely, thus undermining the reliability of the results. More specifically, in the case of RES investments, these uncertainties are related either to the monetary values themselves (e.g. buying cost, rate of interest, maintenance cost, future cost of energy, etc.), or to parameters which affect the monetary quantities (e.g. anticipated life time of the product, malfunctions frequency, expected saving of conventional energy, variability of meteorological conditions, uncertainties related to the performance testing results of the systems etc). In the proposed work, a modified version of the CBA based on the Monte-Carlo simulation is discussed. The examined approach is compatible with the current perceptions regarding the treatment of information under uncertainty conditions, through the use of conventional metrological tools.