Understand how Net Metering & Wheeling can beneficial
One of the major leading agricultural and dairy holding companies in the UAE has initiated the journey towards energy transition by exploring a solution through the implementation of a Solar Power Plant. In 2020, the client’s facility had a total consumption of 6.7 MWh, divided among two (2) main lines that are linked to Ranches and Livestock.
In Abu Dhabi, there are two separate tariff rates exclusively for agriculture and commercial use. In the case of the Client, Ranches have a rate of 4.5 Fils/kWh, significantly lower than that of Livestock, which is 20 Fils/kWh. The Client cannot benefit from existing wheeling and net-metering due to regulatory restrictions. According to our analysis, the client has a sufficient rooftop area of 15,000 m2, allowing for the installation of up to a 2MWp Solar PV System.
One of the main issues addressed during the project was the emphasis on the low tariff rates established for agricultural users by the Al Ain Distribution Company (AADC). Due to the regulations set in Abu Dhabi at that time, the client was unable to utilize net-metering or wheeling strategies to benefit from the excess energy generated. Consequently, the excess energy produced had to be curtailed.
The Clients main goal is to implement a Solar PV System that would deal with their energy consumption and to instigate such solution through a financing means that would result in greater savings for the Client. As stated, regulations prevented the utilization of net-metering and wheeling of excess energy, therefore, Ark Energy decided to analyze the optimal size of the Solar PV System.
Ark Energy, as the client’s consultant, implemented the activity effectively through a twelve (12) step structured approach to ensure the best tariff rate with a Solar PV system that outlives the Solar Leasing Contract. At an initial level, we determined the ideal sizing of the plant. A scenario analysis was conducted to attain the optimized solar capacity that will reduce the curtailment and thus increase cost efficiency of the system
Comparison amongst different plant size scenarios along-side their cumulative savings & cost efficiency with the optimized scenario highlighted
From the analysis conducted, the followed ideal assumption that the possible implemented capacity was 2MWp.Through the scenario analysis, it was determined that the optimized capacity to reduce curtailment and optimize cost efficiency was 1.25 MWp. This is emphasized in the following chart
Chart representing the optimized Solar PV System Capacity that represented the ideal scenario for cost efficiency & optimal savings
At a second level, was to determine the financial feasibility of the project, if the client were to proceed with self-investing or being financed by a 3rd Party . After analyzing different financing options, aside from the Self-Invest, the option of a 3rd Party Purchase Power Agreement (PPA), using a tracking PPA rate is considered as the most ideal in the comparison.
Different financing options with their specified CapEX, Annual Savings & PPA Payout with the highlighted being compared
From the financial analysis conducted, it was clear that the Self Invest model presented the highest annual and life-time savings among all but required an initial investment by the client. Among the 15- and 20-years contracts, the 15-years shows higher life-time savings while the 20-years shows higher annual savings
Plant capacity before and after optimization to emphasize the benefit of avoided curtailment
Through the implementation of the activities done by Ark Energy, there is an apparent results from the optimized energy production and reduced curtailment of energy
Ark Energy was able to secure the 3rd party investor to fund the development of solar PV system, under a solar leasing (PPA) agreement, in which the client will be paying for the solar power utilized for the term of the 20-year contract. 2,000 MWh per year was produced and paid at a rate of 170 AED/MWh instead of 200.
The results that were generated from the project include the following:
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