Economic efficiency in energy renewable sources management.

Duran, Vasile ; Vartolomei-M., Mihaela ; Milos, Teodor 等

1. INTRODUCTION

Energy sources are shared in two parts: energy renewable sources (ERS) and energy non-renewable sources (ENRS). ERS represents the resources in the environment, that are regenerating continuously or with certain periodicity and their consumption don't lead to a possible depletion. These kinds of energy sources are constantly renewed or restored and include: sun (solar), internal heat of the earth (geothermal energy), wind (wind power), vegetation (biomass), falling water, tides, and wave motion (hydropower). A clear feature of ERS is their independent existence by any man's consistently activity (Ambros et al., 1999).

The energetic potential of draught is determined with the follow relation (1) (Anton et al., 2007)

P = 0,6 [AV.sup.3] (1)

Where: A--represents surface area described by propeller, V--represents velocity of draught.

For wind velocity between 5-10 m/s the specific power is 75--600 W/[m.sup.2]. Only a part of kinetic energy of wind can be transformed in mechanic energy by Aeolian turbine (Lazarescu, 2003).

The capacity to transform wind energy in mechanic energy is measured by power coefficient [C.sub.p]. It represents the efficiency of conversion wind energy in mechanic energy (Anton et al., 2007). It is a value less than 0,6. For the highest competitive Aeolian turbines, [C.sub.p] is equal with 0,4 and the mechanic power obtained is calculated with the expression (2):

[P.sub.m] = 0,24 [AV.sup.3] (2)

2. EFFICIENCY EVALUATION

The main economic and financial indicators of ERS are: the specific investment ([I.sub.S])--it represents the specific cost of the investment, the cost of ERS on kilowatt-power investment capacity and the price of cost to produce renewable energy. ([C.sub.W]-it is calculated for the life time of equipments (Buglea, 2002). Besides, there are exploitation expensive (maintenance, reparation), that are very different for existent technology of producing energy.

About Aeolian installations, the specific investment [I.sub.S] is determined by the cost of turbo generators and the cost of infrastructure (roads, backgrounds, electric connections). For present, the specific investment in Aeolian equipments is about 1,0 ... 1,2 thousands Euro/kW. The possibility to reduce the specific cost regarding the enhancement of turbo generators performances. But the cost will be reduced in the future years because of technologic development.

The price of energy cost deeply depends on Aeolian resources and the placement of the equipment. The volume of produced energy for the equipment is proportionally with the cube of wind velocity. This means that an error by 10% in wind velocity can make 30% error in energy cost calculation. The price of Aeolian energy cost can be from 4 to 15 Euro/kWh.

This represents a competitive cost with traditional energy sources cost. Regarding other aspects, the expenses on year for maintenance or reparation are about 1,5-2,5% from the investment cost. The normal duration for utilization of these equipments is usual between 15 and 20 years. The medium value of duration for utilization the maximum power is between 2.000 and 3.000 h/year.

Taking into account the externalities cost in the price of the cost for energy produced by traditional sources can change the Aeolian equipments competition radically in the favor of the last.

Another aspect is the external cost of the produced energy. Therefore, to produce energy by traditional technologies, electric stations burn fossil fuel, sending out more oxides (S[O.sub.2], C[O.sub.2], CO, N[O.sub.x]) and pollutant powders. The nuclear stations harm people's health and entire environment life. Even after the end of functioning, these lands will become "tombs" and will be no more used.

The external effects, leads to external costs that illustrate the real value of the damages or the needed economic effort for avoid these effects producing.

For examples, the external cost of traditional energy sources is very increased. But, also, more powerful solar equipments need more land surface, with an opportunity cost. Aeolian equipments arouse more noises. A simple comparison between total cost of 1 kWh energy (exploitation cost + external cost) for traditional energy sources and renewable energy sources emphasize that the last ones are more competitive from cost aspect too.

The main question that needs a real response is "does really worth to invest in Aeolian investment?" This response can be given only after a technical-economic-financial analysis.

3. PROJECT FEASIBILITY CONDITION

Like any investment project, an energy renewable sources investment project needs to be feasible, that implies a cost-benefit analysis. Therefore, the proposed project worth to be implemented even if the expected effects surpass the achieved endeavors (relation 3 and 4). Thus, when there is a positive net effect the project is feasible.

Expected effects [greater than or equal to] Programmed efforts (3)

Net effect [greater than or equal to] 0 (4)

Net effect = Effects - Efforts (5)

In the framework of the investment project, the efforts represent the total expenses during life of the project, effects represents total gross income, and net effect represents net income. So, our project is feasible if:

ATV > ATE (6)

ANV = ATV - ATE (7)

It results that:

ANV > 0 (8)

Where: ATV--represents actualized total gross value

ATE--represents actualized total expenses

ANV--represents actualized net value

But efforts and effects evaluation suppose to take into account aspects regarding:

--period of studying (equipments life time T=10 ... 20 years);

--actualization process using an actualization rate (r);

--opportunity cost;

--the reality of errors;

Cost/benefit analysis suppose a system of indicators as actualized net value, internal profitability rate, actualized total expenses, recuperation time etc.

The optimization of these methods consists in maximizing actualized net value, maximizing internal profitability rate, minimizing actualized total expenses, minimizing yearly expenses, and obtain maximum in safety of consumers' supplying.

The most important aspect is profitability, measured with actualized net value (ANV). Therefore:

[NI.sub.t] = [TI.sub.t] - [TE.sub.t] (9)

Where [NI.sub.t]--represents net income estimated for year t;

[TI.sub.t]--represents gross income estimated for year t;

[TE.sub.t]--represents total expenses (costs) estimated for year

t, including investment costs ([I.sub.t]) and exploitation cost ([C.sub.t]), exclusively the amortization sum.

[TE.sub.t] = [I.sub.t] + [C.sub.t] (10)

For energy source [TI.sub.t] represents the gains obtained from energy producing process.

[TI.sub.t] = [W.sub.t] x [C.sub.W] (11)

Where: [W.sub.t]--represents the volume of produced energy

[C.sub.W]--represents the opportunity cost for 1 kWh of produced energy.

Furthermore, ANV represents yearly benefit. For the period of time we study, the life time of energy equipments (T) is determined by adding yearly ANV:

ANV = [T.summation over (t=1)] [NI.sub.t][(1 + r).sup.[theta]-t] (12)

Where: T--represents the period of time of the investment;

r--represents the actualization rate (inflation rate or debt rate)

[theta]--actualization year

Using equation (12) in (9) we obtain equation (13) and (14):

ATV = [T.summation over (t=1)][TI.sub.t][(1+r).sup.[theta]-t] (13)

ATE = [T.summation over (t=1)]([I.sub.t] + [C.sub.t]) x [(1 - r).sup.[theta]-t] (14)

For a ERS project with initial investment cost [I.sub.0], the period of time T, ANV is:

ANV = [T.summation over (t=1)][CF.sub.t]/[(1 + r).sup.t] - [I.sub.0] (15)

Where: CF--represents cash-flow, numeral flows foreseen.

If [CF.sub.1] = [CF.sub.2] = ... = [CF.sub.T] (16)

[??] ANV = [CF.sub.t] 1 - [(1 + r).sup.-T]/r - [I.sub.0] (17)

4. CONCLUSIONS

In this paper, author wanted to find if it worth to invest in Aeolian equipments. Like any investment project, our energy renewable sources investment project needs to be feasible. This is why a cost-benefit analysis is very necessary. The ANV instrument is one of the most important efficiency indicators in market economy, where to obtain a more and more profit is a main objective for investors (Popa, 2005). In this context, a solution for optimization the profitability of the ERS project is to maximize ANV criterion. Therefore, the proposed project worth to be implemented if the expected effects surpass the achieved endeavors. Thus, in the project future study we have to find if there is a positive net effect (it represents the general condition of economic feasibility of the investment project). In this situation, our project will be feasible.

5. REFERENCES

Ambros, T.; Arion, V.; Gufu, A.; Sobor, I.; Todos, P.; Ungureanu, D. (1999). Energy Renewable Sources, Tehnica-Info Publishing, Chisinau, ISBN 9975-910-79-3

Anton, L.E.; Baya, A.; Milos, T.; Stuparu, A. (2007), Experimental Hydrodynamics, "Orizonturi Universitare" Publishing House, ISBN 978-973-638-330-4.

Buglea, A. (2002). Investments and Their Financing, West University Publishing, Timisoara, ISBN 973-8433-13-4

Popa, A. (2005). Investments Efficiency, Sitech Craiova, ISBN 973-746-059-6

Vartolomei, M. (2008), Development of Some Unconventional and Non Pollutant Energy Sources in Economic Efficiency and Sustainable Development Conditions, COFRET, 11-13 juin, 2008, Nantes, France, ISBN 2.6905267.61.5