Banking or microgrids? Analysis of Microgrid’s Financial Feasibility in Hungary

Balázs, Marcell (2021) Banking or microgrids? Analysis of Microgrid’s Financial Feasibility in Hungary. Outstanding Student Paper, BCE, Víz- és energiagazdálkodás kérdései. Szabadon elérhető változat / Unrestricted version:

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As the global economy grows and new technologies emerge on the market, the centralized energy system also has to adapt. Different regions face different problems: developing countries often struggle to electrify their societies affordably; the United States needs to cope with the increasing threat from extreme weather events; and Europe, including Hungary, aims to push forward its sustainability agenda. According to many, the old system model needs to be changed for a more decentralized system. Microgrids are electric networks that provide energy at a local level and can work both connected and islanded from the utility grid. As technology grows this scenario is not a utopia anymore. Use cases are being discovered, and many professionals are turning to the question of financial feasibility. This paper assesses the existing literature on microgrid cost and financial analysis and provides a general framework to evaluate economic returns in a Hungarian context. As a result, the method is being demonstrated through a case study, where various microgrid configurations and their financial returns are evaluated for a potential campus microgrid at a primary school in Hungary. Among the three configurations evaluated, the CHP-only and the CHP plus solar PV fared best on most indicators. However, in most cases the returns provided were not attractive enough from a market investor perspective, mainly due to the low level of reliability benefits. The case study highlights the importance of reliability improvement as a microgrid value stream. Since the overall system reliability of Hungary does not face challenges, it may be inferred that microgrids’ potential are limited to a niche in the country.

Item Type:Outstanding Student Paper
Notes:2. díj
Energy economy
ID Code:15512
Specialisation:Finance and Accounting
Deposited On:03 May 2023 09:46
Last Modified:03 May 2023 09:46

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