Environmental and economic assessment of hybrid solar-wind farm as a sustainable model for the development of solar energy in Uruguay

Abstract

Uruguay has been expanding its energy sector with a strong emphasis in renewable and indigenous sources in the last decade. This expansion has been particularly focussed on the electricity sector and mainly driven by wind power and biomass. Currently, the Uruguayan Government is evaluating alternatives to further expand the electricity sector and it is especially interested in solar photovoltaic energy, since the solar resource presents an excellent complementarity with the wind resource. Furthermore, developing solar energy will allow the country to continue diversifying its energy mix based on renewable sources. However, the cost of the technology is still a relevant issue that prevent it from being fully developed in Uruguay and therefore, alternatives must be evaluated to make it economically viable. In this context, the hybrid wind-solar power plant model may be an effective strategy to bring costs down by taking advantage of the existing infrastructure and operating two power plants in the same site. In addition, the hybrid model also has environmental benefits. In this study, the hybrid model was assessed from an economic and environmental view, considering general matters and specific features of a case study in Uruguay. The economic evaluation was conducted following traditional methodologies of project evaluation (LC, CBR, PP, IRR and LCOE), using the most updated data and consulting experience professionals in the renewable energy field. The environmental assessment was carried out by considering the environmental regulatory framework and following the EU Guidance on EIA. The hybrid configuration may reduce the investment costs of solar photovoltaic projects by 15.7% and O&M costs by 23% in the range of 5 MW to 25 MW capacity in Uruguay. Due to these cost reductions and despite some technical constraints, hybrid projects are more profitable than the conventional option (power plant installed independently) under the conditions and assumptions of this study, particularly for small to medium scale power plants. The total investment cost of a conventional project must decrease between 13.5% to 20.0% if it is to achieve the same economic outcomes as the hybrid configuration under the same conditions. Likewise, the energy prices must increase between 10.7% to 15.7% to get the same results. Furthermore, only hybrid projects would be profitable at energy prices between 70 USD/MWh to 75 USD/MWh, which would likely be the price range if a call for projects would be made presently. Regarding environmental matters, solar photovoltaic projects do not present critical issues in general terms. Moreover, the hybrid configuration may provide additional benefits, such as avoiding the construction of the transmission lines and minimising other intrinsic impacts. Overall, the hybrid model may represent an effective strategy to boost the solar photovoltaic technology in Uruguay. It may be the key to accelerate the introduction of this technology, which would allow to avoid or delay the installation of thermal back-up and energy storage systems. Furthermore, it would contribute to continue diversifying the energy mix through indigenous and renewable sources, further expanding the energy sector in a sustainable way.