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Applied Energy 186 (2017) 2845

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Applied Energy
journal homepage: www.elsevier.com/locate/apenergy

Optimal energy cost and economic analysis of a residential


grid-interactive solar PV system- case of eThekwini municipality in
South Africa
B.P. Numbi , S.J. Malinga
Centre for the Development of Green Technologies, Department of Electrical Engineering, Mangosuthu University of Technology, 511 Mangosuthu Highway, Umlazi, 4031,
P.O. Box 12363, Jacobs, 4026 Durban, South Africa

h i g h l i g h t s

 Optimal energy cost control of a residential grid-interactive PV system is modeled.


 There is potential of more than 92% cost saving and payback period of less than 14 years.
 The higher the feed-in tariff (FIT) the lesser the need for a battery bank.
 Use of battery storage improves the cost effectiveness with low FITs unlike with high FITs.
 The higher the grid electricity price, the higher the profitability of the system.

a r t i c l e i n f o a b s t r a c t

Article history: In this paper, an optimal energy control of a 3 kW residential grid-interactive solar PV system is pre-
Received 2 June 2016 sented. A typical two-bedroom household within the eThekwini municipality in the city of Durban,
Received in revised form 18 October 2016 South Africa, is considered. The aim is to assess the potential of energy cost saving and cost effectiveness
Accepted 19 October 2016
the system can achieve under the new residential feed-in tariff (FIT), referred to as residential embedded
generation tariff. Simulation results show that a potential of 69.41% energy cost saving and payback per-
iod (PBP) of 19 years can be achieved under the current FIT. By increasing the current FIT by 58%, the
Keywords:
energy cost saving is increased by 22.8%, while the period is decreased to 14 years. When the FIT is
Grid-interactive solar PV
Optimal energy cost
increased by 71.25% from its current value, a 75% increase in the cost saving is achieved with a PBP of
Economic analysis 8.6 years. However, it is shown that the higher the FIT the lesser the need for a battery bank if grid failures
Residential electricity customers are not considered as a constraint.
Feed-in tariff The impact of battery storage and grid electricity price on the profitability of the grid-interactive solar
PV system is also analyzed. It is shown that the use of battery storage system will have a positive effect on
the system profitability only when the FIT is not attractive. For attractive FITs, the use of battery storage
will have a negative effect on the profitability of the grid-interactive solar PV system. Simulation results
also show that the higher the grid electricity price the higher the profitability of the system.
2016 Elsevier Ltd. All rights reserved.

1. Introduction the reliability and efficiency of coal-fired power stations, a well-


established infrastructure for electricity production from coal, etc.
In South Africa, about 85% of the electricity demand is supplied However, due to the outdated power stations, reduced coal
from coal-fired power plants [1]. Coal has been used for a consid- reserve margins and high investment cost of new coal-fired power
erable number of years as the main energy fuel in South Africa stations, Eskom, the main electricity supplier, is currently experi-
because of reasons such as the abundance of coal reserves in the encing a big challenge to meet the continual growth of energy
country, the cost effectiveness of generating electricity from coal, demand in South Africa, resulting in load shedding and power
blackouts [1,2]. Being part of the Kyoto protocol, South Africa is
also committed to reduce the carbon emission from its coal-fired
power stations.
Corresponding author.
E-mail address: NumbiB@mut.ac.za (B.P. Numbi).

http://dx.doi.org/10.1016/j.apenergy.2016.10.048
0306-2619/ 2016 Elsevier Ltd. All rights reserved.
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 29

In an attempt to meet the national energy demand, Eskom has PV system because of the less attractive Eskoms feed-in tariff (FIT),
built open cycle gas turbines based on diesel fuel which were con- in contract to attractive FITs provided in countries such as Canada
ceptually aimed to operate for short periods, only during peak and Germany [8]. In South Africa, the FIT already takes into account
demand times [2], usually between 7h00 to 10h00 and 18h00 to the interconnection fee, so that no additional cost is charged to
20h00 [3]. However, because of the reduced availability level of customers when feeding their energy to the grid. Eskoms electric-
the current coal-fired power stations, due to the reasons men- ity retail price is half of the price at which residential customers
tioned earlier, these gas turbines are operated for longer periods import power from eThekwini municipality distribution network.
than initially planned [2]. Operating the aged coal-based power The second solution is to store the excess power during the day
generation equipment that require expensive maintenance, and and use it later in the morning and evening when the load demand
also the consumption of large amounts of diesel fuel required by is high. This option gives residential customers the freedom and
gas turbines, would justify the steadily increase of electricity price flexibility to control, at any time, the bi-directional power flow
by Eskom. In eThekwini municipality,1 for instance, the electricity between their buildings and the grid (import and export), unlike
cost has been increased by 9.80% from 2012 to 2013, by 4.95% from in a grid-connected PV system where the power flow is unidirec-
2013 to 2014, by 6.80% from 2014 to 2015 and by 12.20% from 2015 tional [9]. This configuration is usually referred to as grid-
to 2016 [4]. Moreover, with the forthcoming implementation of the interactive solar PV system. Because of energy storage, an addi-
carbon tax in South Africa [5], the electricity cost is expected to ramp tional advantage of the grid-interactive PV system is that residen-
up owing to the fact that coal-fired power plants are one of the big- tial customers can benefit from the time-based pricing, such as the
gest greenhouse gas emission sources. time-of-use (TOU) electricity tariff, through peak shaving, to fur-
On the one hand, to reduce the demand pressure on the national ther reduce their electricity bill cost. In South Africa, NERSA
power grid, South Africa, similar to other countries in the world, advised that priority to export to the grid must be given to cus-
has encouraged electricity customers and independent power pro- tomers on the TOU tariff as this minimizes the national grid peak
ducers (IPPs) to generate power from alternative energy sources, load. However, an optimal energy control scheme is needed to
especially those which are renewable and sustainable, such as achieve minimal electricity cost by meeting simultaneously phys-
solar photovoltaic (PV) and wind, and sell it back to the grid. In ical and operational constraints of the system.
the first phase, connection to the national grid of small-scale The grid-interactive solar PV system is still a new technology
embedded generation systems not exceeding 100 kW has been within PV systems. This was designed to combine both advan-
approved by the National Energy Regulator of South Africa tages of grid-connected and off-grid solar PV systems, in the
(NERSA). Municipalities are allowed to import electricity from sense that it supplies power to the user, feeds the excess to the
these energy systems at the same rate as Eskoms electricity retail grid, boosts grid stability and also provides back-up power during
price, referred to as the Mega Flex rate [6]. However, up to now, grid failure periods [10]. However, there are only few research
only the eThekwini municipality has agreed on the electricity pur- studies on grid-interactive PV systems. Research papers, such as
chase from its residential customers, provided that the connection [1113] have dealt with the optimal energy control of off-grid
capacity does not exceed 4.6 kVA for a single-phase system and hybrid energy systems with the aim to minimize the diesel
13.8 kVA for a three-phase system [4]. energy cost of load demands in remote areas. Authors in Ref.
On the other hand, because of the steady increase in the elec- [14] propose an operational power scheduling based on the
tricity cost, South African electricity customers are showing great IF-THEN rules, for a microgrid, including PV generators with
interest to install distributed generation (DG) systems such as solar embedded storage units and a gas microturbine. The objective
PV and wind. Grid-connected solar PV is seen to be the fastest is to meet the demand load by using the solar PV generator as
growing DG resource in South Africa due to the high solar resource the prior energy source in such a way to minimize the power
the country has, combined with the substantial drop in the initial generated by the gas microturbine. The study in Ref. [15] pro-
investment cost. The average daily solar radiation in South Africa poses a rule-based control method for a battery energy storage
is between 4.5 and 6.5 kW h/m2/day [7], which is higher than that system integrated with a hybrid PV/wind energy system to make
of most countries in the world. In less than one month, for instance, these renewable energy sources more dispatchable. In Ref. [16],
the Authors, through the Centre for the Development of Green an optimal energy management of a battery energy storage sys-
Technologies (CDGT), had the opportunity to work on the design tem in a grid-connected microgrid is proposed with the aim to
of about 550 kWp rooftop grid-connected PV systems to be balance the demand load and the renewable sources, by minimiz-
installed on commercial buildings in the province of KwaZulu- ing the cost of electricity imported from the grid. However, the
Natal. study concentrates on a large-scale grid-connected renewable
The application of grid-connected PV systems has found more energy system. The authors in Ref. [17] present an optimal man-
market in commercial and industrial sectors than in the residential agement model of a grid-connected hybrid PV/fuel/battery energy
sector. For urban residential buildings, however, a grid-connected system with the energy purchasing cost and CO2 emission as
solar PV system might not be cost effective owing to the fact that objective functions to be minimized. However, the FIT, ToU tariff
most electricity usage will not be offset by the investment cost of and economic analyses are not included. In Ref. [18], an optimal
the solar PV system. The reason is that, unlike with industrial energy control of a grid-connected hybrid energy system is inves-
and commercial customers, the need for electricity in urban resi- tigated to minimize mainly the diesel fuel energy cost on one of
dential buildings is greater during the evening than during the South Africas hotels. Although the optimal energy control of a
day, whilst the PV panels produce power only during the day. To grid-connected solar PV-battery hybrid system is studied in
solve this issue, two approaches are possible. The first one is to sell [19,20], the configuration used does not match with the definition
the excess power to the national grid during the day when the res- of grid-interactive solar PV system. The grid-interactive PV sys-
idential load demand is insignificant. However, selling a large tem owes its definition from its bi-directional energy transfer
amount of PV excess power to the eThekwini municipality distri- capability provided by the voltage source inverter [9]. The avail-
bution network will lead to a less cost-effective residential solar ability of pre-assembled grid-interactive PV systems makes the
technology to be cost effective in terms of capital costs. Also,
the fact that most grid-interactive PV systems come as pre-
1
EThekwini is one of the eleven districts of the KwaZulu-Natal province in South assembled packages adds a special constraint to the system
Africa. design. One of these constraints is the battery bank capacity that
30 B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845

depends on the charge controller rating. In Ref. [21], an optimal 2.2. Optimal control model of the grid-interactive solar PV system
power flow management of a grid-interactive PV system is pro-
posed. However, a dynamic programming (DP) technique is Optimal control approach is a powerful tool that is proposed in
employed and the study does not cover the economic analysis. the literature to solve several energy management problems. In
The DP has a weakness of requiring a large memory for problems Ref. [23] for instance, an optimal load shifting model to reduce
studied under a long prediction horizon and discretized with a the energy cost of a colliery is investigated. It is shown that about
short sampling period [22]. 49% energy cost saving can be achieved during 5 weekdays in a
From the above-mentioned works, it can be seen that there high-demand season. In Ref. [24], the authors have shown that a
have been less research works conducted with the aim to study potential of 37.38% energy cost saving can be achieved on a coal
the economic viability of a grid-interactive solar PV system for res- belt conveying system when optimal control scheme is applied.
idential applications. Hence, there is a need of extensive economic In Ref. [25], optimal control is applied to a deep level mine twin
studies of residential grid-interactive PV systems in order to boost rock winder system for energy cost reduction. It is found that
the PV market in residential sectors. With this in mind, the focus of scheduling the hoist under TOU tariff can lead to a potential of
this work is to develop an optimal control model to solve the 30.8% energy cost saving. Authors in Ref. [26] have shown that
energy management problem of a grid-interactive solar PV system. the application of optimal control to the energy management of
The cost effectiveness of the system is also analyzed under the TOU a jaw crushing process in deep mine can lead to more than 50%
tariff and FIT of the eThekwini municipality. A two-bedroom energy cost saving. A systems optimization is proposed in Ref.
household within the city of Durban in South Africa is used as a [27] to reduce the energy cost of a parallel HPGR crushing process.
case study. The authors have shown that a daily energy cost saving of 41.93%
This paper is organized as follows: Section 2 presents the opti- can be achieved. In Ref. [28], the energy cost of a crushing circuit
mal control model of the grid-interactive solar PV system; Section 3 based on vertical shaft impactor is minimized. It is concluded that
presents data for the case study used in this work. The baseline about 49.7% energy cost saving is possible to be achieved.
model is presented in Section 4. Simulation results of the case Optimal control tool was traditionally designed to solve
study are discussed in Section 5 with the aim to evaluate the effec- continuous-time problems by using the Pontryagins maximum
tiveness of the developed model. The economic analysis of the sys- principle [29]. However, solving a continuous-time optimal control
tem is given in Section 6. Conclusions and recommendations are problem by this principle will assume both objective and con-
finally presented in Section 8. straints to be continuously differentiable, referred to as smooth
condition. The TOU electricity tariff being of discrete nature, this
will lead the optimal energy control problem in this work to be
2. Model development
continuous but not differentiable. Also, because of the complexity
of the problem, characterized by several constraints, a numerical
2.1. System description
approach is used as an alternative.

The configuration/power flow of a two-stage grid-interactive


2.2.1. Objective function
solar PV system is shown in Fig. 1, where the maximum power
The control objective to be minimized is the net electricity cost,
point tracking (MPPT) is achieved by the first converter (DC-DC
J C , under a given period. This is defined as the difference between
converter), and the grid interactive operation by the second con-
the electricity cost due to the power imported from the grid, PIMP ,
verter (DC-AC bi-directional inverter) [9]. The two-stage grid-
and the electricity cost due to the power exported to the grid, P EXP .
interactive inverter offers a much easier control than the single-
This is expressed mathematically as follows:
stage structure, although this may lead to a higher system cost
N 
X 
and power losses [9].
JC pj PIMPj  cP EXPj ts ; 1
As shown in Fig. 1, the total power generated by PV panels, PPV ,
j1
is fed to the MPPT converter for optimum PV power extraction at
different weather conditions. On the one hand, if the PV array is where j is the jth sampling interval, N is the total number of sam-
producing more power than what is required, the maximum PV pling intervals, t s is the sampling time, p is the TOU electricity tariff
power, PMP , from the MPPT converter is split into two components and c is the FIT.
namely, the DC input power to the bi-directional inverter, P DC , and
the battery charging power, P B . After converting P
DC to AC power, 2.2.2. Constraints
an amount of power, P LC , is fed to the sub-distribution board 2.2.2.1. Power balance. The power balance is one of the most impor-
where the critical loads, such as lighting, refrigerator, television tant constraints in electrical circuits that need to be met. By
and DStv decoder are connected, and the remaining power, P neglecting all converter power losses, the power balance con-
AC ,
is fed to the main distribution board, where the non-critical loads, straints to be satisfied at different nodes of the system, are
such as the electric water heater and stove are connected. The non- expressed as follows:
8
< PMPj PDC j P Bj ; 1 6 j 6 N;
critical demand load, PLNC , is first fed and the excess power, PEXP , is >
exported to the national grid under the FIT. When the PV power PDC j PLC j PAC j ; 1 6 j 6 N; 2
output is not sufficient to meet the load, the battery bank is dis- >
:P P P P LNC j ; 1 6 j 6 N:
charged at a rate of P 
B as a supplement. On the other hand, during
AC j IMPj EXPj

the night where the PV power output is zero, the total load and
battery bank are supplied by the grid imported power, PIMP , under 2.2.2.2. Dynamics of battery state of charge. During charging and
TOU tariff. In this case, an amount of P IMP is supplied to the non- discharging, the state of charge, SoC, of the battery bank has to
critical load and the remaining, P AC is fed to the bi-directional be maintained between its minimum and maximum values,
inverter. P 
AC is therefore used to feed the critical load, while the SoC min and SoC max , respectively. The SoC of the battery bank in
remaining power is converted into DC power, P  DC . The negative Fig. 1 can be expressed in the discrete-time domain as follows:
sign () for the bi-directional inverter power means the device is
operated in the reverse mode, while for the battery bank, this sym- gB ts
SoC j SoC j1 PBj1 ; 1 6 j 6 N; 3
bolises the discharging mode. Cn
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 31

Fig. 1. Schematic diagram of a grid-interactive solar PV system.

where SoC j is the SoC at the current sampling interval, j; SoC j1 is 2.2.2.4. Power flow limitations. For equipment safety purposes, all
the SoC at the previous sampling interval, j  1; C n is the nominal power flows should be kept within minimum and maximum limits
capacity of the battery bank in kW h and gB is the round trip effi- according to the design specifications given by the manufacturer.
ciency of the battery. However, since the SoC at the current sam- These boundary constraints are expressed as follows:
pling interval has to be expressed only in terms of the battery
8 min
power, PB , which is one of the control variables, SoC j1 has to be >
> PEXP 6 PEXPj 6 Pmax
EXP ; 1 6 j 6 N;
>
>
eliminated from Eq. (3). By a recurrence reasoning, the battery bank >
> min max
>
> PIMP 6 PIMPj 6 P IMP ; 1 6 j 6 N;
SoC at the current sampling interval can be expressed as a function >
>
>
< Pmin 6 PAC 6 Pmax ; 1 6 j 6 N;
of PB and its initial value, SoC 0 , which is constant. This results in the AC AC
7
j
following expression: >
>
> Pmin max
DC 6 P DC j 6 P DC ; 1 6 j 6 N;
>
>
> min
>
gB ts X
j >
> PB 6 PBj 6 PmaxB ; 1 6 j 6 N;
>
> min
SoC j SoC 0 P Bi ; 1 6 j 6 N: 4 :
Cn PMP 6 PMPj 6 PmaxMP ; 1 6 j 6 N:
i1

With this, the constrains to maintain the SoC dynamics within spec-
ified values are written as follows: 2.2.2.5. Exclusive power flow between grid and customer. Since the
customer cannot import and export power at the same time, the
product between P IM , and PEXP , has to be zero. This is mathemati-
gB t s X
j
SoC min 6 SoC 0 PBi 6 SoC max ; 1 6 j 6 N : 5 cally written as follows:
Cn i1
PIMj  PEXPj 0; 1 6 j 6 N: 8

2.2.2.3. PV power output. At any time, the DC power handled by the


MPPT converter should be less than or equal to the available PV 2.2.2.6. Fixed-final state condition. In order to allow for repeated
power output, determined by the PV module characteristics, such implementation of the optimal energy control of the grid-
as the PV power output at maximum power point and PV power interactive PV system, the remaining amount of energy in the bat-
temperature coefficient, and weather conditions, such as tempera- tery bank at the end of the control horizon should be equal to the
ture and incident irradiation. This is expressed as: energy amount at the beginning of the control horizon. This is
equivalent to equating the SoC at the last sampling interval,
PMPj 6 PPV j ; 1 6 j 6 N : 6 SoC N , to the initial condition, SoC 0 . This requirement leads to the
following constraint:
32 B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845

8
X
N
< USD 0:06=kW h from 0  6h00 and 22  24h00;
>
PBi 0: 9
pt USD 0:08=kW h from 9  17h00 and 19  22h00;
i1 >
:
USD 0:16=kW h from 6  9h00 and 17  19h00:
11
3. Case study description
In Eqs. (10) and (11), the first row denotes the off-peak tariff and
To evaluate the effectiveness of the model developed in Sec- periods, the second row denotes the standard tariff and periods,
tion 2, a grid-interactive PV system was installed in a single- and the third one is the peak tariff and periods. USD is the United
phase two-bedroom household in Durban. The load profile of this State Dollar 3 and t is the time of any weekday in hours.
household, and size of each component of the PV system are pre-
sented in this section.
3.3. PV peak capacity and grid-interactive inverter sizing

3.1. Load profile


The size of a grid-interactive solar PV system is mainly dictated
by the budget, energy saving target, available mounting space and
Two types of load are generally connected to grid-interactive
the maximum penetration to the utility grid. In this work, the max-
PV system. These are the critical and non-critical demand loads. imum penetration is taken as the size selection criterion. To benefit
The critical loads are those of high priority that cannot be inter-
from the FIT incentive offered by eThekwini municipality, a grid-
rupted, shifted or reduced, while the non-critical loads can be interactive PV system with a capacity not exceeding 4.6 kWp is
altered without causing considerable prejudice to the household.
to be installed for single-phase residential buildings. With this,
The critical load in the household under study consists of the the minimum and maximum limits on power exchanged with
lighting, refrigerator (with freezer), computers, television, and
the grid are set, respectively, as P min min
EXP P EXP 0 kW and
DStv decoder, while the non-critical load consists of a washing max max
machine, stove, electric water heater, referred to as a geyser in PEXP PEXP 4:6 kW.
South Africa. In this household, the non-critical load is zero The 3 kW IMEON grid-interactive inverter [30] is proposed to be
during the day since the electric water heater is controlled by a used. A PV array with peak power of 3 kWp is to be installed,
programmable timer and is switched on only between 04 : 00 to according to the IMEON inverter manufacturer. The power flow
06 : 00, while the evening and night non-critical load is predom- limits on the MPPT boost converter are set to Pmin
MP 0 kW and
inated by the stove and washing machine energy consumption. Pmax
MP 3 kW and for the bi-directional inverter, to
During the day, only a small amount of energy is consumed by Pmin min
DC P AC 3 kW and Pmax max
DC P AC 3 kW. By choosing a
the critical load since only the refrigerator is operated, while most YL260P-29b (260 W) PV module [31], the total number of modules
critical load appliances are operated during the evening and to be installed is obtained to be 12. Since the nominal voltage of
night. the YL260P-29b PV panel at maximum power point (MPP) is
The load profiles of both critical and non-critical loads have 30.9 V, the connection of 12 panels in series to the IMEON 3.6
been obtained by using Single-phase Efergy E2 Classic energy mon- inverter will lead to a total voltage of 370.8 V, which satisfies the
itors, which provides only 2% measurement error. 2 Fig. 2 shows DC input voltage range of the IMEON inverter (between 150 and
the load profiles of the two types of loads. 510 V).

3.2. Electricity tariffs 3.4. Battery bank sizing

The electricity tariff of the eThekwini municipality in the pro- In grid-interactive PV systems the size of the battery bank
vince of KwaZulu-Natal is used [4]. The FIT incentive for residential depends on the charge controller rating, unlike in off-grid solar
embedded generation used in this municipality is USD 0:46/kW h. PV systems where the battery size depends mainly on the demand
The introduction of the demand-side management programme in load to be backed up [32]. Based on best practice, the battery bank
South Africa has allowed customers to have the freedom to sub- in grid-interactive PV systems is sized in such a way that the charg-
scribe either to flat or time-of-use (TOU) tariffs. In contrast to the ing current is between 10% and 20% of the total battery capacity.
flat tariff, with a TOU tariff, customers are charged at different rates Since the maximum charging current of the IMEON 3.6 charge con-
depending on the time of day the electricity is used. Furthermore, troller is 25 A, a maximum battery capacity of 250 A h can be used.
the TOU tariff also varies depending on the season. In the high In this study, a total battery capacity, Cn, of 200 A h is considered.
demand season (winter), the TOU tariff is higher than that in a 12100 (12 V100 A h) AGM deep cycle battery from CB solar
low demand season. However, this only applies to commercial [33] is proposed. For a nominal charging voltage of 48 V and
and industrial customers. For residential customers, a non- required battery capacity of 200 A h, 4 batteries are connected in
seasonal TOU tariff is used [4]. series and 2 strings of batteries are connected in parallel. Hence,
The TOU tariff, Pt, for residential customers in summer (from the battery capacity can be expressed in kW h as
1 September to 31 May) is given as follows: 200  48 9:6 kW h. The battery power flow limits are calculated
8 based on the maximum of charging and discharging currents,
< USD 0:06=kW h from 0  6h00 and 22  24h00;
> respectively, 25 A and 80 A, and the charge controller nominal volt-
pt USD 0:08=kW h from 6  7h00; 10  18h00 and 20  22h00; age (48 V). Hence, the battery maximum charging and discharging
>
:
USD 0:16=kW h from 7  10h00 and 18  20h00: power flow limits are obtained to be P max 48 V  25 A = 1.2 kW
B
10
and P min
B 48 V  80 A = 3.84 kW. The round trip battery effi-
ciency, gB , is assumed to be 90%.
The TOU tariff for winter (from 1 June to 31 August) is given as
follows:
3.5. PV power output

3
The initial currency was in South African currency Rand R, and was converted in
2
http://efergy.com/manuals/e2classicinstructionsweb2011.pdf. USD: 1 USD = 13.5 R.
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 33

Critical load
Non-critical load

Power consumption [kW]


3

0
0 5 10 15 20 25
Time [h]

Fig. 2. Hourly power consumption.

The PV power output is predicted based on the model proposed 5. Results and discussion
in Ref. [21] as follows:
Since the model developed in Section 2 is a nonlinear program-
It ming problem due to constraint 8, the case study presented in Sec-
PPV P PV;STC NPVs NPVp 1  aT c  25; 12
1000 tion 3 is simulated using the fmincon optimization solver of the
Matlab optimization toolbox. The simulation is performed for a
with single day of both summer (01 December 2015) and winter (01
August 2015) seasons, where the load profile is assumed to be
It the same. The control horizon of 24 h is therefore considered.
Tc Ta NOCT  20; 13
800 The annual energy cost is calculated by multiplying the daily
energy cost by the number of days in the 2015 year (273 days in
where P PV is the PV power output, P PV;STC is the PV output at the summer and 92 days in winter). A sampling time of 30 min is used,
maximum power point and standard test condition (STC), NPVs which leads to a total number of samples per variable of
and N PVp are, respectively, the number of PV panels in series and N 2460 min
48. The initial state of charge of the battery bank
30 min
parallel, It is the solar irradiance on a tilted surface, a is the temper- is set to 50% of its nominal value, the maximum state of charge
ature coefficient of power, T c is the cell temperature, T a is the ambi- SoC max is set to 100% of the nominal value, the minimum state of
ent air temperature, and NOCT is the nominal operating cell
charge SoC min is set to 20% of the nominal value, which corresponds
temperature. It is calculated based on the following equation [1,34]:
to a depth of discharge of 80%.
    To analyze the impact of the electricity price on the cost effec-
1 cosb 1  cosb
It Id coshb Idif qI g ; 14 tiveness of the residential grid-interactive solar PV system, the
2 2
simulation is performed under different FIT values. Case I is where
the actual value of the FIT is used (c 0:046 USD/kW h). Case II is a
where Idif is the diffuse horizontal irradiance (DHI), Id is the direct scenario where the FIT is increased and assumed to be equal to the
normal irradiance (DNI), Ig is the global horizontal irradiance flat electricity tariff (c 0:11 USD/kW h), while in case III, the FIT is
(GHI), b is the tilted angle, hb is the incidence angle of solar radiation further increased and assumed to be equal to the peak TOU elec-
on a tilted surface, q is the reflectance of the surrounding area. tricity price (c 0:16 USD/kW h).
The different values of all input parameters used to predict the Optimal power flow solutions are presented in Figs. 58 for case
PV power output are given as follows: P PV;STC 0:26 kWp, I, in Figs. 1013 for case II and in Figs. 1518 for case III, while the
N PVs 12; N PVp 1; a 0:0045/C, NOCT 46 C [31], q 0:2; b corresponding performance indicators are, respectively, presented
30 (optimal average value between summer and winter seasons in Figs. 9, 14, 19 and Table 1. In all the three cases (I, II and III), the
for a fixed PV mounting structure installed in Durban). Data for legend of the first graph shows the time of use periods, which also
DHI, DNI, GHI and air ambient temperature are plotted in Figs. 3 applies to the rest of the graphs.
and 4 and were collected from the weather station located at the
University of KwaZulu-Natal, Howard College (latitude:
29:87098 , longitude: 30:97695 and elevation: 150 m) [35]. 5.1. Case I: Optimal power flow with feed-in tariff, c = USD 0.046/kW h

Simulation results under this scenario are presented in Figs. 5


4. Baseline 9. It is shown that during the morning off-peak period when the
energy from the sun is zero, the small amount of energy required
In order to study the effectiveness of the developed model, the by the critical load from 00h to 04h00 is mainly supplied from
net energy cost achieved through optimal energy control of the the battery bank (P B ). The discharge rate of the battery bank is
grid-interactive PV system is compared to the energy cost incurred shown through the state of charge, SoC, in the second graphs of
by the residential customer without solar PV system and operating Figs. 6 and 8. When the electric water heater is switched on from
on a flat tariff of USD 0:11/kW h (Residential flat tariff in eThekwini 4h00 to 6h00, the same figures show that the battery bank contin-
municipality). ues to discharge but does not reach its lowest SoC limit. Since only
34 B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845

Global horizontal

Irradiance [W/m2 ]
1000
Direct normal
Diffuse horizontal
500

0
0 5 10 15 20 25
Time [h]

28
Temperature [ o C]

26

24

22

20
0 5 10 15 20 25
Time [h]
Fig. 3. Solar irradiance and ambient temperature during summer (01 December 2015, that is, n = 335).

1000
Irradiance [W/m2 ]

Global horizontal
800
Direct normal
600 Diffuse horizontal

400

200

0
0 5 10 15 20 25
Time [h]

20
Temperature [ o C]

15

10

0 5 10 15 20 25
Time [h]
Fig. 4. Solar irradiance and ambient temperature during winter (01 August 2015, that is, n = 213).

a limited amount of energy is drawn from the battery bank, the reserve so as to meet as much the evening peak energy demand as
remaining amount of energy is imported from the grid to meet possible. On the other hand, due to a higher solar energy during
the load demand. However, a comparison analysis between Figs. 6 summer, the battery bank can still supply energy to the morning
and 8 shows that the battery bank is more discharged in summer off-peak load and be fully charged at 18h00 to reduce the evening
than in winter. The reason is that since the solar energy is lower peak energy demand.
in winter, the optimal energy controller prevents the batteries To reduce the peak energy demand from the grid, PIMP , the bat-
from deeply discharging so that more solar energy is sold to the tery bank is discharged at a high rate during both summer and
grid by reducing the need of charging the batteries during daytime winter evening peak periods, while only a small amount of evening
(from 06h00 to 18h00 during summer and from 08h00 to 17h00 peak energy is provided from the grid to meet the total load
during winter). This allows the battery bank to have enough energy demand. However, it is shown that during the evening standard
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 35

off-peak standard peak

P MP [kW]
2

-1
0 5 10 15 20 25

P DC P AC
Power flow [kW]

-2

0 5 10 15 20 25

3 P EXP P IMP
Power flow [kW]

-1
0 5 10 15 20 25
Time [h]

Fig. 5. Optimal power flow for summer season case I.

2
P B [kW]

-2

0 5 10 15 20 25

100
Battery SoC [%]

50

0
0 5 10 15 20 25
Time [h]
Fig. 6. Battery optimal power flow and state of charge for summer season case I.

period, the battery bank is rather discharged at a much lower rate since no significant load is drawn. The cost saving starts to occur
in such a way as to meet the fixed-final state condition expressed from 04h00 when the electric water heater is switched on and this
by Eq. (9), at the end of the control horizon. is supplied from the battery bank at no cost, while the remaining
The cost performance shown in Fig. 9 demonstrates that from energy is imported from the grid at a cheaper cost compared to
00h00 to 4h00 the baseline cost and the optimal cost are the same the flat tariff. The net energy cost is further reduced from the
36 B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845

off-peak standard peak

P MP [kW]
2

-1
0 5 10 15 20 25

P DC P AC
Power flow [kW]

-2

0 5 10 15 20 25

P EXP P IMP
3
Power flow [kW]

-1
0 5 10 15 20 25
Time [h]
Fig. 7. Optimal power flow for winter season case I.

2
P B [kW]

-2

0 5 10 15 20 25
Battery SoC [%]

100

50

0
0 5 10 15 20 25
Time [h]
Fig. 8. Battery optimal power flow and state of charge for winter season case I.

moment the sun rises, as a result of the green energy sold to the the optimal energy controller is also shown with regard to the con-
grid. The cost saving decreases in the evening when solar energy straints on power flow, battery state of charge and fixed-final state
is not generated. The higher daily cost saving achieved during sum- condition. As previously discussed, the equality between the
mer because of the longer sunshine duration compared to that in amount of energy in the battery bank at the beginning and at the
winter, is also shown in the same figure. It can be seen in Table 1 end of the control horizon will allow the optimal energy control
that 69.41% annual cost saving is achieved. The effectiveness of scheme to be repeatedly implemented in practice.
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 37

2.5
baseline
2 optimal control-summer - case I

Net energy cost [USD]


optimal control-winter - case I
1.5

0.5

-0.5
0 5 10 15 20 25
Time [h]

Fig. 9. Cumulative net energy cost case I.

off-peak standard peak

3
P MP [kW]

2
1
0
-1
0 5 10 15 20 25

P DC P AC
Power flow [kW]

-2

0 5 10 15 20 25

P EXP P IMP
Power flow [kW]

3
2
1
0
-1
0 5 10 15 20 25
Time [h]
Fig. 10. Optimal power flow for summer season case II.

5.2. Case II: Optimal power flow with feed-in tariff, c = USD 0.11/kW h stored can be later sold to the grid, in order to minimize the net
energy cost. During daytime, it can be seen in the second graphs
With the feed-in tariff being increased to USD 0:11/kW h, of Figs. 11 and 13 that the power generated by the solar PV system
Figs. 11 and 13 show that unlike in case I, during the morning is sold to the grid and the remaining is used to feed the daily crit-
off-peak period (from 00h to 6h00), the grid is used to supply ical load (mainly the fridge energy consumption) and charge the
power to both the battery bank and the morning off-peak energy battery bank as in case I. However, during summer, the battery
demand. In case II, the battery bank is rather charged because of bank is not fully charged at the end of the day compared to case
a more attractive feed-in tariff offered. With a higher feed-in tariff, I. One of the reasons is that the energy saving due to the evening
the optimal energy controller allows the batteries to charge during peak shaving is less attractive compared to that achieved through
the morning off-peak period at a cheaper cost so that the energy selling a large amount of solar energy at an attractive FIT. During
38 B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845

P B [kW]
0

-2

0 5 10 15 20 25

100
Battery SoC [%]

50

0
0 5 10 15 20 25
Time [h]

Fig. 11. Battery optimal power flow and state of charge for summer season case II.

off-peak standard peak

3
P MP [kW]

-1
0 5 10 15 20 25

P DC P AC
2
Power flow [kW]

-2

0 5 10 15 20 25

3 P EXP P IMP
Power flow [kW]

-1
0 5 10 15 20 25
Time [h]

Fig. 12. Optimal power flow for winter season case II.

winter, since the solar energy yield is low, priority is given to The results in these figures show that a larger proportion of solar
charge the battery bank so as to supply the load during evening energy is exported to the grid in summer. This could also be justi-
peak and standard periods. fied by the above-mentioned reasons in the sense that the larger
The effect of the increase in FIT on the seasonal power flows is the available amount of solar energy the greater the energy sold
also shown when comparing the third graphs of Figs. 10 and 12. to the grid and lesser to charge the battery bank, and vice versa.
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 39

P B [kW]
0

-2

Battery SoC [%] 0 5 10 15 20 25

100

50

0
0 5 10 15 20 25
Time [h]
Fig. 13. Battery optimal power flow and state of charge for winter season case II.

2.5
baseline
2
optimal control-summer-case II
1.5 optimal control-winter-case II
Net energy cost [USD]

0.5

-0.5

-1

-1.5
0 5 10 15 20 25
Time [h]

Fig. 14. Cumulative net energy cost case II.

This means that with an attractive FIT, during periods of lower During the daytime, Figs. 16 and 18 show that the power to charge
solar PV power production, such as winter and cloudy days, a big- the battery bank from the solar PV panels is greatly reduced com-
ger capacity of battery bank is required as opposed to periods with pared to that of case II. The reason for this is that since the FIT is
high solar PV power production. very attractive, the tendency of the optimal energy controller is
The energy cost results are given as shown in Fig. 14 and Table 1. to sell all the solar energy to the grid to maximize the sales, and
When compared to case I, the results show that the increase in the hence minimize the net energy cost. This can be seen in the third
FIT by 58% (from USD 0:046/kW h to USD 0:11/kW h) leads to an graphs of Figs. 15 and 17 where it is shown that the amount of
increase in the energy cost saving by 22.8% (92.2% in case II and power exported to the grid, P IMP , during the day is almost equal
69.41% in case I). to the power generated, PMP , by the solar PV panels. Hence, the
optimal controller does not see the battery bank as a means to
5.3. Case III: Optimal power flow with feed-in tariff, c = USD 0.16/kW h reduce the energy cost through peak shaving as was the case in
previous scenarios. It is therefore worthy to note that the higher
With the feed-in tariff being increased to be equal to the peak the FIT the lesser the need for the battery bank if grid failures
TOU tariff (USD 0:16/kW h), simulation results presented in Figs. 15 are not considered as a constraint. Hence, with an attractive FIT,
and 16 and Figs. 17 and 18 show that during the morning off-peak the use of batteries in interactive-grid solar PV systems for residen-
period, the charging rate of the battery bank is further increased tial sectors is only required for back-up power during grid failure
compared to case II. This is due to the same reason as in case II. periods and not for energy cost saving. For countries where grid
40 B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845

off-peak standard peak

P MP [kW]
2
1
0
-1
0 5 10 15 20 25

P DC P AC
Power flow [kW]

-2

0 5 10 15 20 25

P EXP P IMP
3
Power flow [kW]

-1
0 5 10 15 20 25
Time [h]
Fig. 15. Optimal power flow for summer season case III.

2
P B [kW]

-2

0 5 10 15 20 25
Battery SoC [%]

100

50

0
0 5 10 15 20 25
Time [h]
Fig. 16. Battery optimal power flow and state of charge for summer season case III.

failures are not common, an attractive FIT will improve the eco- Fig. 19 and Table 1 show that the increase in the FIT by 71.25%
nomic viability of solar PV systems by eliminating the need of bat- (from USD 0:046/kW h to USD 0:16/kW h) leads to an increase in
tery storage since the preference will be given to the grid to the energy cost saving by 75% (144.4% in case III and 69.41% in case
consume the solar energy, whist customers benefit from the FIT I). An energy cost saving over 100 % means that the customer will
incentive. have a negative energy bill.
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 41

off-peak standard peak

P MP [kW]
2
1
0
-1
0 5 10 15 20 25

P DC P AC
Power flow [kW]

-2

0 5 10 15 20 25

P EXP P IMP
Power flow [kW]

3
2
1
0
-1
0 5 10 15 20 25
Time [h]
Fig. 17. Optimal power flow for winter season case III.

2
P B [kW]

-2

0 5 10 15 20 25
Battery SoC [%]

100

50

0
0 5 10 15 20 25
Time [h]

Fig. 18. Battery optimal power flow and state of charge for winter season case III.

6. Economic analysis return (IRR), benefits-to-cost ratio (BCR) and life cycle cost (LCC)
[36]. On the one hand, although the SPP period has the advantage
To analyze the cost effectiveness of a project, various economic of being the simplest economic analysis method, and also the easi-
performance indicators can be used. These indicators include, but est to understand and to calculate, the approach presents some
are not limited to simple payback period (SPP), internal rate of drawbacks. The SPP does not take into account the time value of
42 B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845

3
baseline
2 optimal control-summer-case III

Net energy cost [USD]


optimal control-winter-case III
1

-1

-2

-3
0 5 10 15 20 25
Time [h]
Fig. 19. Cumulative net energy cost case III.

Table 1
Annual energy cost saving.

Strategy Energy cost (USD/day) Energy cost (USD/year) Saving (%)


Baseline 2.417 882.205 /
CASE I: c 0:046 USD=kW h
Optimal control-summer 0.643 0.643  273 days = 175.539 /
Optimal control-winter 1.025 1.025  92 days = 94.300 /
Optimal control-total net cost / 269.839 69.41
CASE II: c 0:11 USD=kW h
Optimal control-summer 0.0413 0.0413  273 days = 11.275 /
Optimal control-winter 0.625 0.625  92 days = 57.500 /
Optimal control-total net cost / 68.775 92.20
CASE III: c 0:16 USD=kW h
Optimal control-summer 1.155 1.155  273 days = 315.315 /
Optimal control-winter 0.802 0.802  92 days = 73.784 /
Optimal control-total net cost / 389.099 144.10

money, while in reality money depreciates over time because of where PW TBav is the annual average PW TB , obtained as follows:
the inflation and other factors. Another disadvantage of the SPP
is that all cash flows beyond the payback period (PBP) are ignored PW TB
PW TBav : 16
since the project lifetime is not taken into account. With this, n
investors will not be aware of the profitability of the project. On
In Eqs. (15) and (16), PW TC denotes the PW of total costs, n is the
the other hand, methods such as IRR, BCR and LCC take into
project lifetime and PW TB is the PW of total benefits, which are
account both the time value of money and the project lifetime by
the annual cost savings less any annual costs discounted to a PW
discounting all future worth cash flows to a present worth (PW)
and incurred by the user during operation. In this work, the annual
cash flow. Since the SPP is defined as the ratio between the annual
costs are the O&M costs.
benefit (AB) and initial investment cost, a true PBP that takes into
The PW TC is the algebraic sum of the discounted costs associ-
account the time value of money and project lifetime can be esti-
ated with the initial investment costs, replacement costs and sal-
mated as the ratio between the PW of total costs (PW TC ) and the
vage value of the grid-interactive solar PV system. However, the
annual average of the PW of total benefits (PW TB ).
salvage values of all components are neglected since all compo-
Due to its simplicity, the true PBP method is proposed for the
analysis of the residential grid-interactive solar PV system in this
work. Table 2 below gives prices for components of the proposed Table 2
residential grid-interactive solar PV system. This quotation con- Bill of quantity of 3 kW grid-interactive solar PV system.
tains updated prices from one of the biggest PV system component Component description Quantity Net price Net price
suppliers in South Africa. (R) (USD)
The BoS in Table 2 is composed of components, such as wiring, Imeon 3.6 solar inverter 1 33,060 2448.88
connectors, DC and AC disconnect switches and protection devices, Solar aluminium structure 6 1200 88.88
etc. YL260P-29b Yingli solar PV 12 26,400 1955.55
panel
As previously discussed, the true PBP is estimated using the
AGM deep-cycle battery 8 16,416 1216
following equation: Balance of system (BoS) 3000 222.22
PW TC Labour R5000 370.37
True PBP ; 15 Total initial investment cost 85,076 6301.90
PW TBav
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 43

nents are assumed to be used over their lifetimes. Since in this Table 3
work the inflation rate is assumed equal to the real interest rate, Payback period for different cases.

the PW of replacement cost, C rep , of each component is calculated Parameters Case I Case II Case III
as follows (adapted from Ref. [37]): Total initial investment (USD) 6301.90 6301.90 6301.90
Project lifetime, n (years) 30 30 30
C rep C cap Nrep ; 17
PV lifetime (years) 30 30 30
where C cap is the initial capital cost for each component (given in N repPV () 0 0 0
C repPV USD 0 0 0
Table 2) and Nrep is the component number of replacements over
Inverter lifetime (years) 15 15 15
the project lifetime. N repINV () 1 1 1
The PW TB is calculated using the following expression (adapted C repINV USD 2488.88 2488.88 2488.88
from Ref. [36]): Battery lifetime (years) 7 7 7
  N repBAT () 3 3 3
1 rn  1 C repBAT USD 3648 3648 3648
PW TB AB n ; 18 AB USD
r 1 r 549.36 750.43 1208.30
PW TC USD 12,439 12,439 12,439
where AB denotes the annual benefit and r is the discount or inter- PW TB USD 7853.7 10728 17274
est rate. It is assumed that the discount/interest rate depends only PW TBav USD 654.47 894 1439.5
upon the inflation rate so that the discount/interest rate is equal to True PBP (years) 19 14 8.6
the inflation rate. Data for South African annual inflation rate from
1997 to 2016 are presented in Fig. 20, where an average inflation
rate of 5.65% is shown. The average value is used for the economic project whose lifetime is 30 years and payback period of around
analysis in this work. 8 years means that the investor will recover his total capital within
The annual cost savings achieved are calculated from Table 1 8 years and have 22 years to generate profit. Although a payback
as USD 882:20  USD 269:84 USD 612:36=year for case I, period of 14 years seems high, the investor will still have 16 years
USD 882:20  USD 68:77 USD 813:43=year for case II and to generate profit over the project lifetime. With case I, however, a
USD 882:20  USD 389:1 USD 1; 271:3=year for case III. grid-interactive solar PV system project with a payback period of
Because of the reduced maintenance level required by AGM deep 19 years might be risky. Some of the reasons are as follows: (1)
cycle batteries, the annual O&M cost of the whole system is assumed the sustainability of the feed-in tariff programme is not guaran-
to be 1% of the total cost, that is, USD 63/year. With this, the annual
benefit (AB) is calculated as USD 612:36  USD 63
USD 549:36=year for case I, USD 813:43  USD 63 USD
Table 4
750:43=year for case II and USD 1271:3  USD 63 USD 1208:3= Payback period without battery storage system.
year for case III.
Parameters Case I Case II Case III
The cost effectiveness of the different cases is analyzed and pre-
sented in Table 3. The project lifetime is taken to be equal to the Total initial investment (USD) 5085.90 5085.90 5085.90
Project lifetime, n (years) 30 30 30
lifetime of the PV panel, assumed to be 30 years. Since the war-
PV lifetime (years) 30 30 30
ranty of the IMEON 3.6 inverter is up to 10 years, its lifetime is N repPV () 0 0 0
assumed to be 15 years. The lifetime of AGM deep-cycle battery C repPV USD 0 0 0
bank is assumed to be 7 years under a proper maintenance plan. Inverter lifetime (years) 15 15 15
Results presented in Table 3 show that with case I, when the N repINV () 1 1 1
C repINV USD 2488.88 2488.88 2488.88
feed-in tariff is USD 0:046/kW h, the total investment cost will be
AB USD 232.70 766.48 1057.67
recovered over 19 years. With Case II, when the feed-in tariff is
PW TC USD 7574.80 7574.80 7574.80
increased to be equal to the flat tariff, which is USD 0:11/kW h,
PW TB USD 3326.70 10,958 15,121
the payback period is reduced from 19 to 14 years. This is further PW TBav USD 277.22 913.16 1260.08
reduced to 8.6 years with case III when the feed-in tariff is
True PBP (years) 27.3 8.3 6.0
increased to be equal to the peak TOU tariff (USD 0:16/kW h). A

12

10

8
Inflation rate, r [%]

2 Annual variation
0 Average (5.65%)

-2
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Period, n [year]
Fig. 20. South African annual inflation rate from 1997 to 2016 (Adapted from Ref. [38]).
44 B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845

22

20

Payback period [Years]


18

16

14

12

10

0 5 10 15 20 25 30 35 40
Electricity price increase [%]
Fig. 21. Sensitivity of electricity price on the payback period.

teed, (2) the integrity of the roof has to be guaranteed to last more corresponds to the price in current year (2016), 10% increase corre-
than 19 years from the time the system is installed. sponds to the price in the year 2017, 20% increase corresponds to
the price in the year 2018, 30% corresponds to the price in the year
2019 and 40% corresponds to the price in the year 2020. The anal-
7. Impact of battery storage system and electricity price on the
ysis of the results shows that the increase in the grid electricity
payback period
price has a huge impact on the payback period of the grid-
interactive solar PV system. It is shown in Fig. 21 that for every
It has been previously shown that under the current FIT, the
10% increment in the grid electricity price, the payback period lin-
installation of a residential grid-interactive solar PV system in
early decreases by approximately 11.5% on average.
eThekwini municipality will result in a high payback period of
19 years. Some of the reasons are the high initial investment cost
and battery replacement cost against the relatively low grid elec-
tricity price due to coal fired power plants. To analyze the effect 8. Conclusions and recommendations
of battery storage system on the payback period, simulation results
without taking into account the battery storage system are pre- An optimal energy model of a 3 kW residential grid-interactive
sented in Table 4. It is shown that under the current FIT (case I), solar PV system under the feed-in tariff (FIT) is proposed in this
a residential grid-interactive solar PV without battery storage sys- work. An urban residential household within the eThekwini
tem will lead to a higher payback period as opposed to cases II and municipality is considered as a case study. Since the system has
III with attractive FITs. The reason is that due to a lower FIT, most an energy storage device, the household is assumed to consume
solar energy will be stored instead of being fed to the grid. This power from the grid under the time-of-use electricity tariff. To
means that for low FITs, the self-consumption of harvested solar study the economic viability of the system, the payback period
energy by means of energy storage system has to be maximized (PBP) is used as the economic performance indicator, under various
in order to improve the profitability of the system. Hence, in this cases where the FIT is varied.
case, energy storage systems will play an important role to Simulation results show that a potential of 69.41% energy cost
improve the cost effectiveness of residential solar PV systems. This saving is possible when the energy cost management is applied
is shown through comparison between Tables 3 and 4. The results to the residential grid-interactive PV system, under the current
show that with case I where the FIT is not attractive, a residential FIT, that is USD 0:046/kW h. However, this leads to a large PBP of
solar PV system without battery storage system will lead to a pay- 19 years. When the FIT is increased to USD 0:11/kW h, the energy
back period of 27.3 years, which is higher than 19 years when the cost saving is increased to 92.2% and the PBP is decreased to
battery storage system is used. 14 years. With a more attractive FIT of USD 0:16/kW h, the energy
On the other hand, with high FITs (cases II and III), it is shown in cost saving is further increased to 144.4% and the PBP is decreased
Sections 5.2 and 5.3, that the higher the FIT, the lesser the need for to 8.6 years. Simulation results show that the higher the FIT the
energy storage system. This implies that the use of battery storage lesser the need for the battery bank if grid failures are not consid-
system when the FIT is attractive will lead to unnecessary increase ered as a constraint.
in the investment cost (initial investment and replacement costs) The impact of battery storage and grid electricity price on the
while not contributing to energy cost saving, thus leading to higher cost effectiveness of the grid-interactive solar PV system is also
payback periods. In this case, a grid-interactive solar PV system reported. Simulation results show that the use of battery storage
without battery storage, referred to as grid-connected solar PV, will system is only beneficial to the system when the FIT is not attrac-
be cost effective. Comparison between Tables 3 and 4 show that a tive since the self-consumption of harvested solar energy by means
grid-interactive PV system without battery storage leads to lower of energy storage has to be maximized in order to improve the
payback periods of 8.3 and 6 years in case II and III, respectively, profitability of the system. For attractive FITs, the use of battery
compared to 14 and 8.6 years when the battery storage is used. storage will have a negative effect on the profitability of the sys-
The sensitivity of the grid electricity price on the payback per- tem. Simulation results also show that the higher the grid electric-
iod is also analyzed under case I (with battery storage). The results ity price, the higher the profitability of the system.
are depicted in Fig. 21. The payback period is calculated for each To this end, the following recommendations are proposed in
10% increase in the electricity price, which corresponds to the aver- order to make the application of grid-interactive solar PV system
age annual increase in electricity price in South Africa. 0% increase on residential buildings in South Africa economically viable:
B.P. Numbi, S.J. Malinga / Applied Energy 186 (2017) 2845 45

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