Name: Piolo Julius G.

Cabagnot Date Submitted: June 25, 2020

Course & Year: BSME – III Offering No.: Z189
MEng 141.3 – Energy Engineering & Management
Insight Paper for Lecture-Series 8

Electricity is one of the critical components needed in an attempt to strengthen and

develop the nation's economy. Because of their remote location, regular grid electrification is
prohibitively expensive or impractical for isolated communities. Due to the aforementioned
circumstances, these isolated communities from remote locations have opted to use electric
generators as their primary energy provider. Continuous combustion of fossil fuel energy, on the
other hand, is the main contributor to climate change and global warming due to its greenhouse
gas emissions. To alleviate these issues, international and national laws and policies are now
suggesting employing a renewable energy source that emits no greenhouse gases. Fortunately,
most islands are located in areas with significant potential for using renewable energy sources,
which are both free and ecologically beneficial when compared to fossil fuel energy. Likewise,
when designing a hybrid power system, including renewable energy to the system would provide
the most secure, strong, and robust energy supply while also being the most cost-effective way
to lessen our dependency on traditional energy providers especially fossil fuels.

Unique and renowned applications for optimizing hybrid power systems in order to satisfy
and meet load demands have been developed by many developers throughout the years and one
of these renowned applications is the HOMER Microgrid Software. It is a computer modeling
software that greatly simplifies and reduces the burden in the evaluation of design alternatives
and options for stand-alone systems and remote applications for both grid-connected and off-grid
energy systems. HOMER's sensitivity and optimization analysis feature and its robust algorithms
enable an engineer or designer in evaluating the overall techno-economic viability of a variety of
technological options and solutions while taking into account changes in energy resource
availability and the everchanging technology cost. It can also simulate all potential energy mix
system combinations in time steps to meet and satisfy the energy load demand for the desired
year, then the results will be evaluated and then all alternatives and combinations of
configurations of the energy system will be then ranked with respect to their respective Net
Present Cost. Economic models are also utilized in HOMER to value the Levelized Cost of Energy
and the Net Present Cost. The value of the Levelized Cost of Energy is based on the most
probable cost per kWh usage of electric energy of the said configurated system, whereas the Net
Present Cost is calculated by the entire cost of the production of the system minus the revenues
throughout the system’s lifespan. The Levelized Cost of Energy and the Net Present Cost are the
two most important economic indicators used in HOMER to rate the various hybrid systems. As
the Net Present Cost attempts to determine the profitability of a particular investment of a system
or a project based on the assumption that a cost of money in the future would not be worth the
same as a cost now owing to inflation. Also, the Levelized Cost of Energy is frequently used by
financial analysts to evaluate different energy-producing technologies, such as the likes of solar,
nuclear, and wind power. It enables these comparisons even though the projects have different
life periods, different capital prices, different project sizes, and different risk levels.

With that said, we can state that the HOMER microgrid software in plant design and power
system construction is undeniably important not only for saving resources, time, and energy, but
also for achieving a globally standard optimized microgrid power system in all sectors, ranging
from villages to isolated communities in remote locations.