Reduction of Industrial Electricity Cost by PV
System as Industrial Load Management
Muhammad Ikromi
Dept. of Electrical Engineering
University of Indonesia
Depok, Indonesia
muhammad.ikromi@ui.ac.id
XXX-X-XXXX-XXXX-X/XX/$XX.00 ©20XX IEEE
Rinaldy Dalimi
Dept. of Electrical Engineering
University of Indonesia
Depok, Indonesia
rinaldy@eng.ui.ac.id
 Abstract— This study presented the analysis of load
management by implementing PV System for engaged textile
industry in study case of PT.X. Various scenarios were
purposed in this study to obtain the most beneficial results.
Scenario I was applying PV system directly to grid, Scenario II
stored energy from PV into batteries and be used during
factory peak load at 2:00 PM – 10 PM, while last scenario
optimized energy only during night peak load at 6:00 PM –
23:00 PM. Considering the tariff of use and investment cost,
obtained that scenario III provided biggest savings about 34%
of electricity reduction. However, most profitable scenario was
showed in scenario I with 23% electricity reduction, biggest
IRR 7%, NPV and shortest payback period. Besides, it has less
equipment installation requirements so it is technically
simpler.
factory peak load against non-peak load operation hours.
Economic justification will be evaluated based on investment
cost through profit, net present value (NPV), internal rate of
retuen (IRR), payback period (PBP), future worth (FW) and
annual worth (AW). In case, technical aspect will be
discussed by evaluating difficulties of technical installation.
II. METHODOLOGY OF INDUSTRIAL PV DESIGN
A. Potensial Area of PV System
To obtain the real number of solar energy on the area, PV
system will be build on potential rooftop of utility building,
production 1 – 3, and open space area.

Keywords—load management, PV system, industry energy

need, green energy

I. INTRODUCTION OF INDUSTRIAL ENERGY

The use of electricity in the Indonesia industrial sector
continues to increase with an average growth rate of
4%/year. the industrial sector as one of the sectors with the
largest national electricity consumption in early 2018, 70
TWh of energy and is predicted to reach 521 BaU in 2050.
Textile industry sector is one of the 5 largest electrcicity
consumers [1]. Based on the Minister Resources Regulation
No.14 of 2012 concerning energy management and
supported by Government Regulation No. 70 of 2009
concerning energy conservation. Industrial sector must
manage and control energy use effectively and efficiently
with the aim of producing optimal output. Various methods
are able to achieve these objectives where load management
and energy conservation are the most common. Fig. 1. Site plan area
In general, Load management is an activity or business
carried out by the customer side which in this case is an Total area that can be used as PV power generation is
industry sector to adjust energy consumption. Availability of 28.050 m2 which are separated into 4 building rooftop and 1
energy can be generated by the alternatives power supply. open space area. The total energy of potential areas were
The aim is for maintaining electricity stability and reducing calculated based on total Direct Normal Irradiation (DNI)
industrial electricity cost. The growth of PV system in load with kWh/m2 unit. When area of array and site plan were
management significantly increase by year and has a major given, the peak power could be measured by considering
influence on the importance of implementing load theoreticqal output energy [6].
management in the industrial sector. It’s installation devided
into two types such as grid connected and stand alone PV Eth= η.Eglob.A (1)
[3]. Various studies have been conducted to determine the
performance of PV system on load management. Optimal Eth is nett output energy obtained from system [kWh],
management of PV decentralized electricity in household Eglob shows theoreticqal solar radiation [kWh/m2], η is PV
have been conducted [4], However PV implementation in module effiency based on common market value is ranged
industrial sector showed in [5] where hybrid PV system 16-19%, while A describes total area of PV system. In case
optimum configuration will lead to diesel fuel utilization, and the Eth given is already known the specific watt peak of
levelized cost of electricity (LCOE). module can be determined as follow
Previous studies have implemented PV system both
grid connected or stand-alone type in industrial load Ppeak = η.I.AArray (2)
management and energy conservation. in [4], PV systems
was connected to grid in the industry by considering Where Ppeak is PV max power output [Wp], I is solar
appropriate technical aspects using simulation. While [5] radiation max/Hours [W/m2] and Aarray express dimention of
evaluated stand-alone PV performance. However, further industry PV module size [1.94 m2].
analysis of the economic aspects as techno-economyc Battery sizing, Inverter and Maximum Power Point
analysis was discussed further by [6] [7][8]. Tracking (MPPT) are also important equipment to be
Different from studies mentioned above, PV system in considered In designing PV System. Battery specification
this study will be evaluated as load management strategy and with depth discharge 50% will last generally for 10 – 13
clasified into three scenarios, considering technical and years. Days of autonomy in battery configuration is defined
economical aspect. Different industrial electricity tariff or as the number of days that a fully charged battery can meet
time of use tariff (TOU) will also be discussed based on
the load demand in the event of the PV system is not in
operation [7]. The size of battery is calculated as follow

CB = (Eth/Vb).Autonomy days (3)

Cb is battery capacity needed [Ah] will be determined by

deviding it by Vb as battery voltage range with 2 days of
autonomy. Inverter sizing can be determined based on total
capacity of PV array, while MPPT sizing could be given as
follow: Fig. 3. Scenario I of load management with grid connected PV system

MPPTs = (n.Ppeak/Vb).Q (4)

Module quantity is expressed with n while Q is capacity

tolerance commonly 25% [7].

B. Load Management Scenario Based on Time of Use

Tariff
Manufacturing process at PT.X is carried out for 24 hours
and divided into 3 work zones. First zone starts at 06:00 AM
– 02:00 PM and will be continued to second until 22:00
while the last zone start at 10:00 PM to 06:00 AM. Daily
electricity consumption in PT.X can reach up to 65.050 kWh
with 5.062kVA of apparent power capacity.
Time of use tariffs (TOU) is applied in PT.X with
different prices for electricity at different times of the day.
There are two electricity prices that apply to PT.X in
accordance with factory working hours. The first is 0.07
USD/kWh for time outside of peak load, However it cost
about 0,1 USD/kWh during peak load hours at 06:00 PM –
22:00 PM only.
Industry load duration curve in this study was evaluated
in order to arrange scenarios of load management with PV
system as alternative power resource. Load characteristic of
PT.X as shown in Fig.2 explain the factory peak load is
occurred during 9 AM – 5 PM with 2.3 MW of load. In
preparing load management scenarios, Peak hours and TOU
were considered against the availability of net energy that is
produced by PV system.
Fig. 2. Factory load duration curve
Calculation of net energy produced by PV system
done by equation (1) and based on factory load curve,
described that zone II is the intercept of peak load and non-
peak load operating hours where TOU is applied. Therefore,
the three scenarios of load management were described in
Fig.3-5.
Fig. 4. Scenario II of load management with stand-alone PV system
Fig. 5. Scenario III of load management with stand-alone PV system
 Load management in scenario I is designing grid
connected PV system where the energy produced
will be directly utilized. This scenario is consist of
PV array, grid-tied inverter (GTI), solar cable and
mounting as main components. This type of PV
system has no battery so the investment and O&M
cost are greatly reduced [7].
 Scenario II consider stand-alone PV where energy
is being used during zone II due to its intercept of
TOU and peak load is occurred in this zone. Energy
produced by PV will stored into battery and
optimized from 2 PM – 11 PM. However, This
scenario requires PV array, inverter, battery, MPPT
and another support components. The battery
capacity used for this scenario was about 833 kAh
that can store about 10 MWh within 8 hours.
 Scenario III will store energy into battery and focus
to release it only during peak load where highest
TOU may applied. The excess energy from PV will
be transferred into the grid where Indonesian feed
in tariff will cost about 0,05 USD/kWh [8]. In this
case, 1.014 kAh of Battery capacity required that
can store about 12 MWh of electrical energy within
5 hours.
C. Techno-economyc Model
The economical justification in this study was done to
compare more economically advantageous scenarios based
on NPV, IRR, PBP, AW and FW. Therefore, investment
cost and yearly O&M must be arranged comprehensively.
In [7][8], the O&M cost per year were done by using Daily savings
estimation within 1% of total PV investment. However, Scenario Daily cost Savings Gap Electricity Savings
(USD) (USD) percentage
O&M cost in this study will be determined for each
Initial cost 3.742 - -
equipments both grid connected and stand-alone PV to
Scenario II 2.662 1.078 29%
obtain most realistic cash flow.
Scenario III 2.598 1.143 34%

(5) To be noted that electricity is only 1 of 8 cost of the

total production unit other than labour cost, sub-material,
machine parts, overhead, depreciation, service and indirect
As shown in Equation 5 that NPV is obtained by cost. Therefore, daily savings in production process is known
dividing Ct as cash flow in t period with i as the value of by total impact of PV load management in electricity
discount rate less by Cinv which express the total of project multiplied with averagely 1.568.063 Pcs/Day of production.
initial investment. However, NPV value must be in positive Total savings per unit cost of PT.X shown in Table. 2.1
number to justified that project is feasible.
TABLE II. SCENARIOS SAVINGS OF UNIT PRODUCT
PV system modeled in this study is expected to have 25
years of operation lifetime. In case to evaluate the economic Daily savings
feasibility, PBP or the time required to return the initial Initial cost
Product Cost
product
Scenario after savings
investment must be less than 25 years. Commonly, PBP is product
(USD/1.000
savings
calculated by dividing total investment in the beginning of (USD/1.000 Pcs) percentage
Pcs))
the project with net annual revenue for a year that has been Scenario I 43.467 43.002 1,07%
less than O&M cost. Scenario II 43.467 42.880 1,35%
AW and FW of each scenarios in this study will evaluate Scenario III 43.467 42.779 1,58%
initial investment decision. AW is defined as serial cash
flow with a uniform value in every period obtained by B. Shaved of Load Duration Curve
converting all cash flows into a uniform annual value, while Based on simulation, the changes of industry load
FW is the amount of money in the future, which is the duration curve due to PV system injection and and
conversion of a number of cash flows with a certain interest implementation for each scenarios are shown in Fig.6.
rate. Both WA and FW used as economic parameters to
decide which project provide most profits based time value
of money.

(6)

AW(i%) means the value of AW in i discount rate, Where n

is project expected lifetime in years. Therefore, if the PW or
present worth of the project is given, FW in i discount rate
can be calculated as:
Fig. 6. Scenario III of load management with stand-alone PV system
(7)
Changes in the daily load curve vary depending on
the scenarios applied with total 12.168 kWh being reduced or
Necessary to be noted that when AW (i-MARR) ≥ 0 and save about 25% of total daily electric consume.
FW (i=MARR) ≥ 0, then this project is economically
profitable [5]. IV. ECONOMIC ASSESMENT
III. PV LOAD MANAGEMENT IMPACT ON INDUSTRY A. Project Investment and Yearly Maintenance Cost
A. PV System Power Savings Economic analysis is aimed to justify the best
scenario with highest profit by compiling initial investment
The application of PV load management with and annual revenues for each load management scenarios.
consideration of TOU tariff in PT.X manufacturing process Initial investment for each scenarios may vary depend on
has reduced the daily electricity cost which have an impact different equipment as mentioned in section II. Annual
on decreaing manufacturing production cost. Tabel 1. Listed revenue is obtained by multiplying the amount of reduced
the impact of each scenarios due to electricity consumption. kWh by the applicable of TOU (0,07USD/kWh for outside
It showed that scenario III gave biggest electrcity cost peak load hours, and 0,1 USD/kWh for load peak hours).
savings about 1.143 USD or 34% of total daily bills. The surplus energy in scenario III will transferred to grid and
will be priced as Indonesian FIT 0,05USD/kWh.
TABLE I. SCENARIOS SAVINGS OF ELECTRICITY
By using equation 2, required 14.427 PV modules for
Daily savings
Scenario 28.052 m2 of site plan. The specific watt peak for each
Daily cost Savings Gap Electricity Savings
(USD) (USD) percentage module determined by equation 3 is 300 Wp, then total
Initial cost 3.742 - - capacity of PV system in this study is equal to 4,3 MWpeak.
Scenario I 2.897 844 23% However, initial investment and O&M cost are different
depend of purposed scenarios as shown in Table. 3 and Fig. 7. Comparison of cash flow
Table. 4.
B. Economic Justification
TABLE III. TOTAL INITIAL INVESTMENT Assessment of each load management scenarios is
Scenario I Scenario II Scenario III evaluated based on cash flow where discount rate used in this
No Equipment
(USD) (USD) (USD) study is about 4,5% based on Indonesian bank announcement
1 PV module 1.081.977 1.081.997 1.081.997 in April 2020. Fig 8. Showed the results of NPV for each
2 Grid tied Inverter 375.000 - - scenario where biggest NPV is given by first scenario
3 Inverter - 450.000 450.000 showed biggest NPV about 865.862 USD. Lowest NPV
4 Battery - 839,750 1.014.000
Battery charger value is occurred in scenario II where it only give 299.047
5 and control - 597.352 597.352 USD.
(MPPTs)
Electrical IRR and PBP for 25 years of operation lifetime is shown
components in Fig. 9. Scenario I able to recoup the capital investment for
(Conductor, 11,8 years with 7% of IRR.
6 Conduit and 562.638 562.638 562.638
fittings, transition
boxes, MCBs,
Fuses, Cables)
Racking and
7 64.919 64.919 64.919
structures
EPC overhead
8 cost, inventory & 189.409 308.327 330.979
shipping.
Developer cost,
payroll, facilities,
9 insurance and 649.198 649.198 649.198
finances
administrative .
Permits fee,
feasibility study,
10 432.799 432.799 432.799 Fig. 8. Comparison of cash flow
testing and
commissioning
Total 3.355.964 4.986.984 5.183.887

TABLE IV. ANNUAL O&M COST

Scenario I Scenario II Scenario III
No Equipment
(USD) (USD) (USD)
General site
1 865 865 865
maintenance
Wiring &
2 electrical 6.059 6.059 6.059
inspection
3 Panel washing 3.462 3.462 3.462
Inverter
4 12.983 12.983 12.983
maintenance
Battery Fig. 9. Comparison of cash flow
5 - 14.103 20.563
maintenance
Total 23.371 37.474 43,935

Since the three scenarios have the same amount of

total capacity and module quantities, some initial investment
and maintenance cost components also will not vary.
Percentage of yearly O&M cost for scenario I is only about
0.70% of initial investment, while scenario II and III gave
higher number as 0,75% and 0,84% from their total
investment.

Fig. 10. Comparison of cash flow

example, write “Temperature (K)”, not “Temperature/K”.

V. CONCLUSION
Various scenario of load management by investing PV
system has been done in this study. The net potential energy
that can be produced in 28.053 m2 of industrial site is
12.168 kWh/day which can reduce up to 25% of electricity
daily needs. Total capacity of PV system designed in this
study is about 4,3 MWpeak with 3 different scenarios
considering TOU and Indonesian FIT, 25 years of lifetime
estimation and 4,5% Indonesian discount rate.
 Scenario I as grid connected PV will give about
284.715 USD of annual revenue with 3.355.964 USD
of capital investment. The IRR given by this scenario
is 7% which greatest among others, 58.392 USD of
AW, 2.602.294 USD of FW and 11.8 years of PBP.
 Scenario II as stand-alone PV will stored about 10
MWh electricity within 8 hours. 4.986.984 USD is
needed as capital investment. NPV of this scenario is
about 299.046 USD, and will recoup

ACKNOWLEDGMENT (Heading 5)
This paper has been done by support of Universitas
Indonesia for funding and analysis....”. Put sponsor
acknowledgments in the unnumbered footnote on the first
page.
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