Model for valuating decentralized energy production

Abstract

The purpose of this thesis is to assess decentralized production technologies in an economical framework. Throughout the thesis, technological aspects such as smart metering or connectivity issues are ignored. All assumptions are based on specification sheets by the producers of the technologies to provide an impartial assessment. Pricing schemes for buying from the grid and selling to the grid are based on dynamic markets, like Amsterdam Power Exchange and Title Transfer Facility. Although these markets are for large scale trading, they provide a good basis for constructing future scenarios where electricity and gas are bought on variable prices rather than fixed prices. Model constructed to evaluate different technologies finds the optimal production given the technologies and prices for the period. Optimal production clearly defines an upper bound on the value of the technology as any other production increases the cost of heat and electricity of the household. In retrospect, model establishes a best case scenario for the value of such systems from an economical perspective. Technological, regulatory, and marketing aspects are not explored in this study. Only economical viability of the technologies is explored. In summary, it is common for individuals to make misinformed or wrong decisions. Effects of marketing etc. can be studied, but my belief based on this study is that these devices are not economically viable and their environmental benefits are questionable.