Cost Analysis

Upon consolidating scenario options and the analysis of the simulations for the three potential solutions was completed, a calculation to assess how much the total demand profile for the business units would be estimated to reduce by. With the reduction in total demand being based on previous assumptions during the analysis of the three scenarios, an estimation calculation for the total cost and carbon emissions were performed. The cost reduction was calculated using the total reduction in demand with a discounted unit price being subsidized to the businesses as £0.20/kWh. The carbon emissions produced were assumed to be 0.193kg/kWh, [1],[2],[3]. Reduction graphs were then populated and compared against the original demand profile, shown in Figure 1.

Referencing Figure 1, an important point to note is that, the reduced demand profile would be met with an electrified energy system;  implementing any of the three scenarios models. Observing the reduction in demand, the consumption and carbon emissions reduced by approximately 50%; with an estimated cost saving of approximately £146,585. Once the estimated cost reductions for the businesses were calculated, the project business structure in terms project costs and payback periods for each scenario were estimated. Due to time constraints and limitations of the project, ascertaining precise project costs was out with the scope of the teams remit. All project costings and returns with the exception of the known cost as given by the Newmilns Regeneration Association for the building restructuring and solar install,  contains costing uncertainties. The estimated project costs were calculated and shown in Table 1, [4],[5],[6].

Upon conducting a cost analysis for each of the simulated scenarios and including mitigation measures i.e. insulation costs; based on the total costs and the return on investment from Table 1 to Table 3, a cumulative cash forecast was calculated and graphed, shown in Figure 2.

Observing Figure 2, it can be seen that scenario 1 offers lower investment capital injection than scenario 2 and 3 and indicates the shortest payback period to breakeven. Scenario 2 has a higher capital cost than scenario 1 and illustrates a longer payback period to recover the investment capital to breakeven. Scenario 3 does not generate any profit and operates at a loss, never breaking even.

References:
[1] “Greenhouse Gas Reporting: Conversion Factors 2022.” Department for Energy Security and Net Zero, 20 Sept. 2022, www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2022.[Accessed 8 May 2023]. 

[2] Ulusu, Hayati, et al. “Mechanical, Durability and Microstructural Characteristics of Portland Pozzolan Cement (PPC) Produced with High Volume Pumice: Green, Cleaner and Sustainable Cement Development.” Construction and Building Materials, 29 Mar. 2023, www.sciencedirect.com/science/article/pii/S0950061823007821. [Accessed 8 May 2023]. 

[3] Davies, G.,  Revesz A., et al. Waste Heat Recovery from Electrical Substations , ASHRAE Winter Conference 8 Dec. 2022,   https://openresearch.lsbu.ac.uk/item/92w24. [Accessed 8 May 2023]. 

[4] Stehly, Tyler and Duffy, Patrick.. 2021 Cost of Wind Energy Review. National Renewable Energy Laboratory. Dec. 2022, Available at: https://www.nrel.gov/docs/fy23osti/84774.pdf [Accessed 8 May 2023]. 

[5] How much do wind turbines cost?. 2016, https://www.windustry.org/how_much_do_wind_turbines_cost [Accessed 8 May 2023]. 

[6]How much does a wind turbine cost?. Renewables First, 2018, https://www.renewablesfirst.co.uk/home/renewable-energy-technologies/windpower/windpower-learning-ce [Accessed 8 May 2023].