Cost Benefit Framework for Cold Climate Microgrids
Date
2023-01-13
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Thesis
Degree Level
Masters
Abstract
For a quarter of a century, global energy policy has shifted electric utility investments away from fossil fuels toward renewable substitutes. Reducing greenhouse gas emissions is motivating improvements in the cost and efficiency of renewable energy technologies. Historically, the social and environmental values of communities were not considered in electric utility decision making in Canada. Today, community capacity building and reducing household costs are important social objectives for renewable energy integration in Canada’s northern, remote and Indigenous communities. This intersection of policy goals is encouraging the development of new decision-making tools for communities using cold climate microgrids and the utility companies who own and operate them. The purpose of this research is to understand, quantify, value and qualify the social and economic implications of alternative energy investments in remote, northern and Indigenous communities. This research adopts a case-study approach to describe the impacts of renewable energy integration, represented by a comprehensive suite of costs and benefits using cost benefit analysis. The goal of using cost benefit analysis as an economic method is to compare alternative renewable energy investments and evaluate them based on a measure of efficiency. The framework is applied using a spread sheet type model. The application includes an analysis of two scenarios (i) the baseline scenario, based on diesel generation compared to (ii) solar photovoltaic integration. The results show that social surplus in remote, northern and Indigenous communities can improve with renewable energy integration into cold climate microgrids. The findings also emphasize the enhanced effects of incorporating demand side management investments to improve economic efficiency. Moreover, renewable energy integration into cold climate microgrids has the potential to correct market failures by reducing information asymmetry and providing numerous positive externalities.
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Keywords
renewable energy, nonmarket valuation, cost benefit analysis, community energy, Indigenous community
Citation
Degree
Master of Science (M.Sc.)
Department
Agricultural and Resource Economics
Program
Agricultural Economics