1270 1

Economic Aspects of a Domestic Micro-

Generation System
António Roque, Nuno Fontes, José Maia, Cláudio Casimiro and Duarte M. Sousa

with no price or thinking that the energy available is infinite.

Abstract—During the last decades several efforts have been
made in order to develop efficient and profitable renewable
energy systems. One way to reach this target is to develop and
implement green energy micro-generation systems in urban
environments, which can not only produce energy for self
consumption but also to provide energy to the typical AC grids.
In this work, an economic analysis of a hybrid system with
solar energy and wind energy production is presented. The
economical main aspects of the system are described and
presented.
Index Terms—Energy, Wind, Solar, Grid, Micro-generation,
Economic Analysis
I. INTRODUCTION
N OWADAYS , societies all over the world are facing
some difficulties originated, mainly, by the increasing
price of the energy. Furthermore, the energy consumption has
been increasing and, simultaneously, the oil dependency still
on.
In addition to the economical aspects, also the
environmental concerns, as for instance Green House Gases
(GHG) has been influencing in nowadays not only the daily
lives routines but also the technical decisions related with the
electric energy generation systems.
During the last couple of months, the energy prices have
been affected by the economic markets fluctuations and social
and political aspects, being impossible acting as having energy
Energy is often treated as end use approach, not thinking about
where is it produced or originated. Anyway, it is important to
prevent scenarios avoiding energy faults or absence.
Furthermore, the power quality is an important issue
contributing to improve the quality of life of the populations.
Without energy, all the sectors of our societies (industry
included) will be forced to slow down their activities.
Under this context, a local decentralized renewable energy
approach could be a solution to smooth the impacts of energy
faults, as well as, to peak shave power in busy energy supply
hours. Actually, a local decentralized renewable energy
approach is strongly dependent of economical/financial
aspects and governments are fostering the use of these
technologies by using a feed-in electrical tariff. Thus, in this
paper an economical analysis of a hybrid system with solar
energy and wind energy production is presented. The main
economical aspects of the system are described and shown.
II. GENERATION SYSTEM
The case study is referred to a house in an urban Portuguese
city and the objective is to install a hybrid system regarding
solar photovoltaic and wind energy. The coordinates for this
location are 38º46”13.05 (Lisbon area). The perspective for
the house and the relative location of the solar panels and the
wind generator is represented in figure 1.

Manuscript received April 21, 2009. Authors thank the CIEEE – “Center
for Innovation in Electrical and Energy Engineering” of IST/TU Lisbon and
POSC – “Programa Operacional da Sociedade do Conhecimento” for financial
support of this work.
António Roque is with ESTSetúbal Campus do Instituto Politécnico de
Setúbal, Setúbal, Portugal and CIEEE – Center for Innovation in Electric and
Energy Engineering, Av. Rovisco Pais, 1049-001 Lisboa, Portugal
(vroque@est.ips.pt).
Nuno Fontes is with the Serviços Municipalizados de Água e Saneamento
de Oeiras e Amadora, Amadora, Portugal, (e-mail: nffontes@smas-oeiras-
amadora.pt).
José Maia is with ESTSetúbal Campus do Instituto Politécnico de Setúbal,
Setúbal, Portugal and CIEEE – Center for Innovation in Electric and Energy
Engineering, Av. Rovisco Pais, 1049-001 Lisboa, Portugal (e-mail:
jmaia@est.ips.pt).
Cláudio Casimiro is with CEEETA-ECO, Consultores em Energia, Lisboa,
rua Dr. António Cândido, nº10 - 1º andar, 1050-076 Portugal (e-mail:
claudio.casimiro@ceeeta.pt).
Duarte M. Sousa is with Instituto Superior Técnico/DEEC AC-
Energia/CIEEE - TU Lisbon, Av. Rovisco Pais, 1049-001 Lisboa, Portugal, Fig. 1. Relative location of the solar panels and the wind generator for the
(phone: +351 - 218417429; fax: +351 - 218417167; e-mail: proposed hybrid system.
duarte.sousa@ist.utl.pt).
1270 2

Being the main objective behind this work to install a possible;

hybrid system regarding solar photovoltaic and wind energy it - Power demand of the house.
will be considered a micro generation system according to the
new Portuguese legislation [1]. In this case, in order to fulfill TABLE I
HOUSE POWER DEMAND
the legal requirements the system should be able to be
Power
connected to the AC electric grid. Apparatus Quant.
Power Nb. of
Consumption
(W) hours
The figure 2 shows the schematic for the case described (Wh)
above.
DC Power demand per day
5 11 2 110
Room lights
4 20 2 40
External lights
1 60 12 720
Refrigerator

Total DC Consumption (Wh) 950

AC Power demand per day

TV set 1 50 50 4

Wash machine 1 1000 1000 0.25

Dishes machine 1 1000 1000 0.25

Computer 1 250 250 2

Microwave Oven 1 700 700 1

1 1200 1200 1
Electric Oven
4 100 400 0.25
Other equipments
Total AC Consumption (Wh)
3200
DC + AC Consumption (Wh/day)
4150
Power consumption per Year(Wh/year)
1494
Costs (€/year)
179

TABLE II
HYBRID SYSTEM COSTS
Equipment Quant. Price (€/un) Partial Costs (€)
Fig. 2. On grid hybrid system.
Photovoltaic modules
12 450 5400
Performing the economic analysis for the system shown in 80 Wp
figure 2, it is assumed that the economic attractiveness of the Lead Acid Batteries
8 144 1152
(E12-150)
micro-generation systems is strongly dependent of economic
Panels structure 1 1200 1200
incentives (feed-in tariff) given directly and indirectly from
the governments. In Portugal, for instance, for systems up to Charge Controller 1 200 200
10MWh (limit applicable to this hybrid system) any economic DC/AC Power Inverter 2 900 1800
incentive is given to install photovoltaic systems being the Wind Turbine
feed-in tariff 650 €/MWh. (Whisper 200 with 1 2680 2680
controller
From the economical point of view, it is mandatory to Wind Tubine Fixation
1 350 350
analyze separately the solar and wind energy production, Tower
because the feed in tariff is attributed as a weighted mean Hot Water Solar
1 2300 2300
Heating Collector
average of the combined technologies: photovoltaic energy is
Hand work 2262
paid at 100% and the wind energy is paid at 70%.
In order to analyse and discuss the energy transit, the Sub-total 15082
system is going to be described according to the following
premises: Taxes (12%) 1810

Hand work taxes (20%) 452

- Based on the solar radiation data obtained for the
referred Portuguese house location; Total 17344
- Different arrangements of the photovoltaic modules are
 1270 3

A. Characterization of the System
To the considered house topology, it is possible to find the
same domestic electrical apparatus that we have in ordinary
homes. Anyway, it is also considered the possibility of having
also DC loads taking advantage of direct supply from the
batteries energy storage system.
In table I, a list of electrical equipment on use in the
considered house is presented considering their average power
consumption. As it can be observed, the equipment was
accommodated in table I according to their supply type.
About the values presented in table I it is important to point
out that the daily average energy consumption is 4150 Wh,
which corresponds to an annual energy consumption of 1494
kWh. Considering 0.12 €/kWh the tariff in use in Portugal, the
total annual cost of the electric energy consumed by the
considered house is 179 €.
B. Photovoltaic System
In table II is shown the cost of the equipment and the global
cost of the system under study (wind + photovoltaic).
In table III, data related with the electric energy produced
monthly by the considered photovoltaic system to the
considered house are presented. The information related with
the solar irradiation of the considered location was obtained
with the help of the “Photovoltaic Geographical Information
System” [11] and took into consideration an optimized slope
of the PV modules.
About the configuration of the system it is also important to
point out that:
• To fulfil the power demand of the house, the number
of PV modules could be higher than the considered
12 modules.
• The available area to install the PV modules is
limited;
• The system under study should fulfil the requirements
of micro-generation systems according to the
Portuguese legislation;
• It is assumed that the batteries should guarantee 4
days of autonomy.
Taking into account the considerations above, the
estimation of the energy generated monthly by the
photovoltaic system is represented in table III being 2825 kWh
the energy produced annually. The Portuguese feed in tariff
applied to the PV energy is 0.65 € [1] corresponding to an
annual profit of 1836 €.

TABLE III
HOUSE POWER BALANCE
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Nominal voltage (V) 24 24 24 24 24 24 24 24 24 24 24 24

Power consumption (Wh/day) 4150 4150 4150 4150 4150 4150 4150 4150 4150 4150 4150 4150

Power (Ah/day) 172.9 172.9 172.9 172.9 172.9 172.9 172.9 172.9 172.9 172.9 172.9 172.9

Power losses (15%) (Ah/day) 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9

Total Power (Ah/day) 198.9 198.9 198.9 198.9 198.9 198.9 198.9 198.9 198.9 198.9 198.9 198.9

Irradiation (kJ/m2) 12204.0 13392.0 19404.0 19548.0 21744.0 23328.0 24300.0 24156.0 21564.0 17424.0 12240.0 11052

Peak Sun Hours 3.4 3.7 5.4 5.4 6.0 6.5 6.7 6.7 6.0 4.8 3.4 3.1

(Ah/day) per PV module 16.2 25.2 36.6 36.9 41.0 44.0 45.8 45.5 40.7 32.8 23.1 20.8

Number of PV modules (theoretic) 12.2 7.9 5.4 5.4 4.9 4.5 4.3 4.4 4.9 6.1 8.6 9.5

Number of modules (real) 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0

PV modules (total Ah/day) 194.9 303.0 439.0 442.2 491.9 527.7 549.7 546.5 487.8 394.2 276.9 250.0

Deficit/Superavit -4.0 104.1 240.1 243.4 293.1 328.9 350.9 347.6 289.0 195.3 78.0 51.2

Days of autonomy 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0

Batteries discharge ratio 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7

Capacity of the batteries (Ah) 988.1 988.1 988.1 988.1 988.1 988.1 988.1 988.1 988.1 988.1 988.1 988.1

Nb. of batteries 8 8 8 8 8 8 8 8 8 8 8 8
1270 4

Using the Raleigh distribution together with the referred

C. Wind System
turbine (table IV) and taking into account that the Portuguese
Being the proposed system to be implemented in an urban legislation refers that the price of 1 kWh of wind energy
environment, it is important to choose an adequate micro wind corresponds to 70% of the price of 1kWh provided by
system considering restrictions related with the urban photovoltaic systems, the income of the described wind
architecture (tower dimensions, views, etc). system is 1266 €/year [1].
Anyway, it was assumed that the wind distribution for the
house location can be fully used. III. ECONOMIC ANALYSIS
Based on the Raleigh distribution, it is possible for such
In table V the economic analysis of this Project, assuming
wind turbine to estimate the energy produced knowing:
20 years of life time for this project, is presented.
- the turbine power (Pt) as function of the wind speed
(vw);
TABLE IV
- the wind speed distribution of the chosen local and WIND ENERGY PRODUCTION (RALEIGH DISTRIBUTION)
wind occurrence in hours/year; and (Pi-
vw (m/s) F(vw) h/year Pi Energy (Wh)
- the average wind speed (vw_av). 1+Pi)/2
0 0.0000000000 200 0 0 0.00
In figure 3 it is represented the characteristic Pt = f(vw)
1 0.0309121396 300 0 0 0.00
based on the “whisper-200” turbine [10].
The wind average speed for the considered location using 2 0.1180324367 800 0 0 0.00
the data for the last 20 years is 5 m/s [10]. Using the average
3 0.2461787439 950 50 25 3.20
wind speed (vw_av) and the wind speed (vw) it is possible to
calculate the Raleigh probabilistic function [10]: 4 0.3949232685 1035 150 100 14.87

5 0.5438802982 1035 200 175 26.07

2
⎛
π⎜
⎞vw 6 1030 310
− ⎟ 0.6770959310 420 41.30
4⎜ v ⎟ 7 0.7853185548 900 500 460 49.78
w _ av ⎠
F (v w ) = 1 − e ⎝ (1)
8 0.8659577191 748 750 625 50.40

Based on function (1), the estimation of the annual wind 9 0.9214012906 578 810 780 43.25
energy production is done using the following expression: 10 0.9567172021 420 980 895 31.61

11 0.9776158017 290 990 985 20.59

N (P + P )
E year = 8760 ∑ [F (vi ) − F (vi −1)] i −1 i (2) 12 0.9891283848 187
102
1005 11.57
i =1 2 0
101
13 0.9950412421 116 0
1015 6.00
Where Pi is the average output power at the instant i, Pi-1 is 14 0.9978758849 70
100
1005 2.85
0
the average output power at the instant i-1, vi the wind speed
15 0.9991455051 38 960 980 1.24
at the instant i, vi-1 is the wind speed at the instant i-1 and N is
the number of periods used. 16 0.9996771749 22 930 945 0.50

17 0.9998854616 10 910 920 0.19

18 0.9999618353 5 890 900 0.07

19 0.9999880574 2 850 870 0.02

20 0.9999964904 1 800 825 0.01

21 0.9999990314 0.9 750 775 0.00

22 0.9999997489 0.6 700 725 0.00

23 0.9999999389 0.5 650 675 0.00

24 0.9999999860 0.4 600 625 0.00

25 0.9999999970 0.3 0 300 0.00

26 0.9999999994 0.2 0 0 0.00

TOTAL 303.5
Fig. 3. Characteristic Pt = f(vw).
1270 5

In this analysis was considered: an initial investment of of the investment as maintenance expenses.
17344 €; a constant income due to the wind energy production As it can be observed in Table V, the pay-back is reached in
of 1266 €/year; and the income due to the photovoltaic system, 6 years (optimistic scenario), which corresponds to an internal
1836 €/year. It was also considered expenses due to energy rate return (IRR) of 21.74 %. Under the same conditions, a
consumption of 173 €/year. growing rate of 7%/year and a period of 20 years, the net
The performed analysis considers 7% of annual growing for present value (NPV) of this project is 32299 €.
the energy consumed and for the energy produced and that 1%
TABLE V
ECONOMIC ANALYSIS (20 YEARS) – ALGARVE – 14 PV MODULES (INCLINATION = 30º)
Year 0 1 2 3 4 5 6 7 8 9 10

Power saves (Fuel+Electric energy sold) 2923 3127.3 3346.2 3580.5 3831.1 4099.3 4386.2 4693.2 5021.8 5373.3

M&D (year rate: 1% ) -143 -150.1 -157.6 -165.5 -173.8 -182.5 -191.6 -201.2 -211.2 -221.8

Investment -17344.3

Cash-flow -17344.3 2749 2945.2 3155.0 3379.7 3620.3 3877.9 4153.8 4449.2 4765.5 5104.2

Pay-back -17344.3 -14595 -11649.8 -8494.8 -5115.2 -1494.9 2383.0 6536.8 10986.0 15751.5 20855.8

IRR (20 years) 21.74% -12.28% -2.81% 3.59% 8.07% 11.31% 13.71% 15.52%

NPV (7% rate) € 32 299 €

Year 11 12 13 14 15 16 17 18 19 20

Power saves (Fuel+Electric energy sold) 5749.4 6151.9 6582.5 7043.3 7536.3 8063.9 8628.3 9232.3 9878.6 10570.1

M&D (year rate: 1% ) -232.9 -244.5 -256.7 -269.6 -283.1 -297.2 -312.1 -327.7 -344.1 -361.3

Investment

Cash-flow 5466.9 5855.2 6271.0 6716.2 7192.9 7703.3 8249.7 8834.8 9461.2 10131.8

Pay-back 26322.7 32177.9 38449.0 45165.2 52358.1 60061.4 68311.2 77146.0 86607.2 96739.0

IRR (20 years) 16.92% 18.01% 18.88% 19.57% 20.13% 20.59% 20.96% 21.27% 21.53% 21.74%

the wind generator and the batteries.

IV. CONCLUSION
In this paper are presented the economic aspects related
with the implementation of a domestic micro generation.
The performed analysis demonstrates that these types of
systems can be attractive contributing to spread the use of
renewable energies in domestic and urban environments.
Anyway, the implementation of such systems depends, most
of the times, on the individual attitude and on the
implementation of policies and governmental incentives
promoting energy saves.
For other hand, the equipment and products adequate to
implement the renewable energies policies and the referred
ideas should be more efficient and less expensive. In general,
Governments should implement policies benefiting the
renewable energies.
Anyway, in remote and isolated places, the investment in
renewable energies is an excellent choice. If the system is
installed near a suburban area (near to the electrical grid), the
best economical choice is to sell energy.
About the system proposed it is important to note that the
system should be versatile allowing to be connected or not to
the AC grid, to supply AC loads or DC loads, to store energy
and to generate energy managing the photovoltaic modules,
As final remark, it is important to point out that the analysis
performed show clearly that the self power generation using
photovoltaic modules and wind generators installed in an
urban house can contribute to decrease the power consumption
provided by the ordinary AC grids. Furthermore, if the
installed system has the ability and permission to inject power
in the AC grids (fulfilling the legal issues) it can constitute an
important contribution to decrease the oil dependency from
other countries, as in the case of Portugal.
REFERENCES
[1] Portuguese Legislation: Ministério da Economia e da Inovação, Decreto-
Lei n.º 363/2007de 2 de Novembro de 2007.
[2] Saifur Rahman and B. H. Chowdhury, “Simulation of Photovoltaic
Power System and their Pergormance Prediction”, IEEE Transactions on
Energy Conversion, Vol. 3, No. 3, September 1988.
[3] Y. Nozaki, K. Akiyama, H. Kawaguchi and K. Kurokawa, “An
improved method for controlling an EDLC-battery hybrid stand-alone
photovoltaic power system”, APEC 2000, Fifteenth Annual IEEE
Applied Power Electronics Conference and Exposition, Volume 2, pp.
781 – 786, 2000.
[4] Pablo Sanchis, Jesús López, Alfredo Ursúa and Luis Marroyo,
“Electronic Controlled Device for the Analysis and Design of
Photovoltaic Systems”, IEEE Power Electronics Letters, Vol. 3, No. 2,
June 2005.
1270
[5] Chang Ying-Pin and Shen Chung-Huang, “Effects of the Solar Module
Installing Angles on the Output Power”, CEMI '07, 8th International
Conference on Electronic Measurement and Instruments, 2007.
[6] Yaow-Ming Chen, Chien-Hsing Lee and Hsu-Chin Wu, “Calculation of
the optimum installation angle for fixed solar-cell panels based on the
genetic algorithm and the Simulated-annealing method”, IEEE
Transaction on Energy Conversion, Volume 20, Issue 2, pp. 467 – 473,
June 2005.
[7] Y. Ueda, K. Kurokawa, T. Tanabe, K. Kitamura and H. Sugihara,
“Analysis Results of Output Power Loss Due to the Grid Voltage Rise in
Grid-Connected Photovoltaic Power Generation Systems”, IEEE
Transactions on Industrial Electronics, Volume 55, Issue 7, pp. 2744-
2751, July 2008.
[8] N. Fontes, A. Roque and J. Maia, “Micro Generation – Solar and Wind
Hybrid System”, EEM 08 – European Electricity Market, Lisboa, May
2008.
[9] M. CarlosTobajas Vázquez, “Energia Solar Fotovoltaica2, Cano Pina.
Sl. 2005.
[10] António Creus Sole, “Energías Renovables”, Cano Pina. Sl. 2004.
[11] (online source) http://re.jrc.ec.europa.eu/pvgis/apps3/pvest.php
[12] N.M. Pearsall, M. Munzinger, F. J. Crick and KK.M. Hynes, “The UK
domestic photovoltaic systems field trial-analysis of design and
performance”, Proceedings of 3rd World Conference on Photovoltaic
Energy Conversion, Vol.3, pp. 2198 – 2201, 2003.
[13] Li-Shiang Lai, Wen-Chieh Hou, Ya-Tsung Feng and Yu-An Chen,
“Novel grid-connected photovoltaic generation system”, DRPT 2008.
Third International Conference on Electric Utility Deregulation and
Restructuring and Power Technologies, pp. 2536 – 2541, 2008.
[14] D. Das, . Esmaili, L. Xu, L. and D. Nichols, “An optimal design of a
grid connected hybrid wind/photovoltaic/fuel cell system for distributed
energy production”, IECON 2005, 31st Annual Conference of IEEE
Industrial Electronics Society, 2005.
[15] Wang Jianqiang and Li Jingxin, “Design and experience of grid-
connecting photovoltaic power system”, ICSET 2008, IEEE
International Conference on Sustainable Energy Technologies, pp. 607-
610, 2008.
[16] D. Infield and F. Li, “Integrating micro-generation into distribution
systems — a review of recent research”, IEEE Power and Energy
Society General Meeting - Conversion and Delivery of Electrical Energy
in the 21st Century, 2008.
6
António E. V. Roque (b. 1961) received the undergraduate (5-year) and
Master degrees in Electrical Engineering and Computer Science from the
Technical University of Lisbon (2000). Presently he is Professor at the ESTS-
IPS (1995-2008) teaching courses in Electrical Machines and Project of
Electrical Engineering. He had worked with EDP- Energies of Portugal
(1995/96) and CME - Construction and Electromechanical Maintenance.
Nuno Filipe V. A. Fontes (b. 1976) received the undergraduate (3-year) in
Electrical Engineering and Computer Science, field of Electromechanical
Engineering from the Polytechnic of Setúbal. (2007). Presently he is
Technical Engineer at Serviços Municipalizados de Água e Saneamento de
Oeiras e Amadora.
José Maia (b. 1963) received the undergraduate. Master and PhD degrees in
Electrical Engineering from the IST/Technical University of Lisbon. Presently
he is Coordinator Professor at the ESTS-IPS. Their principal interests are
Electrical Variable Speed Drives and Renewable Energies.
Cláudio Casimiro (b. 1974) graduated as Process and Energy Engineering
from Universidade de Évora. Post-graduated in Economical Sciences and is
MBA from Technical University of Lisbon (ISEG). He has been active in the
energy field for 10 years being project manager at the Portuguese National
Energy Agency and at the Algarve Local Energy Agency, responsible for
developing several energy audits to industrial sites. Since 2003 until 2007 he
was Project Manager at APVE – Portuguese Electric Vehicle Association.
There, his activity included the organization of conferences and events and the
coordination of research and demonstration projects in the transportation
sector. Actually he is Project Manager at CEEETA-ECO Energy Consultants.
Duarte M. Sousa (b. 1970. Viana do Castelo. Portugal) received the
Dipl.Ing.. M.S. and Ph.D. degrees from the Instituto Superior Técnico,
Technical University of Lisbon, Portugal, in 1993, 1996 and 2003,
respectively, all in Electrical and Computer Engineering. In 1993, he joined
the Technical University of Lisbon where since 2003 he has been an Assistant
Professor.