Decision Analysis Framework for Decentralized Hybrid Renewable Energy Systems in Lebanon Under the Uncertainty of Grid Existence and Tariff Prices

Abstract

Electricity is forecasted to play a leading role in the final energy consumption of the future. Yet, many developing countries suffer from limited access to electricity and poor reliability of fragmented national grid infrastructure. In this context, a large body of research has investigated the development and optimization of household-level and microgrid off-grid and on-grid systems powered by a combination of various renewable and non-renewable electricity generation sources. Yet, from the perspective of the households and communities without access to a reliable central grid, investments in decentralized solutions happen under one major uncertainty: (i) Will the reliable central grid become available at any point in time; and if so, when will that happen? To complete the picture, two secondary uncertainties follow the first one necessarily: if the reliable central grid becomes available, what will be (ii) the price of the centralized electricity, and (iii) the feed-in tariff for purchasing the renewable electricity that is generated by decentralized agents? We develop an optimization-based decision analysis framework that addresses the decision context that such households and communities face while considering these three important uncertainties. We illustrate our methodology by applying it to a case from Lebanon: a country that witnessed a quick drop in the centralized electricity generation due to the ongoing economic crisis and the development of various distributed improvised solutions at household and community levels. We develop a deterministic model and generate different scenarios that show the effects of these uncertainties on the decision. Moreover, we propose a stochastic model and compare its results with the deterministic model to assess the value of energy policy certainty. We finally discuss practical and policy implications that are relevant to Lebanon.