Technical-economic analysis of the implementation of a microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador

Abstract

The integration of renewable energy technologies and the consequent reduction in investment costs has led to an increase in the use of distributed energy resources (DER), which has allowed the deployment of more and more microgrids. Despite the many benefits that can be derived from microgrids, they still face many barriers to participating in the electricity industry compared to traditional grids. This paper proposes to address the implications of installing renewable energy in the parish 5 de Agosto, Stone Mine Sector of the city of Esmeraldas, through a technical-economic analysis of the implementation of a microgrid using the HOMER network software. The analysis shows that implementing a microgrid for renewable energy production significantly reduces total costs, unit energy costs and carbon dioxide emissions over the entire project life cycle. Finally, it is concluded that the photovoltaic matrix produces 82.3%, wind turbines 15.3% and the contribution from the grid is 2.45% of the total energy, respectively. The percentage of renewable energies in the system is 100%.

Full text

International Journal of Physical Sciences and Engineering
Available online at www.sciencescholar.us
Vol. 6 No. 3, December 2022, pages: 91-108
e-ISSN : 2550-6943, p-ISSN : 2550-6951
https://doi.org/10.53730/ijpse.v6n3.13783
91
Technical-Economic Analysis of the Implementation of a
Microgrid with Integration of Renewable Energies in the
Esmeraldas Canton, Ecuador
Byron Fernando Chere-Quiñónez a, Alejandro Javier Martínez-Peralta b, Jorge Daniel Mercado-
Bautistac
Manuscript submitted: 27 October 2022, Manuscript revised: 18 November 2022, Accepted for publication: 09 December 2022
Corresponding Author a
Abstract
The integration of renewable energy technologies and the consequent
reduction in investment costs has led to an increase in the use of distributed
energy resources (DER), which has allowed the deployment of more and more
microgrids. Despite the many benefits that can be derived from microgrids,
they still face many barriers to participating in the electricity industry
compared to traditional grids. This paper proposes to address the implications
of installing renewable energy in the parish 5 de Agosto, Stone Mine Sector of
the city of Esmeraldas, through a technical-economic analysis of the
implementation of a microgrid using the HOMER network software. The
analysis shows that implementing a microgrid for renewable energy
production significantly reduces total costs, unit energy costs and carbon
dioxide emissions over the entire project life cycle. Finally, it is concluded that
the photovoltaic matrix produces 82.3%, wind turbines 15.3% and the
contribution from the grid is 2.45% of the total energy, respectively. The
percentage of renewable energies in the system is 100%.
Keywords
distributed generation;
renewable energies;
implementation;
microgrid;
technical-economic;
International Journal of Physical Sciences and Engineering © 2022.
This is an open access article under the CC BY-NC-ND license
(https://creativecommons.org/licenses/by-nc-nd/4.0/).
Contents
Abstract ........................................................................................................................................................................................................ 91
1 Introduction ........................................................................................................................................................................................ 92
2 Materials and Methods ................................................................................................................................................................... 94
3 Results ................................................................................................................................................................................................... 102
a
Universidad Técnica Luis Vargas Torres de Esmeraldas, Ecuador
b
Universidad Técnica de Manabí, Portoviejo, Ecuador
c
Universidad Técnica de Manabí, Portoviejo, Ecuador

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4 Conclusion ............................................................................................................................................................................................ 105
References ............................................................................................................................................................................................ 107
Biography of Authors ...................................................................................................................................................................... 108
1 Introduction
Energy has become one of the pillars that support the development of today's society, so its availability and
good use are already a key piece in determining the success or failure of world economies. Much to the
chagrin of the Western world, the years of cheap and seemingly infinite energy that occurred for much of the
twentieth century are definitely behind us. The new twenty-first century has given way to an era in which the
proven reserves of oil and natural gas have stopped increasing year by year and the horizon of 2050 for the
first of these products and 2075 for the second, is already seen as a real possibility for the total depletion of
this type of resources. Given this circumstance, in the development of the content the reader will be able to
visualize major axes in which the actions in energy matters in relation to Distributed Generation for the
coming years must be framed, these being the following: a) Adapt the offer of energy products to the coverage
of needs, improving the reliability of the electricity supply, gas and hydrocarbons; (b) Promoting energy
generated from renewable and environmentally friendly sources by doubling its contribution to the regional
energy balance; c) Improve the efficiency of use of energy products, promoting savings in their use through
the proposal of measures, both horizontal and of direct sectoral impact, reducing energy consumption in the
year; and d) Minimize the environmental impact of our energy consumption, contributing to the reduction of
energy CO2 emissions, reducing emissions from energy consumption in the year. Countries in the region and
the world have produced a significant increase in the number of GD installations. With this, new requirements
have arisen in the Distribution Systems: the increase or reduction of losses, the need to strengthen the
capacity of lines and substations (transformation centers) to give space to the new power flows injected by
the GD or vice versa, it could be necessary to reduce the volume of investments in repowering the networks
(generating at points close to demand reduces energy flows). The connection of these generators at the lowest
levels of the hierarchical scheme alters this scheme, posing a series of problems of a technical and regulatory
nature (Lopes et al., 2007; Ackermann et al., 2001).
In the case of Ecuador, GD is considered in the energy planning of this country and in this sense the
provision of energy is guaranteed in the constitution, giving way to the creation of a regulatory framework
that favors the establishment of policies that guarantee sustainability in energy matters, which is why the
importance of work. GD can serve many purposes, but the most important are energy self-sufficiency and
selling power to the grid as any other generator would, this is rapidly gaining acceptance in Latin America,
and several countries are adopting new regulations to allow small generators to connect directly to the
distribution grid and sell their surplus energy to the grid. In countries where GD was already allowed in some
form, regulators are looking to improve the framework to stimulate growth in a sector that increases
renewable capacity with an extremely low environmental impact, such as the Dominican Republic, Peru,
Panama and Colombia (Dincer, 2000; Akella et al., 2009).
The current regulations in most Latin American countries and particularly in Ecuador do not have the
maturity and above all the legal, technical and economic elements that incorporate tariffs and measures that
allow access with preferential costs or eventually have rules for the free use of networks for the injection of
new generation. Even in countries that have carried out previous studies, there are no uniform criteria for the
interconnection of GD, it is a model that requires a lot of openness in the negotiation of the parties so that the
benefits are achieved in both directions. During this work, we seek to establish the possible adverse effects
encountered by GD and identify the challenges to be overcome and obstacles of regulation for the adoption of
the configuration of the distribution network.
In this context of distributed generation and microgrid, this article proposes to carry out a technical-
economic analysis of the installation of renewable generation sources, such as photovoltaics, combined with
storage, integrated into a low voltage network. These sources would serve as an alternative for energy
consumption, foreseeing a reduction in costs with the payment of the electricity rate in an electrical
installation of the Parish 5 de Agosto Sector Mina de Piedra in the city of Esmeraldas. For this, a simulation
will be carried out using the Hybrid Optimization Model of Electric Renewable Energies (HOMER Grid), which
will detail the most appropriate configuration to assemble to achieve the best alternative.

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Chere-Quiñónez, B. F., Martínez-Peralta, A. J., & Mercado-Bautista, J. D. (2022). Technical-economic analysis of the implementation of a
microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador. International Journal of Physical Sciences and
Engineering, 6(3), 91–108. https://doi.org/10.53730/ijpse.v6n3.13783
93
Microgrid - concept, features and purpose
There are several contributions in the literature that define the concept of microgrids. Authors such as
Karystinos et al. (2022), mention that in a microgrid is a possible example of a future energy system consisting
of small types of modules (microturbines, fuel cells, solar systems, etc.) that control identifiable loads. These
systems can be networked together or operate in isolation when disconnected from the network. Figure 1
shows some energy sources such as wind power, energy storage, bioenergy, microturbines, photovoltaics and
fuel cells that form a microgrid connected to the grid through a common connection point (CCP).
Figure 1. Basic structure of a microgrid
In recent years, problems such as environmental pollution and air quality, which are closely related to the
extensive use of fossil fuels, have become increasingly relevant (Gandhi & Gupta, 2021). Therefore, to
proactively address these challenges, steps must be taken to diversify the energy matrix and transform it into
one with lower emissions. The diversification of the energy matrix refers to the installation of less polluting
and highly energy-efficient distributed energy resources (DER). Compared to centralized power generation, it
reduces the cost of using and operating transmission and distribution infrastructure. in addition to reducing
losses in the transmission line (Gandhi & Gupta, 2021).
The application of new technologies, mainly the development of power electronics interfaces and modern
control theory, has highlighted the concept of microgrids. A microgrid is small-scale, independent and
decentralized, uses advanced energy technologies, including gas turbines, wind power, solar power, fuel cells,
energy storage devices, etc., and is close to users. For large grids, a microgrid can be considered a controllable
power supply unit that can operate in seconds to meet the needs of the external transmission and distribution
network (Gandhi & Gupta, 2021). Table 1 summarizes the characteristics of the different DERs, their
advantages and disadvantages. According to the aforementioned characteristics and the arrangement shown
in Figure 1, it can be concluded that the microgrid, due to its flexibility and resource allocation, can guarantee
the supply of energy to important loads when the grid is not available.
Table 1
Comparison between distributed energy resources
N°
Technology
Energy
matrix
Output
Type
Advantages
Disadvantages
1
Engines
Diesel or
gasoline
CA
Low cost.
High efficiency.
Ability to use multiple inputs.
Emission of greenhouse gases.
2
Gas turbine
Diesel or
gasoline
CA
High efficiency using CHP.
Ecologically correct.
Good cost-benefit ratio
High power for small
consumers
3
Wind
Wind
CA
Uninterrupted generation.
Still at a high cost.

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Technology developed from
renewable sources.
Storage required.
4
Geological
thermal
Hot water
CA
Excellent environmental
relationship.
Low operating cost.
Too big for small consumers.
5
Photovoltaic
system
Sun
CC
Emission-free.
Useful for various applications.
High installation cost.
Storage required.
6
Small
hydroelectric
generation
Water
CA
Good economic and ecological
relationship.
Low relative future cost and
maintenance.
Useful for times of peak demand
and excess energy.
Requires appropriate
characteristics of the
installation region.
Difficult expansion.
After connecting to the Internet, the use of energy is further improved, as it eliminates the transmission and
distribution of electricity, improves the quality of power and the reliability of the energy system, and acts as
an alternative solution to energy supply problems in remote regions, which relate to society in these areas for
further economic development. In a microgrid, maintaining a balance between electricity supply and demand
is critical for stability, as generation from intermittent sources, such as solar panels and wind turbines, is
difficult to predict and can vary widely depending on source availability. (Solar radiation and wind energy
resources). The problem of balancing supply and demand becomes even more important when the microgrid
operates in autonomous mode, where only limited supply is available to balance demand (Fele, 2017).
2 Materials and Methods
The objective of this section is to provide information on the production of energy from renewable sources
and the integration of storage systems for grid connection. The analysis was performed using the HOMER Grid
software, taking into account some technical-economic measures. The technical-economic evaluation of
electrical systems can be performed using commercial simulation tools, which offer alternatives to complex
methods such as complex algorithms and lengthy physical experiments, which are expensive. Currently,
several software is available to design, optimize and model renewable energy systems (REA), mainly for
technical and economic evaluation (Maskin & Sjöström, 2002; Lieder & Rashid, 2016).
Economic indicators
The two main economic elements, which are the current total network cost (NPC) and the levelized cost of
energy (COE), depend on the total annualized cost of the system. Because of this, the user needs to calculate
annualized system costs, which correspond to the annual cost of components minus any miscellaneous costs
(Hafez & Bhattacharya, 2012). To calculate the total net current cost, the following equation is used:
 
󰇛 󰇜
(1)
Where:
Cann,tot is the total annual cost,
i is the real interest rate year (discount rate),
N the number of years,
CRF (i, N) the capital recovery factor, calculated according to Equation (2).
󰇛󰇜  󰇛  󰇜
󰇛󰇜
(2)

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Chere-Quiñónez, B. F., Martínez-Peralta, A. J., & Mercado-Bautista, J. D. (2022). Technical-economic analysis of the implementation of a
microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador. International Journal of Physical Sciences and
Engineering, 6(3), 91–108. https://doi.org/10.53730/ijpse.v6n3.13783
95
In addition, the actual annual interest rate can be determined as follows:
    

(3)
Where:
f is the inflation rate,
i′ is the nominal interest rate and
i represents the annual real interest rate.
Another variable considered is the levelized cost of energy calculated through Equation 4.
HOMER Grid defines levelized cost of energy (COE) as the average cost per kWh of useful electrical
energy produced by the system. To calculate the COE, such software divides the annualized cost of
producing electricity (the total annualized cost minus the cost of serving the thermal load) by the
total electrical load served, using the following equation:
  
  
(4)
Where:
Eprim → The electrical energy that the microgrid supplies to the essential loads,
Edef →The electrical energy that the microgrid supplies to non-essential loads and
Egrid→Salts the amount of electrical energy sold to the grid.
In the levelized cost of energy equation (5), the total annualized cost is divided by the electrical load
the microgrid serves. In the cost-leveled energy equation, the amount of electricity sold to the grid
by the microgrid is added. In HOMER Grid, total net current cost is the economically preferable
element and has been used in the optimization process, not the levelized cost of energy (Farret &
Simoes, 2006). Return on investment (ROI) is the annual cost savings over the initial investment.
HOMER Grid calculates the return on investment with the following equation:
ROI 󰇛󰇜


󰇛󰇜
(5)
ROI is the average annual difference in nominal cash flows over the life of the project divided by the
difference in the capital cost of the chosen system and base systems. The internal rate of return
(IRR) is the discount rate at which the base case and the current system have the same net current
cost. HOMER Grid calculates IRR by determining the discount rate that makes the present value of
the difference of the two cash flows equal to zero.

󰇛 󰇜


(6)
Another consideration that must be made about the suitability of the project, is the verification of
the payback which is the number of years in which the accumulated cash flow of the difference
between the current system and the base case changes from negative to positive. Recovery is an
indication of how long it would take to recover the difference in investment costs between the
current system and the base case system (Shuai et al., 2016; Su & Wang, 2012).

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Proposed configuration
The power supply options available in the hybrid microgrid of the system design under
consideration are solar photovoltaics, wind power and grid. In characteristics and costs of the
components of the system are presented in the following. Figure 2 shows the desired configuration.
Figure 2. Diagram of a microgrid with integration of renewable energies.
Source: HOMER PRO
The use of wind energy was thought to give security and stability in the network, since it is an
installation for several homes, which operates daily, and for its use (Benedicto et al., 2017; Tricase &
Lombardi, 2009).
Load forecasting
In order to obtain information on the typical load and energy use for the Stone Mine sector in the
city of Esmeraldas, it is planned to perform a load calculation for the area. In this study, the 5 de
Agosto Parish was chosen as a contextual analysis. It is estimated that the area has 85 homes and 15
commercial premises. Burden estimation was assisted by an overview conducted through meetings
and surveys. With regard to the choice of the size of the test, the interval evaluation rule has been
used. Equation (7) is used to determine the sample magnitude:
ss= 󰇛󰇜

(7)
Where:
ss → Sample size;
z → Z-score for the confidence level selected from the z-score table;
P →Standard deviation;
C →Chosen confidence interval.
The new sample size needed is calculated using equation (8):
= 


(8)
Where:
󰆟ss󰆠_new→New sample size;
ss →Sample size calculated from equation (7);

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Chere-Quiñónez, B. F., Martínez-Peralta, A. J., & Mercado-Bautista, J. D. (2022). Technical-economic analysis of the implementation of a
microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador. International Journal of Physical Sciences and
Engineering, 6(3), 91–108. https://doi.org/10.53730/ijpse.v6n3.13783
97
P_op→ The population considered in the study.
Load assessment
For the survey, all stores were chosen and, as the total number of houses is less than 100 (first rule
of thumb in the sample), all houses were considered to make a more accurate load estimate. The
necessary information was obtained from shop owners and house dwellers about their current
energy sources and appliances. The total load demand used and its consumption (energy) were
calculated as follows:
Total load (W) =Rated power (W) x Quantity, y
Total Energy (Wh) =Total Charge (W) x Hours of Use
To calculate the average load per dwelling and store, the following equation is applied:
󰇛󰇜  󰇛󰇜

(9)
Where:
 → Total load demand;
 →Total number of houses
To calculate the average electricity (energy) consumption per dwelling and store, the following
equation is applied:
󰇛󰇜  󰇛󰇜

(10)
Where:
Tot Energy → Total energy consumption;
Tot Casas → Total number of houses
Table 2 presents the estimated load demand in the study area. The maximum load demanded by
households and businesses is approximately 2.25 kW/day/household and 3.53 kW/day/commerce.
Table 2
Estimated load demand in the study area
Type of cargo
Per unit (kW)
Quantity
Total Cargo (kW)
Home
2.25
85
191.25
Shops
3,53
15
52.95
Total
244.2
Table 3 presents the estimates of energy consumption in the study area. The maximum energy
consumption of households and stores is approximately 8,968 kWh/day/household and
approximately 10.75 kWh/day/store.

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Table 3
Estimates of energy consumption in the study area.
Type of cargo
Per unit (kW)
Quantity
Total
Consumption
(kW)
Home
8.968
85
739.33
Shops
10.75
15
161.25
Total
900.58
Implementation of the system
Geographical location of the site and climate database
The latitude and longitude coordinates of the study area are 0°56.8'N and 79°39.3'W respectively.
These coordinates are needed to obtain insolation and wind speed data from the National
Aeronautics and Space Administration (NASA) surface solar website (Twaha et al., 2012).
Figure 3. Location sector las Américas Esmeralda, Ecuador (0º56.8'N, 79º39.3'W.)
Energy analysis
Load profile
Figure 4 represents the hourly daily electricity demand for household and commercial loads
obtained by the survey. The base load is 0.762 kW. The small load peaks of 0.531 kW occur between
6 and 8 in the morning and 3.37 kW and 1.964 kW from 18 to 21 hours. The maximum daily
consumption of the study area is 244.2 kW, with an average annual energy consumption of 900.58
kWh/day.

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Chere-Quiñónez, B. F., Martínez-Peralta, A. J., & Mercado-Bautista, J. D. (2022). Technical-economic analysis of the implementation of a
microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador. International Journal of Physical Sciences and
Engineering, 6(3), 91–108. https://doi.org/10.53730/ijpse.v6n3.13783
99
Figure 4. Daily load profile of the study area
Source: HOMER PRO
Solar radiation profile
Figure 5 represents the profile of the solar resource in the study area for approximately one year. It
can be observed that the intensity of solar energy ranges from 6,240 kWh//d to 4,702kWh//d. The
annual solar radiation scale is 5.46 kWh//d.
Figure 5. Average radiance values at the proposed site for microgrid installation
Source: HOMER PRO
Wind resource data
Figures 6 and 7 represent the profile of the wind resource in the study area over a period of one
year. The average annual wind speed is 4.60 m/s.

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Figure 6. Average wind speed at the proposed site for the installation of the microgrids
Source: HOMER PRO
Figure 7. Wind speed profile
Source: HOMER PRO
System Computer Configuration
Information entered into the HOMER program includes; Size of the components considered,
acquisition cost, replacement cost, operating cost, maintenance cost and expected service life. Table
4 shows the data used.
Table 4
System components
Component
Size
Capital
Cost ($)
Replace
Cost Amount ($)
O&M
cost ($)
Lifetime
Generic flat plate PV
0 - 100
kilovatios
3,000.00 by kW
3,000.00 por kW
10.00
20 years
Generic 25kW Fixed
Capacity Genset
0 - 300
kilovatios
175,000.00 by
kW
134,000.00 por
kW
5.000 by
hour
50000
operating
hours
Bergey Excel 10-R
25a 86
kilovatios
15,000.00 by
turbine
5,000.00 by
turbine
50 por
año
20 years
Photovoltaic system
In photovoltaic solar energy applications, solar radiation is transformed directly into electricity by
means of silicon solar cells that are electrically joined on a motherboard to constitute an energy

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Chere-Quiñónez, B. F., Martínez-Peralta, A. J., & Mercado-Bautista, J. D. (2022). Technical-economic analysis of the implementation of a
microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador. International Journal of Physical Sciences and
Engineering, 6(3), 91–108. https://doi.org/10.53730/ijpse.v6n3.13783
101
generating set called a solar panel or array. The energy supplied by the panel is calculated from
equation (11).
 =  * ( 
󰇜 * 󰇛󰇜
(11)
Where:
→The output power of the photovoltaic cell;
→ The rated power under reference conditions;
G→ Solar radiation (W / );
→ Solar radiation under reference conditions ( = =1000W /);
→ Cell temperature under reference conditions ( = 25  C),
→ Temperature coefficient of maximum power (= -3.7x (1 / °C)) for monocrystalline and
polycrystalline Si. The temperature of the cell is calculated using the following equation:
 =  + (0.0256 + G)
(12)
Where:
→ The ambient temperature.
The simulation program must accurately calculate the sizing of the photovoltaic system. According
to standard practice, solar panels should be sized 10-30% above consumption to ensure supply
(Madni et al., 2019; Vanek et al., 2016). The dimensions of the solar panels are 25% greater than the
load. An 80% power reduction factor and a service life of 20 years have been used. Solar panels
produce more energy if placed at an inclination equal to the latitude of the place (Madni et al., 2019;
Vanek et al., 2016). For this study, an inclination of the panels of 10.02° has been chosen.
Wind system sizing
In wind turbines, the force of the wind passes through the aerodynamic section of the blades and
the impulse that is produced causes a torsional moment that is transformed into electricity inside
the wind turbine. It is basically the conversion of wind energy into mechanical energy from the
turbine to finally generate electricity. We can say that the hourly energy generated (EWEG) by a
wind turbine of nominal power (PWEG) is determined by the following formulas (Abdel-hamed et
al., 2019; Ali et al., 2019):
 = 
(λ , β) x  x 
(13)
 (t) = x t
(14)
Where;
→Air density;
→Blade surface;
→ Wind speed in m/s;
→ Turbine coefficient of performance;
λ→ Ratio of rotor blade tip speed to wind speed;
β→ Blade pitch angle (degrees);
→ Wind turbine efficiency

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→ Generator efficiency.
For the simulation, a Bergey Excel 10-R DC wind turbine with an estimated life span of 20 years has
been used.
Economic aspect
An annual real interest rate of i = 2.86% according to (3) was calculated for a nominal interest rate
of i′ = 8% and an inflation rate of f = 5%. The appropriate value of this variable depends on the
current macroeconomic situation, the financial capacity of the executing entity and concessional
financing or other incentive policy. The Homer Grid converted the cost of capital of each component
into an annualized cost, amortizing it over the lifetime, using the real interest rate (i) (Putra et al.,
2020; Mora et al., 2018).
Economic analysis and reliable constraints
The study considered an annual interest rate of 10%, which is common in many developing
countries (Kassam, 2010); The useful life of the project was considered to be 20 years. Sensitivity
analyses evaluate the behavior of the system when certain parameters change value. Table 5 shows
the sensitivity variables considered in this study.
Table 5
Sensitivity variables
Sensitivity variables
Values
Price of diesel (US$/L)
1.29, 2.26, 3.40
Maximum annual supply capacity (%)
5, 6, 8
Average annual wind speed (m/s)
3.637, 4.994, 5.228
Average annual solar radiation (kWh//d)
4.70, 5.46, 6.43
3 Optimization Results
The HOMER software performs a simulation of all combined system configurations in the search
space and classifies viable ones based on net present value (NPV). That is, they are ordered
downstream from the most profitable to the least profitable, as shown in Figure 8. The optimal
system consists of one of the solar panels with a total of 1620KW, wind turbines of 540KW. The net
present value (NPV) of the system is $559,864 and the value of energy (COE) is $0.0278/kWh.

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Chere-Quiñónez, B. F., Martínez-Peralta, A. J., & Mercado-Bautista, J. D. (2022). Technical-economic analysis of the implementation of a
microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador. International Journal of Physical Sciences and
Engineering, 6(3), 91–108. https://doi.org/10.53730/ijpse.v6n3.13783
103
Figure 8. The overall optimization results from HOMER
Source: HOMER PRO
Analysis of electricity production
Figure 9 shows the contribution of electricity production from various sources in the hybrid system.
The photovoltaic matrix produces 82.3%, wind turbines 15.3% and the contribution from the grid is
2.45% of the total energy, respectively. The percentage of renewable energies in the system is
100%.
Figure 9. Contribution of various sources of electrical energy to the hybrid system.
Source: HOMER PRO
Economic metrics
Table 6 of Economic Metrics shows economic measures that represent the value of the difference
between the two systems.
1. Internal rate of return (IRR or IRR) is the discount rate at which the base case and the current
system have the same current net cost. HOMER calculates the IRR by determining the
discount rate that makes the present value of the difference of the two cash flow sequences
equal to zero.

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2. Return on investment (ROI) is the annual cost savings relative to the initial investment. ROI is
the average annual difference in nominal cash flows over the life of the project divided by the
difference in cost of capital.
3. Simple investment payback is the number of years in which the cumulative cash flow of the
difference between the current system and the base case system goes from negative to
positive. The return on investment is an indication of the time it would take to recover the
difference in investment costs between the current system and the base case system.
Table 6
Economic metrics
Source: HOMER PRO
Cost summary
The cost summary shows a cost comparison between the Base Case and the lowest cost/winning
system.
1. The Initial Capital is the total installed cost of the system at the beginning of the project.
2. Operating Cost is the annualized value of all costs and revenues other than initial capital costs.
3. The Cost of Energy (COE) is defined in HOMER as the average cost per kWh of useful electrical
energy produced by the system.
Table 7
Cost summary
Source: HOMER PRO
Economic comparison in simulation results
Figure 10 compares the profitability of the two systems based on the summary of cash flow
obtained with the HOMER simulation software. The hybrid PV system has been considered the base
case for comparison with the current system, which is the hybrid PV/wind system. The simulation
results have shown that the capital cost of the current system, although high compared to the base
case, has a minimum net current cost (NPV) and a minimum operating and maintenance value.

IJPSE e-ISSN: 2550-6943  p-ISSN: 2550-6951
Chere-Quiñónez, B. F., Martínez-Peralta, A. J., & Mercado-Bautista, J. D. (2022). Technical-economic analysis of the implementation of a
microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador. International Journal of Physical Sciences and
Engineering, 6(3), 91–108. https://doi.org/10.53730/ijpse.v6n3.13783
105
While in the base case, the initial capital cost is low, but the operating and maintenance costs are
very high. This means that the current system is more cost-effective in the long run than the base
case.
Figure 10. Economic comparison of the base system and the current system.
Source: HOMER PRO
Environmental impact analysis
The HOMER simulation software allows an analysis of the environmental impact generating the
amount of GHG (in kg/year) emitted by the modelled system. In this study, the amount of GHG
emitted by the hybrid PV/wind system was compared to determine which system was more
environmentally friendly. Table 8 clearly indicates that the hybrid solar/wind system significantly
reduces the amount of GHG emissions.
Table 8
Annual greenhouse gas emissions
Quantity
Value (kg/year)
Carbon dioxide
57.287
Carbon monoxide
0
Unburned hydrocarbons
0
Particles
0
Sulphur dioxide
248
Óxido de nitrógeno
121
4 Conclusion
This paper briefly explains the use or application of renewable energies in microgrids, where electricity
production and its integration with traditional energy systems are presented. The microgrid has the
characteristics of flexible programming, good stability of the electrical system and independent operation, in
addition it can be isolated and has high reliability for nearby loads. On the other hand, it is still necessary to
improve the current regulatory conditions to guarantee the safe and sustainable operation of microgrids,
mainly to promote such applications and commercialize hybrid systems, in terms of financing and exemptions,
to improve commercial relations between customers and suppliers. Microgrids can be a good alternative to
reduce electricity costs and should be evaluated in advance to ensure project reliability. The optimal system

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106
consists of one of the solar panels with a total of 1620KW, wind turbines of 540KW. The net present value
(NPV) of the system is $559,864 and the value of energy (COE) is $0.0278/kWh.
The photovoltaic matrix produces 82.3%, wind turbines 15.3% and the contribution from the grid is 2.45%
of the total energy, respectively. The percentage of renewable energies in the system is 100%. The capital cost
of the current system, although high compared to the base case, has been shown to have a net current cost
(NPV) and minimal operating and maintenance value. While in the base case, the initial capital cost is low, but
the operating and maintenance costs are very high. This means that the current system is more cost-effective
in the long run than the base case.

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Chere-Quiñónez, B. F., Martínez-Peralta, A. J., & Mercado-Bautista, J. D. (2022). Technical-economic analysis of the implementation of a
microgrid with integration of renewable energies in the Esmeraldas Canton, Ecuador. International Journal of Physical Sciences and
Engineering, 6(3), 91–108. https://doi.org/10.53730/ijpse.v6n3.13783
107
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Biography of Authors
Byron Fernando Chere-Quiñónez
Electrical Engineer, Master in Electricity Mention in Electrical Power Systems,
Active Accredited Researcher at the Ministry of Higher Education, Science,
Technology and Innovation No. REG- INV-22-06125. Member of Institute of
Electrical and Electronics Engineers (IEEE), Member # 98719587 Ecuador Section
Control Systems. Corresponding member of the House of Ecuadorian Culture
"Benjamín Carrión" Nucleus of Esmeraldas Science and Technology Section.
Research Professor of the Faculty of Engineering at the Luis Vargas Torres
Technical University of Esmeraldas, Ecuador, he also has several scientific
publications and participations in international congresses.
Email: byron.chere@utelvt.edu.ec
Orcid: https://orcid.org/0000-0003-1886-6147
Alejandro Javier Martínez-Peralta
Electrical Engineer, Master in Electricity Mention in Electrical Power Systems,
Specialist in Electrical Engineering, Specialist in Energy Efficiency Management,
Specialist in Power Systems, Specialist in Electric Power Distribution Systems,
trained in Training of PV Techniques professional sales of solar energy,
Corresponding member of the House of Ecuadorian Culture "Benjamín Carrión"
Nucleus of Esmeraldas Science and Technology Section, Consultant of electrical
projects in medium and low voltage.
Email: amartinez8875@utm.edu.ec
Orcid: https://orcid.org/0000-0003-1176-5001
Jorge Daniel Mercado-Bautista
Mechanical Engineer, Graduate Institute, Master in Mechanics, Energy Efficiency
Mention, Technical University of Manabí, Ecuador. Specialist in Mechanical Design
and Production with CAD-CAM-CAE applied to the Industrial Sector.
Corresponding Member of the House of Ecuadorian Culture "Benjamín Carrión"
Nucleus of Esmeraldas Science and Technology Section. President of the Rocío
Foundation.
Email: jmercado0070@utm.edu.ec
Orcid: https://orcid.org/0000-0001-6055-1670