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Economic Assessment of Photovoltaic Water Pumping Integration with Dairy Milk Production
KTH, School of Engineering Sciences in Chemistry, Biotechnology and Health (CBH).ORCID iD: 0000-0001-9129-7265
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(English)Manuscript (preprint) (Other academic)
Abstract [en]

As dairy consumption grows, domestic dairy farms face challenges in reducing the cost of feeds and the production of high-quality milk for market demands. This paper aims to introduce and integrate solar energy into the milk production chain to investigate its economic performance. By collecting data on milk production processes from 11 dairy farms in China, we quantified electricity usage and costs of milk production to identify the best and worst cases. Crop yields response to the water demand and the electricity requirements of the dairy farms were considered. The study simulated scenarios of self-sufficiency at 20%, 80%, and 100%, in the identified farms by integrating a photovoltaic water pumping (PVWP) system to provide both power and water for alfalfa and other feeds’ irrigation and subsequent milk production. We evaluated annual discounted cost, revenue and net profit under each scenario and case. The results showed that a dairy farm with an integrated PVWP system and self-sufficient feeds would lead to value add-ins, such as electricity saving with solar energy generation, economic cost saving of crops, and CO2 emission reduction. The analysis on return on investment (ROI) and internal rate of return (IRR) revealed that not all the self-sufficient feeds can bring positive marginal profit. Among the investigated scenarios and cases, the dairy farm marked out by the highest ROI with 3.12 and IRR with 20.4%, was the farm where the integrated PVWP system was used to reach 20% self-sufficiency (self-production of only alfalfa). The other scenarios and cases with higher levels of self-sufficiency showed lower ROIs and IRRs. This indicates that high self-production levels of feeds decrease the total profit due to high investment cost. Sensitivity analyses of crop price and operational cost were conducted for ROI with single and double factor approaches. Scale and production of feeds proportions should be carefully considered in improving the economic performance of dairy milk production. 

Keywords [en]
Photovoltaic Water Pumping, Solar Power, Economic Assessment, Milk Productivity, China
National Category
Engineering and Technology
Identifiers
URN: urn:nbn:se:kth:diva-235953OAI: oai:DiVA.org:kth-235953DiVA, id: diva2:1254939
Note

QC 20181011

Available from: 2018-10-10 Created: 2018-10-10 Last updated: 2018-10-11Bibliographically approved
In thesis
1. Sustainable Business Innovation of Photovoltaic Water Pumping Systems
Open this publication in new window or tab >>Sustainable Business Innovation of Photovoltaic Water Pumping Systems
2018 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The development of renewable energy technology provides an effective approach to replace fossil fuels for greenhouse gas (GHG) emission. Technological innovation and transfer are the main driving forces in promoting renewable energy usage, because of the better efficiency and economic payback under an emission reduction target. With three of the mechanisms of emission trading originating from the Kyoto Protocol, the most wildly accepted and important mechanism between developed and developing countries is the Clean Development Mechanism (CDM). The CDM has been implemented contributing the most of the trading carbon credits. In this study, by extracting and building an exclusive database of issued Chinese CDM projects, a modified multivariable logistic regression model for technology transfer’s correlation test with 11 extended indicators was investigated for the first time. Renewable energy projects were analyzed with certified emission reduction (CER) sizes, economic development, and geographic scopes.In addition, technological innovation should also be enhanced with new business developments to demonstrate and scale up technologies for better economic and environmental performances. This doctoral thesis studied photovoltaic water pumping (PVWP) technology as a technological solution for integration with the new business model for development and co-benefits. The integration of PVWP with water saving irrigation techniques and sustainable management of water resources, leads to technical innovations, economic benefits, and climate benefits. Field measurements at a pilot PVWP system in Inner Mongolia were conducted with detailed economic performance analyses. Different scenarios for PVWP systems considering variant market incentives were proposed with internal rate of return (IRR), and discounted payback period analyses to develop a new business model approach for implementing PVWP systems with multi-value propositions. The environmental externalities were successfully addressed by evaluating the CO2 emission reduction credits. The economic assessment of feasible and optimal production processes for implementing PVWP systems in dairy milk production was conducted with self-supplied energy and forage assumptions. In comparison with other financing mechanisms, discrete choice model analyses were employed with interviews and costumer behavior surveys to explore the willingness to purchase through crowd funding mechanisms in financing integrated PVWP systems.The results showed that emission reduction mechanisms, such as CDM, have promoted the renewable energy development in China with the national incentives at an entrance level. Yet, the limited sizes and lower income from CERs of renewable energy projects than other projects, required renewable energy projects to develop more advanced technological innovations and business model innovations.  The PVWP systems represent the better technical and economic solutions under a feasible innovated business model in comparison with traditional photovoltaic (PV) systems and current PV business models. The dairy farms with integrated PVWP systems and self-sufficient feeds could improve their investment performance through extra energy saving and CO2 emission reductions. The semi-structured interviews and customer surveys’ results showed that customers can tolerate high prices, and are willing to crowd-fund nutritious and secure cow milk with environmental compensation characters. The results from the PVWP technology integration in China as a specific PV application study can be further applied for the business model of innovation of renewable energy systems in other regions of the world under emission reduction targets leading to economic and environmental benefits.

Place, publisher, year, edition, pages
KTH Royal Institute of Technology, 2018. p. 59
Series
TRITA-CBH-FOU ; 2018:47
Keywords
PV water pumping, Economic assessment, Ecological benefits, Business model innovation, Case study
National Category
Other Chemical Engineering
Research subject
Chemical Engineering
Identifiers
urn:nbn:se:kth:diva-235816 (URN)978-91-7729-972-1 (ISBN)
Public defence
2018-11-01, Kollegiesalen, KTH Campus, Brinellvägen 8, Stockholm, Stockholm, 10:00 (English)
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Supervisors
Note

QC 20181010

Available from: 2018-10-11 Created: 2018-10-10 Last updated: 2018-10-22Bibliographically approved

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Zhang, ChiYan, Jinyue

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