Renewable energy project: Project management, challenges and risk

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Abstract

Renewable energy is one of the most popular topics in utilization of the electric energy resources. There are various types of alternative energy, which can be used as electrical energy. However, the suitableness of the green energy in a certain country is depending on some criteria such as geographical location, the availability of energy and so on. In order to establish the renewable energy, a well-planned strategy and management must be acquired. The main objective of this paper is to analyse the causal relation of some important criteria of project planning and development of a wind energy project in Malaysia. By using a system dynamic approach, it is found that government policies, investment of renewable energy, energy demand, geographical location and fund management are the most important criteria that need to be considered among others. The diagram of causal relationship with reinforcing and balancing loop shows that the application of renewable energy in Malaysia is promising. In addition, the information of the criteria relationship is further investigated by using the stock flow diagram. From the diagram, the factors that affect project’s expenditure could be analysed. This is very important to a developing country where more budgets can be allocated for other facilities, cultures, infrastructure, science, and technology development. By utilise the renewable energy in Malaysia, the carbon dioxide emission can be reduced and contribution to a sustainable and long term alternative energy resources country.

Introduction

Carbon dioxide emission is one of the causes that contributed to the global warming. According to U.S. Energy Information Administration (EIA), the total carbon dioxide emission from the energy consumption in the world is 31,780.36 million metric tons in 2010 [1]. The carbon dioxide emission in China is the most in the world follow by North America and United States. Meanwhile, out of 0.6% of the total carbon dioxide emission is coming from Malaysia. In order to reduce the amount of carbon dioxide emission, the alternative ways in generating electricity must be utilised. For instance, China and United States used renewable energy as a part of electricity generation in the country. From the data of EIA, the total renewable-energy electricity generation for China and United States in 2010 is 770.92 billion kW h (or 770.92 TW h) and 427.38 billion kW h, respectively [1], [2]. At the same time, Malaysia which located at the equator has used the renewable energy and generated 7.69 billion kW h or equivalent to 6.5% from entire electricity generation in 2010 [3].

Apparently, the electricity generation produces thousand million metric tons of the carbon dioxide. In order to minimise the impact of carbon dioxide towards global climate change, many countries approached renewable energies as the alternative electricity generation system. There are various types of renewable energies can be used. However, the suitability in terms of the availability of renewable energy in that particular country is the most important criteria. In such circumstances, the feasibility of the renewable energy must be studied before the project can be started.

As the electricity generation by using the coal fire power plant, the carbon dioxide will release due to the burning process and that will contribute to green house effect. Meanwhile, the electricity production by using renewable energy only produces negligible carbon dioxide emission. Carbon dioxide naturally exists during the respiration process of human beings. Plants will absorb the carbon dioxide and release oxygen during photosynthesis. However, with the vast development of technology that contributes to the huge amount of carbon dioxide emission since last decades, the intensity of carbon dioxide in atmosphere increased and caused green house effect. In order to reduce the amount of carbon dioxide in atmosphere, many countries have the awareness on using green energy that only released small amount of green house gas.

Wind power is one of the lowest carbon dioxide emissions in between the renewable energies [4]. The zero carbon dioxide emission from the wind power has been encouraging the power service provider on selecting it for the electric power generation. As the largest carbon dioxide emission country, China has installed the most wind power which is 75.56 GW up to end of the year, 2012. United States used 60 GW of wind power to be converted into electricity and follow by Germany [5]. Meanwhile, Malaysia installed a 75 kW hybrid integrated renewable energy, wind–solar power plant in Perhentian Island [6]. The main electricity consumers are the villagers and tourists around the island. In order to use the wind energy as it can be connected to the main power grid, a larger wind farm is required.

According to the online wind power analysis software FirstLook, the wind speed in Kudat, Malaysia is promising if compared with other locations [7]. Fig. 1 shows the indication wind speed in Malaysia by using Firstlook. The wind farm project is feasible for the particular place in east peninsular Malaysia. As for this research, wind farm is planned to install at the wind promising area and interconnect to the grid of Sabah, which operates by Sabah Electricity Sdn. Bhd. (SESB). For long term consideration, it can be an extra electricity resource to be sold to Sarawak or even Peninsular Malaysia by using the power corridor. The proposed area is near to main grid line in Sabah as shown in Fig. 2. In order to run the project, there are many criteria need to be considered. The project criteria might cover the feasibility of the wind power in Malaysia, the availability of the maintenance skills on wind turbines, the stability of the power generation, the financial, policy, and technical risks, as well as the project team to ensure no delay and finish on time.

The well organised planning is the key of success for a project. The predictable wind speed is a decision factor that could encourage the commencement of a wind power project [8]. Due to this, the wind farm site has to be highly accessible by the wind. The assumption economic return must be clarified in order to persuade the investors on spending the money in the project. Nevertheless, the wind speed data can be obtained from the meteorology department; the actual site condition should be studied for a better assessment of a project. For planning purpose, the obtained data can be modified according to a different height of the tower hub by using the mathematical formula.

On top of that, the risks of the project must be analysed in order to minimise the loss of revenue. Economic risk and the technical risk play destructive roles in building up the project [9], [10]. The initial cost of running a project might be high. A 900 kW wind turbine manufactured by Wind Inc. cost 1.5 million USD [11]. Hence, a strong financial management is necessary. On the other hand, the technical skills play an important role during the wind-turbine installation and after sales services. Even though many of the manufactures claim that wind turbine can be at least last for 20 years; sometimes the faults like the sensor problems, gearbox problem or even control system problem can be happened due to wear and tear condition [12]. With a strong technical background, the investment allocated in the project would not waste in vain. By using the system dynamics analysis method, the relationship in between the criteria can easily be seen and analysed. The method of analysis will be discussed in methodology.

Section snippets

Literature review

As mentioned earlier, the fund management of the wind-power project plays an important role of the key factor that might affect the progress of a project. Yunna used structural interpretation method (ISM) to analyse the major factors that affected the implementation of effective cost control [13]. The factors such as the cost competition in between the manufacturers, project contractors, adaptability of wind turbine to the market, and the implementation responsible costs are the main cause of

Methodology

In this study, system dynamics is being used in the analysis of project management of wind turbine. Although Malaysia is still new to wind power project, the analysis will base on the environment, government’s policies, and site condition in Malaysia. System dynamic is developed by Jay Forrester in the year 1961. With the aids of computer simulation, the overall system behaviour can be analysed. By using the casual loop diagram (CLD), the relationship in between the variables or parameters can

Results and analysis

The main criteria that encourage the wind-power project can be categorised into four. One of the criteria is the government policies. Normally, a certain policy could be revised into few revisions based on demand in that particular period. These revisions may include the risk analysis, economic analysis, feasibility of the policy, and the feedbacks from publics. The policy such as giving the incentives, tax exemption or a low-interest loan will encourage the development of a massive project. In

Discussion

For this paper, system dynamics analysis is being used for the case study of the wind power project in Malaysia. The stock flow diagram and CLD are used in the analysis. CLD is more efficient in giving the draft concept of the system. However, the stock flow diagram is preferred for the accurate analysis. The wind power project analysis is divided into three major parts. Each part is analysed by using system dynamics approach. After a sectional analysis was completed, it was then combined with

Conclusion

In conclusion, system dynamics can clearly state the causal relationship for the project development in wind power for Malaysia. Wind-power project is feasible in Malaysia as long as the project is well planned. The site survey and the wind speed prediction that can calculate the annual wind power generated is essential for the further analysis. For a new wind power user, the government’s supports play the important role in development of wind power. Malaysia government is aiming to have 5374 GW 

Acknowledgments

Authors would like to thank the Ministry of Higher Education Malaysia (MOHE) for giving the scholarship to the author in order to accomplish this research. Furthermore, the authors would like to thank Ministry of Energy, Green Technology and Water Malaysia (KeTTHA), Ministry of Higher Education, Malaysia (MOHE) and The Office for Research, Innovation, Commercialization, Consultancy Management (ORICC), UTHM for financially supporting this research under the Fundamental Research Grant Scheme

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