Hybrid power plants offer opportunities that individual power plants may not be able to provide on their own. By combining different forms of energy production, synergies can be achieved, such as more stable electricity production, allowing grid connection capacity to be used more efficiently. Production flexibility and resource efficiency can also be improved by combining energy production with energy storage solutions, such as batteries. This means that production does not need to be curtailed, as surplus energy can be stored for later use. Energy storage systems also make it possible to maximize revenues through energy arbitrage, further improving the profitability of hybrid power plants. In hybrid power plants, all these technologies can also share the same grid connection point, which can significantly reduce investment costs compared to developing equivalent power plants as separate projects.
Challenges in assessing the profitability of hybrid power plants
Despite the many opportunities, hybrid power plants are considerably more complex investments than individual power plants. Their profitability depends on several technical and financial factors at the same time. These include, for example, grid connection capacity, plant sizing, investment costs and different market opportunities. Profitability is also affected by electricity market prices and the amount of weather-dependent generation.
The challenge is that many of the factors affecting profitability involve considerable uncertainty. For example, electricity market prices, developments in ancillary services markets and generation volumes are difficult to forecast reliably over the long term. This makes it challenging to assess the profitability of hybrid power plants and creates uncertainty around investment returns. Furthermore, the different factors affecting profitability are interconnected, meaning that a change in one area can have a significant impact on the profitability of the entire project. For example, adding a battery to a solar or wind power plant increases investment costs, but can also increase revenues by enabling energy storage and participation in different markets. For this reason, the factors affecting profitability cannot be considered separately. Instead, the profitability of a hybrid power plant must be assessed as a whole.
The aim of the hybrid power plant investment process is to find the most profitable investment option. However, the more technologies and market opportunities a project includes, the more investment alternatives there are to consider. This makes comparing different scenarios and finding the optimal plant configuration increasingly challenging. Assessing profitability and optimizing plant sizing therefore require a tool that looks at the investment as a whole, taking into account the technical and financial factors affecting profitability, as well as the uncertainties involved. The tool should also make it possible to compare different investment alternatives efficiently, helping to identify the most suitable option.
The topic of investment decision-making for hybrid power plants will be explored further in an upcoming blog post. The post will examine the tools developed to support investment decisions, the challenges associated with these tools, and how investment decision-making can be further improved.
This blog was written by Nelli Parikka, an Energy Specialist who joined Syncron Tech's team this autumn. In her Master's thesis, Nelli focused on investment decision-making for hybrid power plants and how it can be improved.
Nelli works on Syncron Tech's hybrid power plant projects. You can reach her at nelli.parikka@syncrontech.com.


