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Embedded NixOx clusters (x = 4–12) have been studied by the density-functional method using compensating point charges of variable magnitude to calculate the ionic charge, bulk modulus, and lattice binding energy. The computations were found to be strongly dependent on the value of the surrounding point charge array and an optimum value could be found by choosing the point charge to reproduce the experimentally observed Ni–O lattice parameter. This simple, empirical method yields a good match between computed and experimental data, and even small variation from the optimum point charge value produces significant deviation between computed and measured bulk physical parameters. The optimum point charge value depends on the cluster size, but in all cases is significantly less than ±2.0, the formal oxidation state typically employed in cluster modeling of NiO bulk and surface properties. The electronic structure calculated with the optimized point charge magnitude is in general agreement with literature photoemission and XPS data and agrees with the presently accepted picture of the valence band as containing charge-transfer insulator characteristics. The orbital population near the Fermi level does not depend on the cluster size and is characterized by hybridized Ni 3d and O 2p orbitals with relative oxygen contribution of about 70%.