Microgrid operator´s capacity and storage investment strategies under environmental regulations

Environmental concerns in power generation and distribution systems have led to policies that incentivize investment in low-carbon or renewable technologies. Microgrid (MG), as a subsystem with generation and associated loads, participates in the environmental policies administered by the utility companies. In this paper, we build an economic model that can provide investment and operation guidance for microgrid operators (MGO) to optimize their profits in a competing market formed by the utility company, subject to environmental policies. A case study of two year planning is provided to demonstrate the optimal long-term interaction among the utility company and MGOs. The utility company globally controls the market by playing a leader-follower game with MGOs. The Nash equilibrium between MGOs are also presented.