Economic evaluation of microgrids

The economic evaluation of the microgrids is still challenging. This paper presents a methodology to design the number and capacity for each piece of equipment (e.g. gas engines, batteries, thermal storage tanks) in a microgrid with combined heat and power (CHP) system. In the methodology, annual cost is minimized by considering the partial load efficiency of a gas engine and its scale economy, and the optimal number and capacity of each piece of equipment and the annual operational schedule are determined by using the optimal planning method. There is a growing ability of DER to participate in ancillary services markets such as reserve service and voltage control. We estimate the potential amount of reserve provision when the reserve might be necessary. The regulatory issues such as electricity trading between a microgrid and the utility are also discussed.