Summary
Microgrid systems based on renewable energy sources can play a significant role in providing cost‐effective, environmentally friendly and reliable electrical supply to the people living in rural areas of India. This assessment aims to design and evaluate the performance of a grid‐connected microgrid system comprising of photovoltaic (PV) arrays, wind energy generating units and battery energy storage system (BESS). The realistic load data of a small village, Tandwal, located in Ambala district of Haryana, India, is considered for this assessment. Furthermore, sensitivity analysis is performed to find out the effect of load demand, solar radiation, utility grid price, grid outages, capital cost of BESS, solar module cost and power converter loading ratio in the proposed microgrid system. The results show that the PV‐BESS‐utility grid system is an optimal solution with renewable energy penetration at the studied location. The feed‐in tariff/net metering makes the overall system sustainable and improves its reliability with unmet load as well as capacity shortage.