Abstract-Increasing energy security and reliability concerns are intensifying the interest in microgrids. In this setting, design optimization is vital to achieve a reliable infrastructure without overbuilding. This paper considers the impact of frequency and voltage regulation on the optimal design of a conceptual, autonomous military microgrid. This microgrid comprises a solar panel and vehicles as power sources, with each vehicle incorporating a battery and generator. The power output and terminal voltage of these inverter-based sources must be regulated. The paper investigates the effects of battery DC voltage variations on a decentralized regulation scheme, and the resulting influence on optimal component sizing. To this end, controllers are first designed based on the typical assumption that the voltage on the DC side of each inverter is constant. The battery internal resistance is then considered and its impact on regulation performance is investigated. The results show that the battery internal resistance can affect the performance of both frequency and voltage regulation, and consequently must be taken into account in component sizing decisions. Thus, the paper identifies an important coupling between regulation and component sizing problems through battery characteristics, and highlights the need for a combined sizing and regulation framework for microgrid design.