The impact of policy on microgrid economics: A review

Abstract

This paper investigates the impact of government policy on the optimal design of microgrid systems from an economic cost minimization perspective, and provides both an overview of the current state of the art of the field, as well as highlighting possible avenues of future research. Integer programming, to select microgrid components and to economically dispatch these components, is the optimisation method of choice in the literature. Using this methodology, a broad range of policy topics is investigated: impact of carbon taxation, economic incentives and mandatory emissions reduction or mandatory minimum percentage participation of renewables in local generation. However, the impact of alternative tariff systems, such as capacity tariffs are still unexplored. Additionally, the investigated possible benefits of microgrids are confined to emissions reduction and a possible decrease in total energy procurement costs. Possible benefits such as increased security of supply, increased power quality or energy independence are not investigated yet. Under the expected policy measures the optimal design of a microgrid will be based on a CHP-unit to provide both heat and electricity, owning to the lower capital costs associated with CHP-units when compared to those associated with renewable technologies. This means that current economic analyses indicate that the adoption of renewable energy sources within microgrids is not economically rational.

Robust Energy Management and Economic Analysis of Microgrids Considering Different Battery Characteristics

“…The output power of WTs depends on the wind speed in a specific location and the power curve (given by the manufacturers of the WTs), which is expressed as a function divided into four parts as represented in (2). Also, the hourly wind speed is estimated using the Weibull distribution function from data in previous publications [46].…”

The Effects of Capital and Energy Subsidies on the Optimal Design of Microgrid Systems

“…Moreover, different examples of policies and regulations were discussed in detail. In [42] the authors reviewed the impact of governmental policy frameworks on the optimal design of microgrids with hybrid energy systems. The main focus of the study was to review the most recent methods available in the literature for the evaluation of several governmental policies.…”

Microgrids Literature Review through a Layers Structure

“…They bring up the idea that policy makers, with the right policy framework, are focused on strategies to decentralize the main grid, which may lead to a decrease in customer energy costs. The impact on carbon taxes, economic incentives, mandatory emissions reduction, and mandatory minimum participation percentages of renewables are topics examined in [49]. Despite policy measures considering a broad spectrum of microgrid sizes, from a building to entire communities, they also suggest that the effects of microgrid size have not been examined in the literature yet.…”