Microgrid is a new power system concept consisting of small-scale distributed energy resources; storage devices and loads. It is necessary to employ a simplified model of microgrid in the simulation of a distribution network integrating large-scale microgrids. Based on the detailed model of the components, an equivalent model of microgrid is proposed in this paper. The equivalent model comprises two parts: namely, equivalent machine component and equivalent static component. Equivalent machine component describes the dynamics of synchronous generator, asynchronous wind turbine and induction motor, equivalent static component describes the dynamics of photovoltaic, storage and static load. The trajectory sensitivities of the equivalent model parameters with respect to the output variables are analyzed. The key parameters that play important roles in the dynamics of the output variables of the equivalent model are identified and included in further parameter estimation. Particle Swarm Optimization (PSO) is improved for the parameter estimation of the equivalent model. Simulations are performed in different microgrid operation conditions to evaluate the effectiveness of the equivalent model of microgrid.