Techno-economic microgrid design optimization considering fuel procurement cost and battery energy storage system lifetime analysis

The importance of microgrids (MGs) lies in their capacity to enhance energy reliability, integrate renewable resources, and bolster resilience, yet their optimal design and sizing pose intricate challenges in balancing investment and operational cost while dispatching the MG equipment efficiently. This paper presents the optimal MG design problem formulated as an integer linear program (ILP) aimed at minimizing total investment and operational cost of MG as well as optimal hourly dispatch of MG asset over the project lifetime. Furthermore, a comprehensive analysis of the fuel procurement cost and the impact of ESS technical parameters, such as depth of discharge (Dod), ESS lifetime, and battery C-rate, on the optimal MG design, ESS lifetime and relevant costs is presented in this work for a MG operating in islanded and grid-connected modes. The simulation results demonstrate that the optimal design of a MG with the maximum load demand of 300 kW operating in the grid-connected mode can save about 28 k$ equivalent to 14% in total annual cost compared with the islanded mode operation thanks to the flexibility provided by the utility purchases and efficient MG equipment sizing. This study's unique contributions provide significant insights into the practical implications of MG design optimization, potentially influencing regulatory policies and business strategies.