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Analyzing the Impact of Renewable Energy Incentives and Parameter Uncertainties on Financial Feasibility of a Campus Microgrid

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  • Vu Ba Hau

    (School of Electrical Engineering, Kookmin University, 861-1, Jeongneung-dong, Seongbuk-gu, Seoul 02707, Korea)

  • Munir Husein

    (School of Electrical Engineering, Kookmin University, 861-1, Jeongneung-dong, Seongbuk-gu, Seoul 02707, Korea)

  • Il-Yop Chung

    (School of Electrical Engineering, Kookmin University, 861-1, Jeongneung-dong, Seongbuk-gu, Seoul 02707, Korea)

  • Dong-Jun Won

    (Department of Electrical Engineering, Inha University, 100, Inha-ro, Michuhol-gu, Incheon 402-751, Korea)

  • William Torre

    (University of California San Diego, 9500 Gilman Drive, La Jolla, CA 92093, USA)

  • Truong Nguyen

    (University of California San Diego, 9500 Gilman Drive, La Jolla, CA 92093, USA)

Abstract

The popularity of microgrids is increasing considerably because of their environmental and technical advantages. However, the major challenge in microgrid integration is its financial feasibility due to high capital costs. To address this obstacle, renewable energy incentive programs, which are the motivation of this study, have been proposed in many countries. This paper provides a comprehensive evaluation of the technical and financial feasibility of a campus microgrid based on a techno-economic analysis using the Microgrid Decision Support Tool, which was implemented to support decision-making in the context of microgrid project investment. A method for microgrid design aiming to maximize system profitability is presented. The optimal microgrid configuration is selected depending on financial indices of the project, which directly address the returns on an investment. Most importantly, this analysis captures all the benefits of financial incentives for microgrid projects in California, U.S., which presents a key difference between the California market and other markets. The impact of incentives and uncertain financial parameters on the project investment is verified by sensitivity analysis. The outcomes show that the optimal configuration generates significant electricity savings, and the incentives strongly determine the financial feasibility and the optimal design of a microgrid.

Suggested Citation

  • Vu Ba Hau & Munir Husein & Il-Yop Chung & Dong-Jun Won & William Torre & Truong Nguyen, 2018. "Analyzing the Impact of Renewable Energy Incentives and Parameter Uncertainties on Financial Feasibility of a Campus Microgrid," Energies, MDPI, vol. 11(9), pages 1-24, September.
    • Handle: RePEc:gam:jeners:v:11:y:2018:i:9:p:2446-:d:169947
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    References listed on IDEAS

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    Cited by:

    1. Amir, Vahid & Azimian, Mahdi, 2020. "Dynamic Multi-Carrier Microgrid Deployment Under Uncertainty," Applied Energy, Elsevier, vol. 260(C).
    2. Eva González-Romera & Mercedes Ruiz-Cortés & María-Isabel Milanés-Montero & Fermín Barrero-González & Enrique Romero-Cadaval & Rui Amaral Lopes & João Martins, 2019. "Advantages of Minimizing Energy Exchange Instead of Energy Cost in Prosumer Microgrids," Energies, MDPI, vol. 12(4), pages 1-18, February.
    3. Azimian, Mahdi & Amir, Vahid & Javadi, Saeid, 2020. "Economic and Environmental Policy Analysis for Emission-Neutral Multi-Carrier Microgrid Deployment," Applied Energy, Elsevier, vol. 277(C).
    4. Krzysztof Zagrajek & Mariusz Kłos & Desire D. Rasolomampionona & Mirosław Lewandowski & Karol Pawlak & Łukasz Baran & Tomasz Barcz & Przemysław Kołaczyński & Wojciech Suchecki, 2023. "Investing in Distributed Generation Technologies at Polish University Campuses during the Energy Transition Era," Energies, MDPI, vol. 16(12), pages 1-24, June.
    5. Vu, Ba Hau & Chung, Il-Yop, 2022. "Optimal generation scheduling and operating reserve management for PV generation using RNN-based forecasting models for stand-alone microgrids," Renewable Energy, Elsevier, vol. 195(C), pages 1137-1154.
    6. Tomasz Rokicki & Piotr Bórawski & Barbara Gradziuk & Piotr Gradziuk & Aldona Mrówczyńska-Kamińska & Joanna Kozak & Danuta Jolanta Guzal-Dec & Kamil Wojtczuk, 2021. "Differentiation and Changes of Household Electricity Prices in EU Countries," Energies, MDPI, vol. 14(21), pages 1-21, October.
    7. Àlex Alonso-Travesset & Diederik Coppitters & Helena Martín & Jordi de la Hoz, 2023. "Economic and Regulatory Uncertainty in Renewable Energy System Design: A Review," Energies, MDPI, vol. 16(2), pages 1-30, January.
    8. Mohseni, Soheil & Brent, Alan C. & Kelly, Scott & Browne, Will N., 2022. "Demand response-integrated investment and operational planning of renewable and sustainable energy systems considering forecast uncertainties: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    9. Kourgiozou, Vasiliki & Commin, Andrew & Dowson, Mark & Rovas, Dimitrios & Mumovic, Dejan, 2021. "Scalable pathways to net zero carbon in the UK higher education sector: A systematic review of smart energy systems in university campuses," Renewable and Sustainable Energy Reviews, Elsevier, vol. 147(C).
    10. Pablo Benalcazar & Adam Suski & Jacek Kamiński, 2020. "The Effects of Capital and Energy Subsidies on the Optimal Design of Microgrid Systems," Energies, MDPI, vol. 13(4), pages 1-23, February.
    11. Incheol Shin, 2020. "Approximation Algorithm-Based Prosumer Scheduling for Microgrids," Energies, MDPI, vol. 13(21), pages 1-16, November.
    12. Hak-Ju Lee & Ba Hau Vu & Rehman Zafar & Sung-Wook Hwang & Il-Yop Chung, 2021. "Design Framework of a Stand-Alone Microgrid Considering Power System Performance and Economic Efficiency," Energies, MDPI, vol. 14(2), pages 1-28, January.

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