A Framework for Considering Capital Cost Limit in Sizing Microgrid Distributed Energy Resources—Application to Industrial Microgrids

Capital cost is a practical limitation in distributed energy resources (DER) system sizing and the optimal size may lead to high capital investment. This calls for the development of a framework that provides alternate system sizing with the ability to address capital cost constraints. A framework for sizing microgrid DER considering capital cost constraints and inclusion of manufacturer catalog ratings is introduced in this article. This framework uses a system-wide, composite, cost metric that combines capital costs and operating costs per month. This per-month optimization results are transformed to evaluate the feasible DER ratings and annual savings possible with imposed capital and operating cost constraints. The formulated framework is demonstrated using two microgrid case studies in peak shaving applications at industrial facilities located in the U.K. and USA. This article also introduces development of hardware-in-loop (HIL) system as a tool to validate microgrid sizing results demonstrating that real-time operation can provide the savings projected by the optimized assets. The HIL simulation, with a microgrid controller and the plant sized per the optimization verifies the annual savings. This HIL confirmed that the sizing did not result in violations of state of charge limits of battery energy storage. Traditional optimal sizing approaches do not verify for violations and can result in suboptimal or oversized designs.