Stochastic Capital Budgeting of Microgrid Projects Under Electricity Market Uncertainty

A stochastic microgrid planning model is proposed to determine the optimal size and combination of distributed energy resources (DERs) for microgrid projects. The cost savings realized from utilizing local resources and selling the excess power to the main grid, recompense the high capital expenditure required for DER installations and economically justify the microgrid deployment. Price and load duration curves are adopted as a replacement for chronological curves to capture the associated uncertainties. The duration curves are shown to be effective in the planning problem and guarantee a substantial error reduction for longer prediction periods. Numerical simulations and sensitivity analysis of capital budgeting constraints are conducted to illustrate the effectiveness of the proposed model.