Levelized cost of energy calculations for microgrids

The levelized cost of energy (LCOE) provides an effective tool to compare different energy resource technologies with different lifetimes, cost structures, and capacity factors from an economical perspective. This paper follows simple and limited discussions in LCOE calculations of individual generation units and extends it to a sophisticated model to determine LCOE of integrated generation units. The proposed model is further tailored to determine the LCOE of microgrids which comprise various distributed energy resource (DER) technologies, such as dispatchable thermal generation, renewable wind and solar generation, as well as distributed energy storage (DES). Numerical simulations on a test microgrid exhibit the viability of the proposed model and further analyze the sensitivity of a microgrid's LCOE to a variety of factors such as the individual DERs' rated powers, LCOEs, and capacity factors.