Techno-Economic Framework for Optimal Capacity Expansion of Active Microgrid in the Mediterranean: A Case Study of MCAST

The purpose of microgrids is to improve system flexibility and resilience during normal and emergency conditions. The ceaseless load growth mandates to increase microgrid's capacity, thereby improving the system flexibility and resilience. However, capacity expansion requires significant investments, making it essential to identify the optimal capacity of energy resources. The methodologies proposed in the literature identifies the microgrid's capacity with an assumption of investments with a single installment. This way of theoretical approach leads to unrealistic solutions. Besides, microgrid's participation in a flexible market will enhance its performance both in commercial and technical aspects. Therefore, this paper proposes a realistic framework with the concept “expansion through time” inspired by “Real Options Theory.” This framework includes practical parameters like resource & load uncertainty, physical space required to install, revenue generated by resources, and maximum demand penalty, on top of electrical parameters; constrained with significant return in investments to improve the overall savings. In addition, this paper proposes a market participation model for microgrid, which defines a bidding process with two components, such as regular and flexible portions under both normal and extreme conditions. This study considers renewable-based energy resources like solar-photovoltaic plants (SPPs) and battery energy storage systems (BESSs) as microgrids' energy resources. The system chosen for testing the efficacy of the proposed framework is a real-world active-microgrid of Malta College of Arts, Science and Technology (MCAST), located on an island.