Bi-level goal programming model for simultaneous microgrid investment and tariff design: A case study in the Volta Region of Ghana

Abstract

The use of microgrids for remote rural electrification in developing countries requires solutions to technical and financial constraints involving variability in renewable generation and electricity demand, budget limitations, and underlying electricity tariffs. While previous research has evaluated a subset of these problems, to the best of the authors’ knowledge, no attempt has been made to design an optimal tariff structure that promotes an isolated microgrid’s business case for rural electrification. This work presents a new goal-oriented bilevel optimization model capable of simultaneously optimizing the microgrids tariff design–to offer full revenue recovery for the investor while also ensuring equitable electricity prices for low-income households–as well as optimizing the physical microgrid design. A case study of an off-grid island on Ghana’s Volta Lake demonstrates the efficiency of the new tariff design over the existing policy. For a remote rural village, a 6kW solar PV, 5kW wind and 11kW diesel microgrid provide the highest lifecycle electricity supply adequacy at the lowest investment cost. Through scenario analysis, we demonstrate the implementation of an optimal tariff design capable of offsetting a 39 % revenue shortfall compared to an existing tariff structure while ensuring equitable electricity prices for low-income households.