Measuring the value of microgrids: a benefit–cost framework

Abstract

This study examines the costs and benefits of microgrids under a variety of business models. Many factors complicate a utility-planning benefit–cost framework when evaluating microgrids. For the purposes of this paper, a ‘microgrid’ is a group of interconnected resources and loads sharing a (usually) single point of interconnection with a larger grid, and capable of balancing load and resources when disconnected from the grid, through dispatch of resources and demand control and/or response. Economically, a microgrid can be examined from a variety of perspectives, and the picture is more complex than for typical utility investments. It is Electric Power Research Institute's intent to provide unbiased and independent analysis of technology applications, examining economic questions from the perspectives of electricity end-consumers and society as a whole. Among the first steps is determining the point of view the analysis is to assume and narrowing down the set of economic questions to be addressed. Since the nature and major purpose of a microgrid is presumably to provide its internal customers with enhanced reliability and resilience, it is important to ask the question of perspective: For whom is the microgrid an economical choice, and compared with what?