Optimal design and sizing of renewable energies in microgrids based on financial considerations a case study of Biskra, Algeria

Abstract

Integration of renewable energy sources in microgrids is a challenging process, where a wealth of metrics should be optimized together to achieve an optimal design. This paper presents a comprehensive approach for selecting the best microgrid structure including a versatile renewable energy source (RES), the proposed microgrid systems are considered using investment costs evaluation and total power generation needs. Through the analysis of the economic feasibility and guiding decision-making on microgrid projects, three system configurations have been examined at the Algerian site of Biskra using the HOMER software. In this work, photovoltaics, photovoltaics/wind, and photovoltaics/wind/diesel projects were explored in respect to the specificities of the targeted region. The Net Present Cost (NPC) was found to be 11.7 M$,13.3 M$, and 9.45 M$ respectively, likewise, Levelized Cost of Energy (LCOE) were 0.19 $/kWh, 0.728 $/kWh, and 0.188 $/kWh respectively. Where a comparative analysis was carried out as a sensitivity analysis to find out the effect of different economic and technical conditions on costs and parameters. Cash flows were also forecasted, and financial criteria such as the Internal Rate of Return (IRR) (13%, 15%), Net Present Value (NPV) (1 M$ to 10 M$) for three projects, and Discounted Payback (DPb) (6 to 9 years). In addition, Monte Carlo simulation is used to assess the risks associated with the project's net present value, this is done to maintain the robustness of project decision-making outcomes. The findings emphasise the importance of financial analysis in the design and sizing of RES microgrid.