Economic multi-objective approach to design off-grid microgrids: A support for business decision making

• Published in: Renewable energy Vol. 159; pp. 693 - 704
• Main Authors: Fioriti, Davide, Pintus, Salvatore, Lutzemberger, Giovanni, Poli, Davide
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01-10-2020
• Subjects: Direct MultiSearch (DMS); External rate of return (ERR); Mini-grids; Modified internal rate of return (MIRR); Net present value (NPV); Non-dominated sorting genetic algorithm (NSGA-II); Net present value (NPV); Direct MultiSearch (DMS); Mini-grids; Non-dominated sorting genetic algorithm (NSGA-II); External rate of return (ERR); Modified internal rate of return (MIRR)
• ISSN: 0960-1481; 1879-0682
• DOI: 10.1016/j.renene.2020.05.154

Designing off-grid microgrids is a costly and risky activity, especially for newly electrified communities in developing countries. Private developers and researcher have been using several economic indicators to value the profitability of an investment, such as Net Present Value, Discounted Payback Period, Levelized Cost of Electricity; however, each index has its advantages and specific limitations. Selecting a single objective may lead the developer to misestimate the profitability of a project, because a single index cannot accommodate the variety of requirements of the business process. Acknowledging this, this study proposes a wide analysis for highlighting the effects of different indicators onto the optimal design of an off-grid hybrid energy system. A multi-objective approach that optimizes together different economic indicators is proposed, based on the results of a preliminary analysis on single-objective formulations. A sensitivity analysis with respect to the electricity price, the load curtailment cost and the dispatching strategy is also performed. A numerical case study is proposed for a possible off-grid microgrid in Soroti, Uganda, which well represents a hard environment for business development. Results suggest that the proposed multi-objective approach provides intermediate configurations that are a good compromise between multiple objectives, thus satisfying the difficult environment developers are enduring.
•Multi-objective economic optimization to maximize business opportunities.•Comparison of different objective functions for the optimal design of the minigrid.•Modified Internal Rate of Return applied to hybrid microgrids.•Numerical case study for an off-grid system in developing countries.•Sensitivity analysis w.r.t. indicator, load curtailment cost and operating strategy.