Consumer-centric and capital efficient design of community microgrids for financially-Strapped communities

ABSTRACT

Subscription-based microgrids have been deployed to serve electricity needs of rural communities due to their simple user interfaces and basic energy management requirements. However, these projects often suffer from economic inefficiency to sustain long-term operations, lacking insufficient price signals and demand side, as well as uncertainties around consumer participation. This article proposes a consumer-centric planning and design framework for community microgrids, based on capacity subscription with self-rationing to reveal consumers’ real preferences in service reliability and their budget constraints, in order to achieve social welfare maximization and revenue adequacy. This capital efficient community microgrid greatly simplifies the microgrid investment planning, operation and scheduling, and reduces capital requirements and transaction costs, thus to improve electricity accessibility and affordability and to incentivize private sector investments. This is particularly advantageous in microgrid applications for financially strapped communities when incorporating high share of variable renewable energy generations. Requiring a lower level of investments than the current subscription-based microgrids, our analysis shows the benefits of the proposed design in improving the consumers’ surplus, and supply–demand matching, achieving cost recovery, and desired level of service reliability for consumers.

KEYWORDS:

• Microgrid planning
• capacity subscription
• capital efficient
• consumer-centric
• consumer preference
• dynamic pricing
• demand response
• service reliability

Nomenclature

Table

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ ‘Reliability’ in the rest of this paper refers to ‘service reliability’, rather than ‘system reliability’.

² Customer expenditure is the sum of capacity prices paid by the customer, plus energy prices paid by the customer, not adjusted for time value of money.