Abstract: As decentralized electricity generation is supporting grid development into the prosumer era, this paper investigates the economic viability of adding batteries to residential microgrids powered by photovoltaic units, under various electricity pricing schemes. Batteries bring the benefits of grid-stabilization and congestion relief, and they are also becoming cheaper. The problem identified is that the main grid effectively acts as a lossless storage system, especially under the net-metering scheme, whereas using a battery involves investment costs and energy losses. This mismatch is addressed by analysing residential microgrid projects under seven tariff designs, each in seven countries of the European Union, and compare the economic viability of photovoltaic systems with and without batteries. The findings show that the conditions most favourable to batteries are given by a capacity tariff scheme allowing price arbitrage. Based on these findings, the paper discusses possibilities for further support in order to bring the economic viability of microgrids with batteries on par with that of microgrids without batteries.

Abstract: Decentralized energy production offers an increased share of renewable energy and autonomy compared to the conventional, grid-only solution. However, under the net-metering scheme, the energy losses in batteries translate into financial losses to an investor seeking to move away from grid-only electricity and set up a residential PV+Battery microgrid. Our paper examines a hypothetical support scheme for such a project, designed to balance the economic disadvantage through partially supporting the acquisition of batteries, and thus ensure that the microgrid solution is more attractive than no investment. For this we develop four case studies based on experiments carried out in Greece, Italy, Denmark and Finland. Using the minimization of the Net Present Cost for each project, we compare the PV+Battery solution to the grid-only scenario over 25 years, for a range of electricity prices. The results illustrate first how the success of this project depends on the price of electricity. Second, we find that under current conditions in the respective countries the need for battery support varies between zero in Denmark and 86% in Italy, which reflects how the disadvantages of net metering can only be counterbalanced by either very high electricity price or very high solar resource. Our paper contributes thus to the discussion about the favourable environment for batteries in residential microgrids.

Abstract: This paper investigates the impact of government policy on the optimal design of microgrid systems from an economic cost minimisation perspective, and provides both an overview of the current state of the art of the field, as well as highlighting possible avenues of future research. Integer programming, to select microgrid components and to economically dispatch these components, is the optimisation method of choice in the literature. Using this methodology, a broad range of policy topics is investigated: impact of carbon taxation, economic incentives and mandatory emissions reduction or mandatory minimum percentage participation of renewables in local generation. However, the impact of alternative tariff systems, such as capacity tariffs are still unexplored. Additionally, the investigated possible benefits of microgrids are confined to emissions reduction and a possible decrease in total energy procurement costs. Possible benefits such as increased security of supply, increased power quality or energy independence are not investigated yet. Under the expected policy measures the optimal design of a microgrid will be based on a CHP-unit to provide both heat and electricity, owning to the lower capital costs associated with CHP-units when compared to those associated with renewable technologies. This means that current economic analyses indicate that the adoption of renewable energy sources within microgrids is not economically rational.