Policy effects on microgrid economics, technology selection, and environmental impact

• Mixed integer linear program used to assess public policy effects on microgrid design.
• Emission taxation and mild incentives seen to have little impact on optimal design.
• Strong economic incentives encouraged renewables usage and emission reduction.
• Local fuel-fired cogeneration used to reduce emissions by 5–15%.
• Renewable power used to achieve high levels of emission reduction, but more costly.

This paper deals with the impact of policy decisions on optimal microgrid design. A generic system is considered consisting of solar photovoltaics, wind turbine, microturbines, electric boiler, gas-fired boiler, and a battery bank. The microgrid is grid-connected and designed to supply both heat and power. An optimal design is found to minimize the cost of energy supply over a 20 year lifespan. The optimal design is analyzed under a variety of policy scenarios such as emission taxation, emission reduction, and minimum system autonomy.