The Electricity Journal 30 (2017) 68–74

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The Electricity Journal

journal homepage: www.elsevier.com/locate/tej

Special Issue: Contemporary Strategies for Microgrid Operation & Control

Rural electrification and expansion planning of off-grid microgrids MARK

Mohammad E. Khodayar
Southern Methodist University

A R T I C L E I N F O A B S T R A C T

Keywords: This paper presents the past and current practices for rural electrification and the current trend in using off-grid
Rural electrification microgrids to provide energy to the customers with no access to the central electricity network. The challenges
Off-grid microgrid correspond to the capacity expansion of off-grid microgrids including the financial and business models for
Expansion planning establishing these technologies, the economic and reliability considerations, the environmental issues, the
expansion and feasibility studies, and the uncertainties in the operation horizon were presented.

1. Introduction to electricity. This includes 512 million people in Asia, 244 million in
India, 41 million in Indonesia, and 11 million in the Philippines (WEO,
A microgrid is one of the most indispensable elements of smart 2016). For the developing world, providing and maintaining access to
power systems to improve the reliability and resilience of energy supply the electricity is the main driver for developing off-grid microgrids, as
in distribution networks. A microgrid is a group of interconnected this technology provides the most economical solution for electrifica-
distributed generation and demand entities within the clearly defined tion of remote areas. In fact, microgrids could become an alternative to
boundary to represent a single controllable entity in the utility that grid extensions if the decrease in cost trends persists.
operates either in grid-connected or island mode. The generation
capacity of microgrids ranges from kilowatts to megawatts and these 2. Market and business model for off-grid microgrids
small power systems are built for a variety of applications, from small
cell phone towers (also referred to as nanogrids) to large commercial, The microgrid market is expected to reach 38.99 billion by 2022,
industrial, and military facilities. In developed countries, microgrids are with a compound annual growth rate of 12.45% in 2016–2022
used to improve energy security, power quality, reliability, and (Microgrid, 2017). Remote/off-grid microgrid solutions are expected
resilience. The declining capital cost of renewable resources and energy to claim a considerable portion of the total microgrid market, with
storage promotes the application of such technologies to provide annual revenue for off-grid energy supply (microgrids and nanogrids)
electricity for households and small communities. Several countries, expected to exceed $25 billion by 2024. The markets for residential and
including Australia, Italy, Denmark, Spain, and Germany, are expected commercial applications, including healthcare, rural electrification, and
to have greater residential loads served by renewable resources. In telecommunications, are expected to grow at a considerable compound
recent years, the merits of developing grid-connected microgrids to annual growth rate in 2016–2022 (Microgrid, 2017). The growing
improve reliability and resilience measures in critical infrastructure market for off-grid microgrids for remote and rural electrification is
systems (e.g. hospitals, industrial facilities, universities, and military supported by organizations such as the United Nations and World Bank.
bases) have become more widely understood compared to off-grid Off-grid microgrid projects promote the participation of other
microgrids. The effects and objectives of implementing microgrids for players besides governments (e.g. private-sector businesses or indivi-
off-grid electrification are quite different from the cases in which duals, non-government or community-based establishments) with cor-
microgrids are operated in grid-connected mode and the utility grid is responding human and monetary resources and reduce the pressure on
counted as the primary source. Off-grid microgrids mainly provide utilities to extend services to remote areas. In order to increase the
access to electricity for people who live in areas for which an extension installed capacity of off-grid microgrids, a system of incentives should
of the grid cannot be performed with reasonable time and cost. be developed to attract investment. The geographical location, capacity
Therefore, the impact of off-grid microgrids is not only measured by and scale, the income portfolio of the consumers, and the available
the reduction in the electricity cost in rural and remote areas, but also subsidies are major factors that impact the investment decisions of
by the extent of improvement in residents’ quality of life. It is estimated private investors and operators. Since off-grid microgrids in remote and
that 1.18 billion people (17% of the world’s population) have no access inaccessible areas may not entice private-sector interest, the entities

E-mail address: [email protected].

http://dx.doi.org/10.1016/j.tej.2017.04.004

Available online 16 June 2017

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M.E. Khodayar The Electricity Journal 30 (2017) 68–74

that organize the community are usually the owners or operators of microgrids reached 500 MW. By the end of 2015, China aimed to
these systems. These entities are responsible for the operation, expan- provide power to 1.19 million people without electricity by using solar
sion planning, and maintenance of generation and distribution assets as PV technology.
well as managing the related financial services (e.g. tariff collection).
The business model for off-grid microgrids involves devising tariffs that 3.2. India
consumers are willing to pay and subsidies for capital costs to guarantee
a reasonable rate of return for the investment and operation costs. A India is a leading country in developing grid-connected and off-grid
common approach to promoting this technology is to subsidize a microgrid applications. Microgrid growth is supported by India’s
considerable share of the capital cost (e.g. 15–20% in micro-hydro aggressive policies backing electric vehicles. Electric vehicles’ batteries
grids in Sri Lanka) by the government through funding rural electrifica- play a significant role in storing solar energy. The Indian government is
tion projects while the community of private investors usually covers seeking to develop a financial model for “EV as a service” to promote
maintenance and operational costs. Another approach leveraged by using EV batteries as a grid source. Several programs were initiated by
utilities or energy service companies that usually own the facilities is to the government to develop off-grid microgrid projects and grid exten-
operate the off-grid microgrids and regulate the fees for service to be sions that target bringing electricity to one-quarter of India’s population
comparable to rural grid tariffs paid by the customers. In order to adjust still without it. India is in the midst of a major program to connect 250
the off-grid electricity tariffs, the utility or energy service company million people without access to the grid, while improving conditions
provides subsidies for capital costs and a portion of operational and for others throughout the country who face power shortages. The
maintenance costs using public funding sources. This model is widely Deen Dayal Upadhyaya Gram Jyoti Yojana rural electrification
adopted in (1) China to operate 10–150 kW photovoltaic (PV) micro- program will supply power to 18,452 villages by 2018, with 4248
grids; (2) isolated diesel generator projects in the Philippines, and (3) villages served by off-grid microgrids. In the State of Karnataka, the
the Renewable Energy for Rural Markets Projects in Argentina. SELCO Foundation deployed DC microgrids with solar-storage technol-
ogies to supply energy to Baikampady Mangalore, Mendare Village,
3. Global statistics of off-grid microgrids Neelakantarayanagaddi Village, and Kalkeri Sangeet Vidyalaya. The
major policy of the Jawaharlal Nehru National Solar Mission (JNNSM)
In developing countries, the market for off-grid microgrids is mainly is to promote solar energy in off-grid microgrid deployments.
focused on enhancements in electrification rates. In 1990–2010, rural Distributed renewable energy projects using the wind, hydro, biomass
electrification improved with the increase in population by 300 million generation technologies, and hybrid systems have been established to
people during the last two decades. Therefore, the number of indivi- meet the energy demands of isolated communities. As of June 2013, the
duals with no access to electricity has not changed. In India, the physical progress of electrifying remote villages program showed that
Philippines, and Indonesia, the growth rates for grid electrification is 10,154 villages and hamlets were supplied with the electricity and
2% annually. However, the geographic conditions of highly populated 12,771 villages and hamlets were sanctioned (Remote Village
remote areas with limited access to electricity such as northern India, Electrification Program, 2013). India has 164.7 MW biomass gasifiers
Indonesia, and the Philippines impedes expansion of central utility for rural off-grid and industrial applications, 174 MW solar PV,
grids. In this section, the current state of major off-grid microgrid 2.25 MW small wind generation and hybrid systems, 13.2 MW of small
developments in the world is presented. hydro plants and 3.77 MW of biogas systems. The Indian Ministry of
New and Renewable Energy drafted a national policy to add up to
3.1. China 500 MW of microgrid capacity within the next five years. The policy
promotes forming local communities to address the current challenges
China has the largest population in the world, 1.375 billion people, for collecting tariffs and dispute resolution, as well as determining
with almost 50% living in rural areas. The geographical characteristics regulations for selling electricity to the local utilities.
of the country and the considerable rural population makes rural
electrification a critical and challenging task. Rural electrification in
3.3. The Philippines
China went through three major phases. In the first phase (1949–1977),
government efforts were mainly focused on large commercial energy
The installed capacity of diesel microgrids is 375 MW, with most of
developments for urban areas and industrial facilities and rural areas
these microgrids operating six to eight hours per day. The operating
were supplied by small thermal plants and hydro units. The second
capacity in most microgrids is less than 500 kW. The power corpora-
phase (1979–1997) brought a major reform in rural power management
tions in the Philippines aim to electrify rural areas using off-grid
that promoted investment decisions by counties, a strategy that brought
microgrids. A study by the World Bank in 2002 (Rural Electrification
the electrification rate to 99%. In the last phase of development, which
and Development, 2002) showed the substantial socioeconomic bene-
began in 1998, the central grid has been extended to reach rural areas
fits gained by serving a typical rural household from the utility grid in
formerly served by off-grid resources. By 2011 China achieved 99.6%
the Philippines, as shown in Table 1. The objective of the Rural Power
rural electrification, though that still left 3 million people mostly living
Project (RPP), which was supported by the World Bank in partnership
in remote areas of western China with no access to electricity. The high
with the private sector, was to provide adequate, reasonable, and
altitude, rugged terrain, harsh weather conditions, and sparsely dis-
tributed population in these areas makes grid extension extremely
Table 1
costly. The Brightness program in 1999–2002 was the first effort by the Quantified benefits of electrification for a typical household in rural areas of the
government to promote solar PV generation technology and hybrid PV/ Philippines (Rural Electrification and Development, 2002).
battery systems to serve 50,000 people in western China. The Township
Electrification Program in 2002–2005 increased the capacity of solar Benefit Category Benefit Value Consumer Type
($/month)
PV, PV/wind hybrid systems, and small hydro stations to serve 1
million people in western China. The Village Electrification Program in Expanded use of lighting 36.75 Household
2005–2010 with the participation of international, national and local Expanded use of radio and television 19.6 Household
agencies, resulted in the development of 400,000 off-grid solar home Returns on education and wage 37.07 Wage earner
income
systems in 20,000 villages in western China. By 2013, the capacity of
Time saving for household tasks 24.50 Household
grid-connected and off-grid microgrids with diesel, hydro and solar PV Productivity of home business 34 (current) 75 (new) Business
systems was increased and the installed capacity of solar PV off-grid

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dependable energy services (Philippines, 2016). The outcome of this 3.5. North America
project was to supply 20,975 new customers in rural areas with
microgrids or stand-alone renewable energy technologies. Solar PV North America is the world’s leading microgrid market, with an
was the major technology to provide electricity for 17,340 households anticipated capacity of 5.9 GW by 2020 that represents 64% of world-
and 2147 public facilities, with microgrids serving 1450 households. wide global capacity. Off-grid microgrids are used to supply telecom-
The size of the developed PV systems was 20–100 kW peak. With the munication sites, as well as remote industrial and public facilities
support of the department of energy and other economic cooperatives, including national parks, schools, and lighthouses. The applications of
3500 solar home systems were developed and 23,181 tons of CO2 per microgrids are divided into four categories: (1) Islands and Remote
year was avoided as a result of this project. systems, to provide access to electricity for islanders and residents; (2)
Commercial and Industrial, to provide improved power quality and
reliability (99.99% reliability) or supply cheaper and cleaner energy,
3.4. Africa especially by leveraging the heat byproduct of electricity generation;
(3) Communities, institutions, and campuses, to provide electricity for
Microgrids and off-grid solar home systems are rapidly being hospitals, government and community buildings, and other institutions;
developed to serve people living in Sub-Saharan Africa. Two-thirds of and (4) Military, to provide improved reliability and resilience of
Africans do not have access to electricity and rely on kerosene as their energy supply for 500 U.S. military facilities within and outside of the
main energy supply. Given the savings over kerosene, and avoided country.
expansion costs for electricity infrastructure, there are considerable In the U.S., 10% of total installed PV capacity (i.e. 100 MW) was
investment opportunities and a policy push to promote off-grid micro- used for off-grid electrification in 2009. In 2009, 40 MW of additional
grids in Saharan Africa. In 2014, the U.S. government launched a off-grid capacity was installed, though the use of off-grid systems has
program called Beyond the Grid to exclusively focus on facilitating declined since then. In addition to microgrid capacity, an additional
investment in small-scale off-grid energy solutions in Africa. This 8.9 GW of nanogrid capacity (from 5 kW remote systems to 100 kW
program is a part of the larger initiative Power Africa that targets to grid-connected systems) was identified in 2014. In Canada, about 300
provide access to electricity for 20 million residential and commercial remote communities are served by diesel- and gasoline-powered
consumers in Africa by 2020. microgrids with a total capacity of 453 MW. The challenge for these
A micogrid on Ascension Island in Saint Helena has 1650 kW wind communities is that the level of demand is very close to generation
generation and 1 kW gas/diesel. Electricity availability for 5000 capacity (90% of generation capacity) and therefore, the probability of
residents of Annobón Island in Equatorial Guinea has increased from demand curtailment increases. Furthermore, accessing such commu-
five hours per day to 24 h per day via installation of a 5 MW solar nities is only possible by plane or winter roads, complicating the
microgrid (Case Study, 2015). The residents in La Graciosa Island are logistics for providing the fuel or generation units. Fuel consumption in
served by a 1.5 MW solar PV on the rooftops of 350 houses, 4.5 MW of remote microgrids in Canada is approximately 129 million liters per
wind generation, and 500 kWh, 2800 kW of Li-ion battery storage. year,which produces 368,000 tons per year of CO2. The total cost is
Robben Island, home of the infamous prison, also boasts an innovative $583 M/year and the total generated energy is 459 TWh/year. The
microgrid for tourists. The microgrids in other African islands including average cost of energy is $1.2/kWh. These community microgrids are
Sal Island and Santiago have a diversified generation mix including operated by provincial utilities and community utilities. Utilization of
solar PV, wind, and diesel generation. The installed capacity of renew- wind generation technology is an alternative to reduce the cost and
able generation in the Sal Island microgrid is 2.5 MW solar PV emission associated with electricity generation in microgrids and about
generation and 7.65 MW wind generation, and the capacity of the solar 175 locations are using diesel for energy mix. Another renewable
and wind generation in Santiago Island is 9.35 MW and 5 MW, generation technology is hydropower, which can provide a good
respectively. African countries have considerable potentials to develop resource with seasonal variations to reduce CO2 emissions. In Mexico,
off-grid microgrids for rural electrification. The Nigerian government approximately three million people live without access to electricity
announced plans to promote rural electrification in 2014 with wind, and about 500 microgrid systems were installed to serve local commu-
solar, biomass, and hydropower resources. In 2007–2012, 40 small- nities, colleges, and water pumping systems.
scale off-grid solar energy systems including six microgrids, five solar Looking elsewhere in the world, a mere 2% of Australia’s population
home systems, and several street lighting systems were installed in rural lives in areas that are not served by the central utility grid. This
communities and 700 households were served by microgrids for light- population consumes over 6% of the total generated electricity, for
ing. The Rural Electrification Agency in Tanzania perceived hybrid applications such as agricultural processing, mining, and small resi-
generation technologies as an effective way to provide reliable and dential and industrial communities such as telecommunications and
affordable electricity to isolated areas. The government of Tanzania has desalination facilities. This population is currently served by off-grid
an ambitious program to support off-grid microgrids to serve develop- interconnected systems and islanded microgrids. In 2012, 15,812 GWh
ment centers with more than 1500 inhabitants and social infrastructure of electricity was produced by 5 GW installed capacity of natural gas
that will not be connected to the grid before 2020. Kenya is the third and diesel off-grid generation in Australia (Off-Grid Renewable Energy
African country with a high potential for off-grid renewable systems Systems, 2015). The off-grid industries (mainly mining) consume
and microgrids, as only 23% of Kenya’s 44 million people had access to approximately 79% of total off-grid produced electricity. The genera-
electricity in 2010. In 2011, a 10 kW solar PV and 80 kVA diesel power tion capacity of the Pacific Islands was approximately 712 MW (78%
plant were implemented; and in 2013 a 13 kW solar PV microgrid was from fossil fuels and 22% from hydropower) in 2012. Many Pacific
installed. This effort was further expanded starting in 2016 to serve Island states – composed of numerous islands – are served by microgrids
200,000 homes from off-grid solar systems. Access to electricity in rural with 25 kW–10 MW diesel generators. The world’s first renewable
areas of Mali increased from 1% to 17% in 2006–2012 (Off-Grid energy island microgrid in the Garden Island, which is located off the
Renewable Energy Systems, 2015). This country has the highest coast of Perth in Western Australia, is expected to be electrified by a
installed capacity of solar PV/diesel generation microgrids (216 kW) mixture of generation technologies including wave energy, battery
in Africa. The Scaling Up Renewable Program is funded to increase the storage, and solar PV. This project funded by the Australian Renewable
capacity of solar PV generation with the existing diesel units in 40 Energy Agency boasts a capacity of solar PV and battery storage of
neighborhoods comprising a total of 5 MW solar PV. Several private 2 MW and 0.5 MWh, respectively. This project both provides electricity
operators are expanding the capacity of PV generation in conjunction to the islanders and produces desalinated water in grid-connected and
with diesel power plants. off-grid modes. This project is the first attempt to leverage wave energy

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to produce energy in microgrids, with clear implications for other (solar, wind, hydropower, and biomass) affect the capacity factor of
communities based in islands and remote coastal areas. renewable generation. In areas with adequate hydro resources, pico-
hydro systems with less than 5 kW generation capacity are used for
4. Expansion planning in off-grid microgrids individual or huddled households and small farms located near the
river. The mini-hydropower plants are built on sites where the
The microgrid and off-grid applications of microgrids are not new. minimum requirements for the head and flow of water are satisfied.
Numerous diesel and gasoline generators worldwide supply electricity Such installation sites should be reachable to developers to install the
to residential, commercial, and industrial facilities where the grid is required facilities. Installing wind generation unit is economical at sites
unavailable or unreliable. In developed countries, off-grid microgrids in which the average wind speed is above 4 m/s. Site monitoring must
are divided into two types: (1) those for rural communities, commer- be conducted on an annual basis to ensure enough renewable resources
cial, military, and industrial facilities, and (2) rooftop solar PV in are available for future expansion planning decisions. In the case of
residential households. Germany and Japan are currently providing biomass technology, the planner needs to ensure enough fuel resources
subsidies to promote self-consumption of solar PV in residential are available on an annual basis prior to using this technology for
facilities. For decades microgrids were the best option to supply remote power generation.
areas such as rural villages, islands, mines, and even small communities The other important factor is the cost of energy provided to
and cities that cannot be connected to the central electricity grid. The consumers. The electricity cost is affected by a number of elements
emerging renewable generation technologies changed the paradigm for including the capital cost, the operations and maintenance costs, and
developing off-grid microgrids. Utilization of these technologies in off- interest and inflation rates. The cost of energy is dependent on the
grid microgrids is growing in both developed and developing countries. generation technology and the size of the generation units. Diesel
With the declining cost and increase performance of small hydro generators with a diverse range of capacity from 5–10 kW systems to
facilities, solar PV and wind turbines and the technological improve- several megawatts power plants, provide a larger volume of electricity
ments of energy storage, off-grid integration of renewable energy with much lower capital cost per kilowatt than wind or hydro
resources has become a growing market. Utilizing renewable energy generation technology. For concentrated and interconnected customers,
resources, including biomass and geothermal, could reduce the adverse diesel generators coordinated with renewable energy technologies are
environmental effects of generating electricity and improve the eco- the preferred solution. One of the challenges in integrating this
nomics and availability of the energy resources. In the short term, the technology is the high cost of the diesel fuel and the volatility of the
market for developing off-grid microgrids with a high capacity of fuel price. The other challenge is the uncertainty in the availability of
renewable energy systems is expected to increase in islands and rural the diesel fuel because of the impediments in transporting the fuel to
areas by coordination among existing diesel generation with such remote locations. Furthermore, diesel generators require regular and
technologies. It is estimated that there are 10,000 islands around the costly maintenance that is performed by skilled technicians. The high
world with a population of 750 million. As discussed earlier, the fuel cost and its scarcity often diminish the low-capital-cost advantage
Philippines, China, and Indonesia have the largest population of of this technology. As a result of such drawbacks, and the environ-
islanders. Many of these islanders rely on diesel generation for mental issues of using this technology, utilizing diesel generation is not
supplying electricity to the islanders. The drawbacks of using diesel promoted in off-grid microgrids. Biomass gasifier engines and direct
generation include lower reliability and availability, the uncertainty in combustion engines also introduce similar environmental challenges
energy cost associated with the fuel and fuel transport, and the and therefore are regarded as less common solutions.
environmental issues. The islanders spend a significant percentage of Irrespective of leveraged technology, the reliability of service and
their gross domestic product (GDP) on fuel imports as a result of limited delivery of power with promised quality is an important factor in
access to efficient fuel transport system and increased transportation expansion planning practices. In the past experiences where quality of
cost for parts, crew, and other equipment for maintenance practices. In service was sacrificed to reduce investment and operational costs,
this section, the major challenges corresponding to the expansion consumer dissatisfaction and non-payments undermined the projects
planning of off-grid microgrids are presented in three major contexts. and the technological advancements they introduced. Therefore, the
reliability of the installed generation technologies as well as the
4.1. Economic considerations effective long-term maintenance practices and contracts that require
convenient access to the crew, and spare parts should be considered in
Expansion planning addresses the most economical solution to the long-term expansion planning studies.
increase generation and distribution capacity in microgrids to serve
demand. Such efforts captures: (1) long-term demand growth, (2) the 4.2. Variability and uncertainty
availability and transportation accessibility of resources (i.e. fossil fuels
and renewable resources), (3) availability of generation and distribu- The variability and uncertainty of renewable energy resources and
tion assets, (4) capital and O & M costs of generation and distribution fluctuation of nonlinear demand impact the security and reliability of
components, and (5) demand curtailment penalties and reliability energy supply. Seasonal and daily demand/supply variability would
constraints. In a microgrid, the outages in generation and distribution significantly increase the operation and expansion planning costs as off-
assets are considered as contingencies and an efficient expansion plan grid generation resources are designed to serve peak energy demand
maintains the reliability and energy security in normal mode and with minimal resource availability. A hydropower plant with large
contingencies. enough capacity to serve demand in the dry season with minimal
One important question that needs to be answered in expansion available hydro resources should curtail the generated energy in other
planning practices is the mixture of the generation technologies in off- seasons as generation capacity exceeds demand. To circumvent un-
grid microgrids. The designed system and leveraged generation tech- economic generation curtailment and alleviate intermittency and
nologies are dependent on the nature of the load and the financial variability of renewable generation, wind, solar PV, and even small
resources available to compensate for the costs of the project over the hydro generation units are coordinated with dispatchable generation
operation period. When the number of customers is low and scattered assets such as diesel generators or energy storage facilities. These
over a large geographical region, distributed energy solutions including hybrid systems are developed to serve uninterruptible loads such as
solar PV homes and distributed microgrids are the most economically cold storage facilities for food preservation, where the electricity
viable options. Another important factor is the availability of energy interruption cost is costly and intolerable. The higher cost of installing
resources. The availability and abundance of the renewable resources renewable generation resources (e.g. solar PV) is justified if the cost of

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diesel fuel is significantly high or fuel supply is limited due to logistic 4.3.2. Environmental Conservation
issues. Efficient operation of hybrid systems using diesel generators is The conservation indicator is associated with preserving the natural
only possible if the diesel fuel supply chain is reliable and the living environment. Contemporary efforts to reduce greenhouse gas
consumers can afford the fuel cost that may escalate over the planning emissions including CO2, SOx, and NOx, provide a cleaner environment
horizon. for off-grid communities. Expanding the capacity of non-carbon gen-
Energy storage is one of the major components of microgrids. This eration technologies and energy storage would reduce the reliance on
technology enables microgrids to operate using non-carbon-emitting conventional generation technologies and facilitate achieving this
resources. Renewable generation technologies such as PV solar genera- objective. For example, using wood as the major fuel resource in Sub-
tion require a voltage source with which to synchronize, and energy Saharan Africa combined with a steady increase in the regional
storage is the cleanest resource to provide such a reference in the population will lead to rapid deforestation, an adverse effect that could
microgrid. Energy storage also smooths the variability and volatility in be mitigated by replacing the current generation units with solar PV.
the renewable generation profile, provides reactive power support to Expansion of renewable resources can also introduce environmental
maintain the required voltage level, and improves the reliability and challenges, developing run-of-river hydro units can jeopardize wildlife
security of the microgrids by providing peak shaving and backup by killing fish and other species in the rivers, meaning that mini-
generation. The merit of energy storage is further highlighted in off- hydropower projects should be built in accordance with national
grid microgrids with limited generation resources that cannot benefit guidelines and regulations on wildlife protection and land use.
from the utility grid support to serve peak demand and maintain the
stability of the system. Furthermore, energy storage plays an important 5. Expansion planning practices and feasibility studies
role in the recovery and restoration process once the microgrid is
exposed to extreme conditions. Energy storage can be used to supply Expansion planning and feasibility analysis determine capacity,
mission-critical facilities and uninterruptible loads during possible location, and time for installing generation and distribution assets in
outages in the microgrid and facilitates the black-start operation to the microgrid to meet projected demand in the expansion planning
restore the electricity after contingencies. The penetration level of horizon. The generation resources have different portfolios so that
energy storage facilities in the 15 GW of worldwide microgrid capacity coordinating these resources ensures the economic, reliable, and secure
has increased to 25%, thanks mainly to the declining price of energy operation of off-grid microgrids. The output of conventional dispatch-
storage and increasing interest in renewable resources. able generators can be regulated and their operation costs are depen-
dent on the volume of fuel consumption; however, the generation
profile for solar PV and wind generation is uncertain, variable, and
4.3. Environmental considerations
volatile. Similarly, the demand in off-grid microgrids is dependent on
several factors including consumer behavior and environmental condi-
The prominent environmental benefit of a microgrid is the ability to
tions (e.g. temperature). Therefore, the challenging task is to determine
use waste heat to supply heat demand. As heat cannot be transported
the capacity of each generation technology considering the projected
over long distances, developing distributed generation solutions pro-
uncertainties in the planning horizon to ensure the certain reliability of
vide higher energy efficiency by using the waste heat in the exhaust
service for the consumers. The uncertainty in other economic factors
gases of thermal generation units as a byproduct of the electricity
such as capital cost of the assets, inflation and interest rates, fuel cost,
generation in microgrids. This heat energy can be used to provide hot
and other operations and maintenance costs could add further complex-
water, space cooling, and refrigeration (through absorption chilling).
ity to microgrid expansion planning practices. The deterministic and
The degree to which customers can reduce emissions through adoption
stochastic approaches and the overall solution framework for the
of microgrids is dependent on the capacity of the leveraged renewable
expansion planning of off-grid microgrids are presented in this section.
energy resources and energy storage technologies and their operation
scheme. The following environmental indices and indicators should be
5.1. Deterministic approach
measured and quantified in the expansion planning studies.
In this approach, the demand and generation profiles of renewable
4.3.1. Hazard prevention energy resources are considered as known parameters. The demand and
The hazard prevention index is associated with the environmental renewable generation time-series for the planning horizon are devel-
risks of using distributed energy resources. Such risks are associated oped using historical or synthesized data. Several techniques for
with the corrosive and toxic materials and chemicals that are used in renewable generation and demand forecasting can be used to improve
such technologies and the capability to recycle the pieces of equipment the accuracy of the considered time series. Such techniques can capture
at the end of their lifecycle. For example, in a lead acid battery the lead more parameters including ambient temperature to obtain more
is a toxic metal and the sulfuric acid is highly corrosive. These accurate estimates of the available renewable supply and demand.
substances can contaminate the soil and groundwater and pose a severe While deterministic approaches are theoretically straightforward and
threat to human health and the environment. Off-grid microgrids may simple to develop, ignoring the uncertainties in renewable energy,
use efficient lighting such as light-emitting diodes (LEDs), compact demand, the availability of generation and distribution resources, and
fluorescent lamps (CFLs), lead-acid or Li-ion batteries. Improper other economic factors will lead to errors in expansion planning
disposal of these devices will affect residents’ health and contaminate decisions. Therefore, stochastic approaches are used to address the
the soil and water resources. The waste management systems should uncertainties in the planning horizon.
effectively handle the hazardous materials and avoid the mixture of
such hazardous materials with household wastes and land in trash 5.2. Stochastic approach
incinerators. Furthermore, off-grid electrification developments should
be coordinated with national recycling programs to safely dispose of In this approach, the availability of renewable energy resources,
and recycle these devices. In remote locations without such programs, demand, and availability of the generation and distribution assets and
the consumers, developers, and the system operators should be trained the economic factors including capital costs, interest and inflation rates,
for the safe recycle and dispose of the hazardous waste. Furthermore, and operations and maintenance costs are represented by uncertain
the costs and constraints associated with recycling and disposal of the variables. Such uncertain variables are represented by a probability
assets with hazardous materials and wastes should be captured in the distribution function using the historical data. The uncertainty in the
long-term expansion efforts. expansion planning horizon is captured by generating scenarios using

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Fig. 1. The overall framework for the long-term expansion planning of off-grid microgrids.

the Monte Carlo simulation. There are several challenges in using the probability distribution functions, and boundaries for the uncertain
stochastic approach. The first is the computation burden associated variables. Scenario generation using Monte-Carlo simulation, and
with a large number of generated scenarios. The second is that the defining the uncertainty sets are among the practices to quantify the
probability distribution function for the uncertain variables is not uncertainty in the short-term and long-term operation planning pro-
readily available or inaccurate. Therefore, risk-averse stochastic ap- blems. The long-term operation planning problem captures the short-
proaches are used to mitigate the computation burden and eliminate term operation decisions as shown in Fig. 1. The short-term operation
the effect of probability distribution function on the expansion planning planning problem is formulated to address the economics and security
practices. As off-grid microgrids have limited generation resources to of the expansion planning strategies.
serve demand, the risk-averse solutions provide better reliability
measures compared to risk-neutral or deterministic solutions.
5.3.3. Short-term operation planning
The short-term operation planning problem assesses the economics
5.3. Overall Framework and security of the off-grid microgrid. The inputs to this problem are the
synthesized data as well as the expansion decisions of the long-term
Fig. 1 shows the outline of the framework for the expansion operation planning problem. Once the expansion decisions were made,
planning of off-grid microgrids. As shown in this figure, the long-term the short-term operation problem is formulated to assess for network
expansion planning studies are composed of three major components. security violations. The appropriate constraints (Cuts) reflect the
security/capacity signal from the network in case there is any net-
5.3.1. Data collection and synthesization work/security violation. Furthermore, the short-term operation plan-
The first step is to determine the characteristics of the generation ning problem is formulated as unbalanced optimal power flow or unit
and demand resources, as well as the energy infrastructure system. At commitment to provide the economic signals for the long-term opera-
this step, the demand profile, types of the customers (i.e. residential, tion planning problem. The short-term operation problem is formulated
commercial, or industrial), and the critical loads (e.g. hospitals, military to ensure that the determined expansion decisions provide the most
bases, chemical and biological processes) are identified. The data economic solution for the short-term operation of the off-grid micro-
collected from the identified resources are used to synthesize future grid.
data in multiple time scales. The time-series of the demand and supply
including the availability of the renewable energy resources, demand, 6. Conclusions
and the availability of the generation and distribution assets are used
for the short-term and long-term operation planning studies. Off-grid microgrids are among the most viable solutions for
electrification of remote areas, islands, and regions to which extension
5.3.2. Long-term expansion planning of the main utility grid is costly. Expansion planning of off-grid
The second step is to formulate the long-term expansion planning microgrids requires a concrete business model to engage the commu-
studies to determine the location, capacity, technology, and timing for nities, set appropriate tariffs that are comparable with utility tariffs,
expanding the generation and distribution assets to maintain the and provide incentives and subsidies to ensure that affordable energy is
network reliability and security. Several factors including, the long- supplied to customers. Examples of off-grid microgrid projects in China,
term availability and price of fuel, annual demand growth, construction India, the Philippines, United States, Canada and Australia show the
lead times for generation and distribution components, availability and current practices for implementing microgrids with a high penetration
transportation accessibility of resources (i.e. fossil fuels, hydro, and of renewable resources in different capacities. Feasibility studies should
renewable resources), financial incentives, operation and maintenance be carried out to address the economic, reliability and security, and
costs, availability of existing assets, and the reliability constraints are environmental impacts of such expansion plans in the microgrid. Such
captured at this step. The uncertainty is quantified by introducing the studies address the deterministic and stochastic solutions for microgrid

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expansion planning practices considering the uncertainties in the Disclosed Oct. 2016. [Online] Available: http://documents.worldbank.org/curated/
en/949261475785744433/pdf/000180307-20141202025238.pdf.
planning horizon such as availability of generation and demand Remote Village Electrification Program. [Online] Available: http://mnre.gov.in/file-
resources, availability of generation and distribution components, and manager/UserFiles/physical-progress-of-RVE-programme.pdf.
uncertainty in other economic factors including interest rates, inflation Rural Electrification and Development in the Philippines: Measuring the Social and
Economic Benefits. ESMAP Report No. 255/02. World Bank, Washington, DC.
rates, and installation, operations and maintenance costs. [Online] Available: http://siteresources.worldbank.org/INTPSIA/Resources/
490023-1120845825946/philippines_rural_electrification.pdf.
References WEO, 2016. Electricity Access Database. [Online] Available: http://
www.worldenergyoutlook.org/resources/energydevelopment/
energyaccessdatabase/.
Case Study—Annobon Island Microgrid. Princeton Power Systems. [Online] Available:
http://www.princetonpower.com/images/casestudies/pdfs/Annobon_CaseStudy_
Mohammad E. Khodayar received the B.Sc. degree from Amirkabir University of
Septembert2015.pdf.
Technology, Tehran, Iran; the M.S. degree from Sharif University of Technology,
Microgrid Market by Offering (Hardware- Power Generation & Energy Storage System,
Tehran; and the Ph.D. degree from the Illinois Institute of Technology, Chicago, IL,
Software, and Service), Connectivity (Grid Connected and Remote/ Island), Grid
USA, in 2012, all in electrical engineering. He was a Senior Research Associate with the
Type (AC, DC, and Hybrid Microgrid), Vertical & Geography – Global Forecast to
Robert W. Galvin Center for Electricity Innovation, Illinois Institute of Technology. He is
2022. [Online] Available: http://www.marketsandmarkets.com/Market-Reports/
currently an Assistant Professor with the Department of Electrical Engineering, Southern
micro-grid-electronics-market-917.html.
Methodist University, Dallas, TX, USA and an associate editor of the IEEE Transactions on
Off-Grid Renewable Energy Systems: Status and Methodological Issues. http://www.
Sustainable Energy. His current research interests include power system operation and
irena.org/DocumentDownloads/Publications/IRENA_Off-grid_Renewable_Systems_
planning.
WP_2015.pdf.
Philippines – Rural Power Project (English), Implementation Completion Report Review.

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