Quantifying Changes in Retail Electricity Rates Resulting from a Microgrid Deployment
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2017-12
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Abstract
Understanding how a proposed microgrid would affect customers is critical to deciding whether to deploy such a system and this paper seeks to assess how a microgrid deployment would affect retail electricity rates for residents of Cape Hatteras, North Carolina.
To answer this question, a simplified model was first developed and then run using inputs specific to Cape Hatteras imagining a microgrid system with local distributed generation. The results of the modeling suggest that average retail electricity rates, in $/kWh, will increase slightly during winter months but decrease slightly during the summer. Additionally, annual electricity bills for Cape Hatteras residents can be expected to decrease by an average of $114.14 per year.
The results of the modeling also suggest a -21% rate of return to the local co-op for the overall project and all individual project segments apart from the demand response initiative. However, project rate of return is heavily dependent on the frequency and severity of major outages. Additionally, microgrid designs are highly customizable for use with different technologies and government policy can play a significant role in ensuring economic viability of a microgrid paired with distributed generation. In all, a holistic review suggests there is the potential for an economically-viable microgrid deployment on Cape Hatteras, NC.
The completion of this project enabled me to synthesize the various topics of learning throughout the EPC program. I was able to apply my knowledge of finance, the technical aspects of different energy technologies, and created the potential for policy integration to test the real-world effects of different policies. During the completion of this project, I also gained more insight into renewable project financing for energy cooperatives, community cooperative operations in general, and an appreciation for energy efficiency and grid modernization efforts currently underway at local levels.
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microgrid, retail electricity rate, distributed generation, Cape Hatteras