Efficient multi-year economic energy planning in microgrids

With energy systems, the problem of economic planning is decisive in the design of a low carbon and resilient future grid. Although several tools to solve the problem already exist in literature and industry, most tools only consider a single typical year while providing investment decisions that last around a quarter of a century. In this paper, we introduce why such an approach is limited and derive two approaches to correct this. The first approach, the Forward-Looking model, assumes perfect knowledge and makes investment decisions based on the full planning horizon. The second novel approach, the Adaptive method, solves the optimization problem in single year iterations, making incremental investment decisions that are dependant on previous years, with only knowledge of the current year. Comparing the two approaches on a realistic microgrid, we find little difference in investment decisions (maximum 21% difference in total cost over 20 years), but large differences in optimization time (up to 12000% time difference). We close the paper by discussing implications of forecasting errors on the microgrid planning process, concluding that the Adaptive approach is a suitable choice.