Community Microgrid

Community microgrids can deliver many benefits to rural and regional communities, such as improving the reliability of their electricity network. More specifically, community microgrids can assure continuity of electricity supply under natural disasters (e.g., bushfires, storms and floods) while coordinating local renewable energy resources (e.g. solar-PV systems) and energy storage systems. There are many communities in the world vulnerable to natural disasters, however, they require support and expertise to develop microgrids. Using our technical, regulatory and policy expertise on community energy systems, we can assist these communities to build and operate microgrids.

This website provides vital information on microgrid planning, design, and other relevant aspects (business models, policy and regulatory aspects).

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What is a Community Microgrid?

There are many definitions presented for defining a microgrid (e.g. ARENA and US Department of Energy). Considering the unique attributes of a community microgrid it can be defined as:

“a group of coordinated local energy resources, such as solar-photovoltaic (PV) and battery energy storage systems, designed to serve the energy demand of a local community. Community microgrids operate within a clearly defined boundary with the ability to operate in standalone mode, without the energy supply from the main grid. Therefore, during grid outages, the microgrid can be ‘islanded’ and will maintain the continuity of the electricity supply to local community loads, such as households, local businesses, and community centres. The community microgrid can also be stay connected with the main grid and can participate in energy arbitraging and provides system support services.” 

Figure 1: A community microgrid.



Moreover, the following definitions are also used to define a microgrid:


ARENA Definitions

Embedded Microgrid
An electricity supply arrangement that coordinates and optimises the use of connected, locationally proximate distributed energy resources (DER) to provide secure and reliable electricity within the microgrid and is able to provide value to the major grid. This could include energy market participation, provision of system flexibility, systems services and deferral of network investment. [1]
Standalone Power Systems (SAPS)
An electricity supply arrangement that can demonstrate temporary or permanent operation when not physically connected to a major grid. SAPS encompasses supply to single and multiple customers. Where:
  • customers, currently connected to a major grid, can move to a SAPS, or
  • a SAPS is installed rather than a new grid connection. [1]
Remote Isolated Microgrid
An electricity supply arrangement that already operates as an isolated SAPS and will continue to do so. These systems are often in very remote locations and managed by State Government owned corporations. [1]

United States Department of Energy Microgrid Definition

Microgrid
A group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. Microgrids can connect and disconnect from the grid to enable them to operate in both grid-connected and island modes. [2]

What are the Main Components of a Microgrid?

A typical microgrid consists of the following key components:


Distributed Energy Resources: These include solar PV systems (both rooftop systems and solar PV farms) and energy storage systems. In many microgrids, battery energy storage systems are used; however, supercapacitors, compressed-air storage systems and thermal batteries are sometimes also used. Wind generators are also used in microgrids, depending on available wind resources at the microgrid site. In some cases, diesel generators are used as a backup source, but diesel is not a recommended source for new low-carbon microgrids.


Loads, or Energy Consumers: These include the electrical loads of dwellings, community buildings, local industries and farms. Microgrid loads are not limited to these examples, as any equipment or building connected to the microgrid can be considered a load served by it.


Distribution Network: This refers to the electrical network (e.g., wires, cables, and transformers) that delivers power from the DERs to the energy consumers. Typically, the existing distribution network is used when designing the community microgrid. However, it may need to be augmented to include additional equipment, such as circuit breakers, to facilitate off-grid operation.


Microgrid Controller: A controller is required to coordinate the DERs. The controller also balances the generation and the load demands and provides additional support services to the microgrid, such as voltage and frequency support, fault ride-through capability and black-start capability. Moreover, it manages power and energy flows between the microgrid and the main grid in accordance with the business model adopted by the microgrid operator.

How a Microgrid Work?

Figure 2: A detailed architecture of a community microgrid.

Main Design Considerations

  1. Purpose of the Microgrid: The primary purpose of the microgrid should be identified as the top priority in the design process. For example, a microgrid can be designed to improve the energy reliability of a community when a community is experiencing severe reliability issues due to an unreliable supply feeder. Once the purpose of the microgrid is clearly defined, the key attributes of the microgrid should be identified, such as required duration for the off-grid operation with the local energy sources etc.

  2. Availability of Energy Resources: The availability of the primary energy source should be taken into consideration when designing the microgrid. For example, if solar-PV is used as the primary energy source, then the availability of the solar resource at the microgrid location should be considered. Typically, 1 to 3 years of historical data should be considered when determining the firm energy capacity of the source.

  3. Network Availability and Augmentations/ Upgrades: Network is imperative to deliver the generated power from microgrid sources to the energy consumers. Typically, the existing distribution network can be used with the consent from the distribution network system operator. Also, in some cases the existing network need to be augmented (e.g., distribution lines, cables, and transformers) to accommodate new energy sources to the microgrid. These upgrades should be identified at the design stage of the microgrid.

  4. Control Functions: The control functions (e.g., voltage and frequency control and black-start capability) of the microgrid controller should be determined at the design stage to design appropriate controllers and size the energy storage systems for the microgrid.

  5. Financial Resources: Availability of financial resources, such as equipment funding is one of the main constraints in designing a microgrid. The funds can be sourced from federal and state government grants, loans, private investors, community groups and microgrid operators. The available funds will also determine the size and capacity of new energy resources which can be added to the microgrid.

  6. Business Models: The business model specifies how the microgrid should be operated from the financial perspective. This includes, revenue streams, energy costing and billing, and investment decisions etc. This must be decided at the design stage of the microgrid, as the business model dictates some of the technical functionalities of the microgrid. The available financial resources and the business models should be considered together to assess the economic viability of the microgrid.

  7. Policy and Regulations: The microgrid should be complied with the underlying policies and regulations, and hence “what can” and “what cannot” from the policy and regulation perspective should be identified at the design stage to design a practically feasible microgrid.

Microgrid Operational Requirements

Generally following operational requirements are followed by microgrid designers and operators:

Planning and Design of a Microgrid

The following design process can be followed to plan and design a community microgrid:

Identify Opportunity

1. Define goals (e.g. energy cost reduction, enhance reliability & resilience, reduce environmental impact)
2. Site selection and determine boundaries (geographical and electrical) of the microgrid
 -Physical boundaries (buildings, houses, facilities, etc)
 -Distribution system configuration (feeders, substations, etc)
3. Determine the key stakeholders

Data Collection

4. Evaluate existing conditions
 - Existing network data
 - Existing resource capacities (e.g. solar-PV, wind, etc.)
 - Weather conditions/ historical natural disasters
 - Historical outage data
 - Demographic information
 - Development plans
5. Identify energy needs
 - Critical loads to be served
 - Peak demand to be served
 - Availability of additional renewable sources

Feasibility and Design Analysis

6. Define operational requirements
7. Evaluate policy and regulatory requirements
8. Formulate and analyse possible solutions
 - Battery energy storage system requirements
 - Generation sources to cater the load demand
 - Compliance with technical standards
9. Cost estimation & financial feasibility analysis
10. Acquire investments and funding

Detailed Design

11. Configuration of systems and controls
 - Development of control architecture for microgrid and edge elements
 - Integration of existing assets
 - Implementation of management/control interface

Construction and Operation

12. Construction and operation
 - Construction of physical assets
 - Integration of existing assets
 - Rectification of defects
 - Data analysis and documentation
13. Maintenance and future upgrades
 - Routine maintenance
 - Integration of additional resources or extending the physical boundaries

Site Selection for Microgrids

Appropriate site selection for a microgrid is crucial, and many aspects must be carefully considered when deciding a site to construct the microgrid.
Some of the factors to be considered are:

The following basic steps should be followed when selecting an appropriate site for a microgrid.

Step 1 : In the first step, designers and planners should use data like geographic information system (GIS) data, weather data (solar, wind, and temperature), and rural and country electrical grid data and feedback from the state government, community and rural town council officials and distribution network service provider to identify the most suitable site for the microgrid. Most recent data should be used for the analysis and may require site visits to verify the information.

Step 2 : Microgrid designers/planners should do a site visit to verify the data collected in Step 1. This will also help to begin direct communication with the relevant community and public entities to measure the actual interest of the community/town covered by the microgrid.

Step 3 : In the third step, designers/planners should do a preliminary feasibility study of the microgrid incorporating renewable energy resources and storage.

Step 4 : Microgrid designers/planners should conduct a detailed feasibility study incorporating the evaluation of the existing and future electrical load demand. If electrical load demand does not meet operational expectations, the income generated by the microgrid may not be adequate to cover the microgrid's construction, maintenance, or repair costs. Electrical load demand and generation forecasting are essential to participating in the national electricity market. Major considerations should be given to demand-side management to ensure that the load demand does not exceed the local generation to guarantee continuous revenue.

Sizing of Renewable Resources and Storage for Microgrids

Along with the microgrid site selection, it is vital to explore the optimal control, optimal microgrid component sizing, and the operation of microgrids with different renewable energy technologies and storage systems to find the best design choices if the microgrid is installed at a given location. For example, the energy dispatch and economic operation of a microgrid can be analysed from the perspective of integrating photovoltaic (PV) generators, energy storage systems (ESS), different distributed energy resources (DER) and backup generators by using professional power system tools or customised optimisation algorithms considering simple economics, reliability, and renewable generation uncertainty issues.

Various professional design tools and customised mathematical algorithms are available for microgrid planning and hosting capacity assessment. These tools and algorithms can be used for microgrid design and optimal sizing of renewable energy generators and storage to guarantee economical operation, control, and system reliability.

Figure 5 shows a simple working principle with input and output blocks and their functionalities for the renewable energy generator and storage sizing of a microgrid. For optimal sizing of the microgrid components, the following are the required input data: electrical load demand; renewable resources and availability; microgrid components (renewable and non-renewable generators, inverter/converter, energy storages, grid electricity prices and grid reliability) details; microgrid system constraints; microgrid system energy dispatch and control; emission data.

Figure 5: A block diagram representing the process of finding the optimal renewable energy generator and storage capacities/sizes for a microgrid.

Once these input data are provided to a particular design tool or sizing algorithm, based on the design constraints, it can output a set of results, including optimal component sizes, net present cost (NPC), cost of energy (COE), levelised cost of energy (LCOE), capital cost, capacity shortage, excess energy generation, and renewable energy fraction. From these results, optimal component sizes can be selected for the detailed microgrid reliability analysis and operation to ensure that the power system reliability, voltage, and frequency requirements have been met.

Software Tools

The following software tools are available to plan and design microgrids.

resources

Homer Energy

resources

REOPT

resources

XENDEE

Grid Codes and Technical Standards

Microgrid should adhere to the technical requirements stipulated by the local distribution network service provider (DNSP) and the National Electricity Rules (NERs). In addition, in Victoria, the microgrid should adhere to the rules stipulated in the “Electricity Distribution Code of Practice.”

Embedded Generator Rules of DNSPs: Jemena, CitiPower, United Energy, AusNet Services and PowerCor

National Electricity Rules (NER) : Regulates the generation assets participating in National Electricity Market (NEM) in Australia. If the microgrid is participating in the electricity market, then these rules apply to the microgrid.

Electricity Distribution Code of Practice : Regulates the activities such as distribution of electricity by a distributor to its customers, connection of an electrical installation or embedded generating unit to the distribution system, regulate the disconnection of, and planned and unplanned interruptions of supply to customers, regulate the activities of exempt distributors and promote and promote the long-term interests of Victorian consumers.

The following national and international standards are also applicable to microgrids and their generation sources:

IEEE1547 : Stipulates the technical requirements for interconnection and interoperability of distributed energy resources with associated electric power systems interfaces

AS/NZ4777/2 : Provides the technical requirements for grid connected inverters

IEEE2030 Series : Provides technical guidelines for Smart Grid interoperability of energy technology and information technology operation with the electric power system

If the microgrid is registered to provide demand response services, then the technical requirements stipulated in AS 4755 will apply.

Factors Affecting the Financial Viability of Microgrids

A range of factors should be taken into consideration when determining the financial viability of the microgrid, and the levelized cost of electricity (LCOE). These numbers will vary from one microgrid to another due to various design considerations and techno-economic factors. The following factors affect the cost of electricity generated by the community microgrid:

  1. Investment cost
  2. Subsidies and grants
  3. Operation and maintenance cost
  4. Network cost
  5. Revenue streams
  6. Financing cost
More information is available in the white paper
Community Microgrids White Paper

Employment Aspects of Community Microgrids

The various stages of a community microgrid project, from design through to establishment and maintenance, create different local employment opportunities because they require different specialised skills.

Establishment Stage:
During the initial stages of the project, (partial) jobs may be created in community engagement, infrastructure and equipment installation.

Operation Stage:
Once the community microgrid is in operation, little or no workforce will be needed, depending on the control structure of the system. If the system is fully autonomous or virtually built, onsite operators will not be required. However, for routine or periodic maintenance, a few skilled workers might be needed.

More information is available in the white paper
Community Microgrids White Paper

Climate Change Mitigation Potential

Renewable energy sources play a crucial role in community microgrids as they are typically designed to maximise the use of local renewable energy sources for catering the local energy demand. Even under grid-connected operation, electricity generation from local renewable energy sources can be prioritised to cater to the local energy demand (including the locally stored energy in the battery energy storage system) before importing power from the main grid[1]. Only a few microgrids have employed diesel backup generators, and now they are being gradually replaced by battery energy storage systems. Therefore, community microgrids can assist in reducing the carbon emissions from power generation without depending on the fossil fuel-dominant power grid.

Emission reduction by the community microgrid can be calculated considering the amount of energy served by the renewable energy sources in the microgrid, life-cycle greenhouse gas (GHG) emission values of the microgrid sources and generation sources of the power grid [2]. Since the generation mix varies from one dispatch interval to another, the average generation mix of the power grid can be considered when determining the GHG emission from the power grid. However, for a precise calculation, interval-by-interval generation mix must be considered.

In the absence of a national or regional carbon price, the cost of carbon emissions is limited to the “social cost of carbon.” This is defined as the socio-economic damages caused by an extra tonne of CO2 emission. These damages can range from climate change by heat-trapping, respiratory diseases from smog and air pollution to extreme weather conditions, food supply disruptions, and increased wildfires[3]. Climate change-related (marginal) damages may span over several sectors, including agriculture, health, and labour productivity[4]. The social cost of carbon has been estimated between 44 and 413 USD per tonne of CO2[5].

  1. This may not be the most economic operating mode for the community microgrid but can be programmed if the community has a renewable energy target.
  2. IRENA, Avoided Emissions Calculator. Available: url
  3. C. Nunez, Carbon dioxide levels are at a record high. Here is what you need to know. - National Geographic. Available: url.
  4. Stanford, Stanford explainer: Social cost of carbon. Available: url
  5. K. Rennert et al., Comprehensive evidence implies a higher social cost of CO2, Nature, 2022.

Regulations in Victoria and Australia

Regulations in Other Countries

Each country has a unique regulatory landscape for their electricity network and the generation infrastructure. Therefore, different regulatory frameworks are employed in each country for microgrids, and in many cases the regulations associated with distributed generators apply to microgrids. Microgrid regulatory frameworks of several countries are described below:

United States

Microgrids are regulated through interconnection rules of each state. The interconnection rules/ policies stipulate the technical requirements and the contractual terms for the distributed generators and microgrids. The grid interconnection process is initiated by submitting an application to the utility. Then it will be reviewed against the interconnection criteria: (1) Design Requirements; (2) Operating Requirements; (3) Dedicated Transformer; (4) Disconnect Switch; (5) Power Quality; (6) Power Factors; (7) Islanding; (8) Equipment Certification; (9) Verification Testing; and (10) Interconnection Inventory1.

Moreover, if a microgrid fulfills the criteria for a “qualifying facility (QF)” defined by the Public Utilities Regulatory Policies Act (PURPA) of 1978, then it will receive a special regulatory treatment and can reduce the regulatory burden. The generating capacity, fuel-use criteria, and efficiency standards are considered when determining the QF status for the microgrid. Finally, microgrids should comply with the building, safety, and environmental codes and regulations [1].

Singapore

The Singapore Electricity Act regulates the generation assets, and according to this act each generator (including microgrids) rated 1 MW or above should be registered with the Energy Market Authority. If these distributed generators or microgrids wish to export electricity to the main grid, then it must be registered as a market participant with the Energy Market Authority. However, if a generator unit or a microgrid is rated below 1 MW, then they are allowed to export electricity without registering with the Energy Market Authority. Despite these regulatory requirements, there are some challenges exist for microgrids in terms of licensing requirements for individual generator units of the microgrid, access requirements to the main grid, as they are typically connected to the distribution networks (existing right to access principals applies to transmission connected assets), islanding requirements, and interconnection requirements.

1. The Ernest Orlando Lawrence Berkeley National Laboratory, International Microgrid Assessment: Governance, Incentives, and Experience (IMAGINE), June 2012.

Community Microgrid Examples in Victoria


State Government Funded Feasibility Projects:


Federal Government Funded Feasibility Projects:


Demonstration Projects:

Community Microgrid Examples in Australia


Federal Government Funded Feasibility Projects:

International Examples

San Francisco - Valencia Gardens Energy Storage (VGES) Project [1]

Key features:

  • The first front-of-meter merchant energy storage project in California, sited at the Valencia Gardens Apartments(VGA) with 260 units.
  • A total of 580 kW of solar is installed in the system, which exceeds the peak load demand (570 kW).
  • A 250 kW & 556 kWh battery energy storage system (BESS) is deployed to support the network under grid outages.

Objectives:

  • Increase the VGA feeder hosting capacity by at least 25%,
  • Examine how storage capacity can be monetised by the wholesale market,
  • Study the enhancements and associated costs required to upgrade VGES to an operational Community Microgrid,
  • Propose policy & market mechanism innovations that advance commercial-scale front of meter energy storage and other distributed energy resources
[2]


California - The Redwood Coast Airport Microgrid (RCAM) [3]

Key features:

  • The first front-of-meter, multi-customer microgrid in Northern California.
  • Consists of 2.2 MW solar-PV and DC coupled 2.2 MW/8.8 MWh battery energy storage system, and 300 kW of net metered solar PV.
  • Operates in both islanded mode and grid-connected mode.
  • Participates in wholesale market operated by California independent system operator.

Objectives:

  • Demonstrate a viable, replicable business model for a 100% renewable community-scale microgrid;
  • Provide resilience to critical community services under climate change driven natural disasters;
  • Provide local benefits via renewable energy development;
  • Reduce greenhouse gas emissions;
  • Develop agreements, standards and processes for replicability, advance technology and policy through cutting-edge public research.
[4]

Donald and Tarnagulla Microgrid Feasibility Study - Area Hosting Capacity Assessment

This project was part of a larger project to assess partial or full microgrid feasibility in two regional Victorian towns with supply vulnerabilities. The two load centres of Donald and Tarnagulla have 1034 and 144 predominately residential customers respectively and are supplied through long rural lines with high-reliability risks for these communities. The network operators and the community groups in these two towns have been interested in improving the reliability of their power supply by enabling cost-effective fully or partially self-sustaining microgrids through alternative energy resources such as solar and battery storage.

This project addressed parts of a feasibility study for microgrids in the two regional Victorian towns under the Federal Government’s Regional and Remote Communities Reliability Program Fund – Microgrids Fund 2019-20 Grant. The team at RMIT University has led the detailed hosting capacity assessment study for the proposed microgrid facilities at “Donald” and “Tarnagulla” in collaboration with Centre for New Energy Technologies (C4NET), Monash University, University of Melbourne and Powercor. These two regional Victorian towns have been experiencing power supply vulnerabilities and the project aimed to explore various hosting scenarios to assess the hosting capacity and feasibility of partial or full microgrids in these two towns. The outcomes of this project were also utilized in the other parts (projects) of this feasibility study to provide the communities with potential alternative and renewable solutions for their energy supply.

This project has been divided into four sub-project tasks and the detailed results and outcomes of these tasks are provided in the final report (Link). In the first task, the detailed models of the networks of Donald and Tarnagulla with associated distributed energy resources (DERs) have been developed in the simulation platform. This was followed by identifying customer types and behaviour by applying state-of-the-art machine learning and data analysis techniques on the de-identified smart meter and network data provided by C4NET and Powercor. The hosting capacity has been assessed for various operation modes of the microgrids such as grid-connected, stand-alone and VPP modes considering both the economic and reliability aspects of the network. This was followed by simulating various load and generation hosting scenarios to assess the capacity of the MV and LV networks of these towns as well as their supply network. Furthermore, the load and generation profiles identified through the data analytics phase of the project are used to perform quasi-dynamic simulation in order to quantify the network impact associated with the observed customer behaviours. Additionally, the study explored the feasibility and effects of advanced and innovative technologies in increasing the hosting capacity of the proposed microgrids.

Community Microgrids White Paper

This white paper covers the planning, design and control of community microgrids, with a strong emphasis on policy-related, regulatory, legal, financial and economic aspects.

Our Publications

  • M. Ahmed, L. Meegahapola, A. Vahidnia, and M. Datta, “A Novel Hybrid AC/DC Microgrid Architecture with a Central Energy Storage System,” IEEE Transactions on Power Delivery, vol. 37, no. 3, pp. 2060 – 2070, Jun. 2022.
  • M. Ahmed, L. Meegahapola, A. Vahidnia and M. Datta, "Stability and Control Aspects of Microgrid Architectures–A Comprehensive Review," in IEEE Access, vol. 8, pp. 144730-144766, 2020, doi: 10.1109/ACCESS.2020.3014977.
  • M. Farrokhabadi, Claudio A. Canizares, John W. Simpson-Porco, L. Meegahapola et al., “Microgrid Stability Definitions, Analysis, and Examples,” IEEE Transactions on Power Systems, vol. 35, no. 1, pp. 13-29, Jan. 2020.
  • M. Ahmed, L. Meegahapola, A. Vahidnia, and M. Datta, “An Adaptive Power Oscillation Damping Controller for a Hybrid AC/DC Microgrid,” IEEE ACCESS, vol. 8, pp. 69482-69495, Apr. 2020.
  • V. Jayawardena, L. Meegahapola, D. Robinson, S. Perera, “Microgrid Capability Diagram: A Tool for Optimal Grid-tied Operation Renewable Energy,” Renewable Energy, vol. 74, pp. 497- 504, Feb. 2015.
  • V. Jayawardena, L. Meegahapola, D. Robinson, S. Perera, “Representation of a Grid-Tied Microgrid as a Reduced Order Entity for Distribution System Dynamics and Stability Studies,” International Journal of Electrical Power and Energy Systems, vol. 73, pp.591-600, Dec. 2015.

External Resources

RMIT - Sustainable Technologies and Systems Platform

RMIT Enabling Impact Platform for Sustainable Technologies and Systems.

Investing in fire resilient energy infrastructure to provide reliable power supply in all conditions.

DEECA – New Energy Technologies

Exploring emerging energy technologies to support our emissions reduction and renewable energy targets.

Frequently Asked Questions

What is a community microgrid?

There are many definitions for a microgrid, however considering the unique attributes of community microgrids it can be defined as;

“A community microgrid is a group of coordinated local energy resources, such as solar-photovoltaic (PV) and battery energy storage systems, designed to serve the energy demand of a local community. They operate within a clearly defined boundary with the ability to operate in standalone mode, without the energy supply from the main grid. Therefore, during grid outages, the microgrid can be ‘islanded’ and will maintain the continuity of the electricity supply to local community loads, such as households, local businesses, and community centres. The community microgrid can also be stay connected with the main grid and can participate in energy arbitraging and provides system support services”

How can a microgrid help to improve electricity network reliability?

The rural and regional communities are supplied by long distance feeders. These feeders are likely to be damaged during natural disasters (e.g., bushfires) and harsh weather conditions (e.g., storms). Therefore, the rural and regional communities may have to stay without electricity for days until the electricity supply system is fully restored. However, when a microgrid is established, it can maintain the continuity of the electricity supply without depending on the main grid. Thus, community microgrids can help improve the reliability and resiliency of rural and regional electricity networks.

What is the cost to the customers?

There is no simple answer to this question. The cost will vary from one microgrid to another due to various design considerations and techno-economic factors. The following factors affect the cost of electricity generated by the community microgrid:

  • Investment cost
  • Subsidies and grants
  • Operation and maintenance cost
  • Network cost
  • Revenue streams
  • Financing cost
For more information, please refer to Cost of microgrid supplied electricity.