Minimizing the multi-decadal cost of islanded renewable-electricity microgrids for different climate zones

Abstract The aim of this study is to minimize the cost of developing a renewable energy islanded microgrid that provides reliable electricity and thermal comfort for a small building over multiple decades. The study is carried out with a model that minimizes the total cost of energy system components. Four different system configurations considering solar photovoltaics, electric heat pumps for heating and cooling, and a subset of battery-electricity storage, hydrogen-fuel-cell-electricity storage, and thermal-energy storage with phase-change materials are modeled. The objective is to minimize total lifecycle costs (capacity and operational costs) while ensuring reliable electricity as well as heat and cold supply. Over five climate zones, four system configurations, and 25 weather years, the annual costs of 100% renewable microgrids for residential-type loads and structures are at least 67% lower than the same microgrid powered with diesel generators for 75% of the cases. On average, using renewable energy instead of diesel reduces the annual cost of islanded microgrids by 72%. Systems with higher technology diversity, such as batteries combined with hydrogen-fuel-cell-electricity storage, result in even lower average-cost solutions (75% lower than diesel); however, they may increase the risk of loss of load events over the project lifetime if the systems are optimized for only one weather year. Despite the higher risk, the incremental cost to reduce one kWh loss of load over multiple weather years is estimated to be 89% lower with both batteries and hydrogen than with batteries alone, highlighting the value of diverse technology portfolios in microgrid planning. • Renewable microgrids cut annualized costs by ≥67% in 75% of tested base cases • Thermal storage cuts costs by 78% in cold climates compared to battery-only systems • In California, PV-battery-hydrogen systems reduce costs by 23% over battery-only • Battery-hydrogen setups lower loss of load more cheaply than battery-only systems • Robust sizing across weather years avoids overfitting and enhances reliability