Optimization-based Insights on Renewable Integration in Fossil-Fuel-Powered Microgrids under Market Power Conditions: A Lebanese Case Study

Microgrids provide a reliable supply alternative to unstable public electricity grids in developing countries such as Lebanon. However, privately owned microgrids often prioritize fossil fuel generation over the integration of renewable energy, as they aim to maximize profit by increasing the utilization of their existing diesel generators. This study employs a mixed integer linear programming model to optimize the operation of a microgrid under market power conditions imposed by its owner. It also examines the interactions between microgrid owners, household consumers, and household prosumers with rooftop solar PV. Results indicate a transition from diesel generators to solar PV, yet generation remains largely controlled by microgrid owners, limiting prosumer contributions. Although the unutilized rooftop PV generation capacity decreases, the reduction remains modest. Furthermore, profit-driven disconnections of unprofitable prosumers increase as penalties for unmet demand become more severe. The findings highlight the need for policy interventions in developing countries to further improve rooftop photovoltaic utilization and ensure equal access to electricity for all microgrid customers.