Cost Implications for Collaborative Microgrids: A Case Study of Lean—Heijunka Microgrid Operations Mitigating Renewable Energy Volatility

The volatility of renewable energy outputs is a well-known obstacle that has hindered the integration of more renewables in the UK’s energy mix, as the current network was not designed to handle such swings. Microgrids (MGs) may function as an effective means of integrating more renewables, particularly if they can effectively control the volatility of renewables at a smaller scale (the MG level) through a collaborative operational strategy. This paper focuses on the management of renewable energy fluctuations in MGs, proposing a pre-contract order update (COU) strategy based on the lean balancing (Heijunka) concept. The study compares the performance of collaborative and selfish MGs in terms of levelized cost of electricity (LCOE), order volatility, and carbon emissions. Two simulations models for the collaborative and selfish MGs were implemented, while considering two distinct backup generation scenarios within the MG system. The findings indicate a two-dimensional trade-off between the collaborative MG models, which are 61% more sustainable and reduce order volatility to the utility grid by 55%, and the selfish MGs, which incur lower energy consumption costs reduced by only 19%. These findings highlight the potential of collaborative MGs in enhancing grid stability and supporting broader renewable energy integration goals.