Can grid-forming inverters pay off? A techno-economic analysis of photovoltaic and battery systems in low-inertia power systems

The increasing penetration of inverter-based renewable generation reduces natural power-system inertia and increases the need for grid-forming (GFM) control. This study develops an integrated technical-economic framework for comparing grid-following (GFL) and GFM operation in a residential PV + BESS system under Romanian low-inertia conditions. The technical assessment is performed using an electromagnetic-transient MATLAB/Simulink model of a 5 kWp PV system coupled with a 10 kWh battery. GFL synchronization is implemented through a phase-locked loop, whereas GFM operation combines droop control with virtual inertia emulation. A fixed-step resolution of 50 μs is used to simulate a 1.2 kW step-load increase and a 20% voltage sag, with performance evaluated through frequency and voltage deviations, stabilization time and rate of change of frequency (RoCoF). The technical analysis is complemented by a discounted cash-flow model based on NPV, IRR, classical and adjusted LCOE, payback period and sensitivity analysis. Results show that GFM substantially improves dynamic response, reducing RoCoF from 18.99 to 6.34 Hz/s while providing faster voltage and frequency recovery and islanding capability. Under the analyzed economic assumptions, GFM achieves an NPV of approximately €2591, an IRR of 10.4%, and a GFM-premium payback of approximately 2.85 years.