Optimal green investment strategy for grid-connected microgrid considering the impact of renewable energy source endowment and incentive policy

Microgrid is a promising way to integrate renewable distributed generation into the electric power sector, which has received widespread attention. In this paper, a uniform capacity-constrained optimization model under different power purchase and sale price contracts is developed to explore the optimal green investment strategy for grid-connected microgrid (GCM) with three configuration types. The impact of renewable energy source endowment and incentive policy is focused when macrogrid’s generators emit more pollution than GCM’s non-renewable generators, such as in China and India. The results show that: (1) GCM with renewable generation can only be invested in a site with relatively abundant renewable endowment; (2) carbon tax effectively promotes the deployment of GCM with renewable generation and achieves carbon emission abatement, but excessive carbon tax cannot incentive investment in the most desired GCM type; (3) a subsidy trap is found under feed-in tariff (FIT) subsidy, which implies that the fade-out or exit of FIT subsidy is beneficial for microgrid’s healthy development; (4) and the comparisons under different price contracts emphasize the importance of macrogrid providing non-discriminatory access to feed-in and feed-out services to microgrid.