Page 65 - Energize August 2022

TECHNICAL

Energy modelling: an essential step

in microgrid projects

In recent years, consumers are increasingly considering microgrids due to the aging infrastructure
of the centralised electric power grid, growing concerns about energy availability and quality, more

frequent extreme weather events caused by climate change, corporate and governmental emissions
mandates, and rising costs of utility power and fossil-based fuels.

by Shalaw Mohammed, Cummins

microgrid is a system that is its location. The modelling result will outline the system performance both financially and
composed of one or more energy technically for each mix of assets and sizing of these assets.
g
A eneration and/or storage assets For example, a utility-connected commercial facility is interested in installing solar
that produces power locally, with the photovoltaic (PV) panels and storing excess energy in a battery energy system to reduce
option of supporting the facility load their utility charges. The energy model will evaluate the facility load, utility tariff structure,
separately from the traditional power available solar radiation and various sizes of batteries and PV installations, to determine the
utility. It offers consumers the ability to best configuration of technologies for the facility. The modelling results can help to quickly
produce power with high reliability and assess the financial, technical, and environmental feasibility and benefits of the project and
potentially lower costs by diversifying their provide guidance on the operation of the system to best realise the project objectives.
energy mix. Realising a microgrid solution
that unlocks these benefits, however, can Why is energy modelling important?
at first seem challenging. When it comes to microgrids one of the most common questions is “What is the best mix and
Microgrids are large investments size of assets for my operation?”. The answer depends on many variables such as available
and without expertise in this area it may space, site electrical load, equipment pricing, environmental impact goals, accessible fuel
seem difficult to achieve the desired sources, tax incentives, among many other considerations. An energy model can provide the
project objective. The first key step when answer to many of these questions by evaluating all the different factors using site-specific
considering a microgrid is to look at information.
the economics of different technically The model can then sort the hundreds, and sometimes thousands, of feasible solutions
feasible solutions. This can be done with to narrow in on the results that best achieve the objectives of the project. Energy models,
a system model that considers the project due to the fact that they are simulation-based, can be quickly adjusted and modified as
objectives, available energy assets and new information is known without significant cost or time. As a project progresses towards
power demands of the microgrid and implementation, the energy model can continue to be iterated upon to ensure that the
assigns values and costs to each, making project will have the optimum outcome.
optimal recommendations for the system
accordingly through simulations of the What are the benefits of energy modelling?
systems. Energy modelling is a very helpful tool to determine the feasibility of a project without
any major upfront costs. It is a critical first step for iteratively developing, validating, and
What is energy modelling? optimising potential system approaches. The output of the model can quickly paint a picture
An energy model can carry different of what a winning system could look like both financially and technically. Here are a few
meanings but, in this paper, we are points on how a model can help evaluate a project’s feasibility:
focusing on techno-economic modelling, • Financial: The model will capture the total value of a project over its lifecycle. It does
which is a virtual simulation of a multi- this by considering capital and operating costs for each asset and considering various
asset energy solutions based on the revenue streams for the system as a whole. Energy models can account for financial
financial, environmental and technical incentives, tax credits and various depreciation methods which will impact the project’s
inputs of a specific project. returns. The energy model will calculate critical financial metrics such as return on
Typically, a model will evaluate investment (ROI), internal rate of return (IRR), levelised cost of energy (LCOE), and
hundreds, if not thousands, of different simple pay back in years based on site-specific information. This is a great way to
scenarios, over a defined period to determine how financially viable a project may look for a given asset mix and sizes. It
determine the most efficient and effective makes it easy to validate the proposed solution’s financial benefits in comparison to the
system architecture for a given project and baseline or current energy mix.

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