Early Economic Feasibility of Hybrid Microgrid in California Market

Open Access
Dill, Joshua
Graduate Program:
Architectural Engineering
Master of Science
Document Type:
Master Thesis
Date of Defense:
November 12, 2015
Committee Members:
  • James Freihaut, Thesis Advisor
  • David R Riley Ii, Thesis Advisor
  • Donghyun Rim, Thesis Advisor
  • CHP
  • hybrid
  • microgrid
  • distributed generation
The Energy Policy Act of 1992 opened the legal door to distributed generation (DG). Although electricity has been deregulated for over 20 years, today 95% of electricity is generated by utility companies. At the present time concerns are rising over carbon emissions and power reliability while technological advancements are making renewable generation and electricity storage more cost effective. These converging influences are currently challenging the central grid model and encouraging customers to consider DG investment. Historically prospective customers are unwilling to invest without a favorable return on investment (ROI). At the present time DG implementation is limited to the industrial sector. This thesis investigates the operation of a hybrid system (HMG = hybrid microgrid) comprised of combined heat and power (CHP), solar photovoltaic array (PV), and electrical storage on two commercial loads and a 150 unit multi-residential load served by the California utility Pacific Gas and Electric (PG&E). The study investigates the necessary battery characteristics to meet each facility’s load. Federal investment tax credits and California’s Self-Generation Inspection Program are used to calculate each system’s ROI timeline. Three sensitivity analyses are conducted for battery price, natural gas fuel price, and electrical rate to determine the impact on ROI. The thesis concludes by identifying the required market conditions to yield 10, 5, and 3 year ROIs of each building. The report finds commercial loads are the most technically feasible due to the load consistency. Larger loads and consistent load factors increase the economic viability.