ABSTRACT
Chapter 14 provides an introduction into the key considerations that must be addressed to develop a business case for microgrid development. The interest in microgrids has been increasing as distributed energy resources have become more widely understood and the cost for renewables has declined. There are a number of ways to support the financing of microgrid projects. Traditional approaches include third-party financing, public–private partnerships, and build-transfer agreements. Microgrid development can be supported by sales of electricity or services, cap-and-trade programs, renewable energy certificates, clean development mechanisms, and peer-to-peer trading arrangements. Many microgrids are custom projects and may include costs for utility interconnections and electrical energy storage. Larger microgrids such as those that connect multiple centers and cross public rights-of-way face multiple policy barriers. Financial risks must be identified during project development. Making the business case for microgrids necessitates an assessment of the value proposition, quantification of lifecycle costs and benefits, and development of a detailed cash flow analysis.
