PV-array sizing in hybrid diesel/PV/battery microgrids under uncertainty

Levels of electricity access in sub-Saharan Africa are low with large populations living far from existing electricity infrastructure. This has led to interest in decentralized electrification solutions like microgrids, which can reach remote communities more quickly. To address a lack of capital to deploy these projects, governments have sought private investment in the sector. Studies have found that hybrid microgrids using both conventional and renewable generators provide electricity at lower cost than diesel powered systems. These studies focus on metrics such as levelized cost of electricity (LCOE) and life cycle cost (LCC) and do not account explicitly for investment risk. This paper employs a stochastic techno-economic model to examine the impact of PV array sizing in microgrids on debt and equity investment metrics like debt service coverage ratio (DSCR) and net present value (NPV) using a risk based approach. Results indicate that high levels of PV penetration mitigate fuel price risks when low-cost capital is available.

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