The electric power grid forms the foundation for several other critical infrastructures of national importance such as public health, transportation and telecommunication systems, to thrive. The current power grid runs on the century-old technology and faces serious challenges of the 21st century - Ever-increasing demand and the need to provide a sustainable way to meet the growing demand, increased requirement of resilience against man-made and natural disasters, ability to defend against cyber attacks, increasing demand for reliable power, requirement to integrate with alternate energy generation and storage technologies. Several countries, including the United States, have realized the immediate need to modernize the grid and to pursue the goal of a smart grid. Majority of recent grid modernization efforts are directed towards the distribution systems to be able to meet these new challenges. One of the key enablers of a fully functional Smart Grid are microgrids — subsystems of the grid, utilizing small generation capacities at the distribution system level to increase the overall reliability and power quality of the local grid. It is one of the key directions recommended by national electric delivery technologies roadmap in United States as well as policy makers for electricity delivery in many countries. Microgrids have witnessed serious research activity in the past few years, especially in areas such as multi-agent system (MAS) architectures for microgrid control and auction algorithms for microgrid electricity transaction. However, most of the prior research on electricity transaction in microgrids fails to recognize and represent the true nature of the microgrid electricity market. In this research, a comprehensive microgrid electricity market has been designed, taking into account several unique characteristics of this new market place. This thesis establishes an economic rationale to the vision of wide-scale deployment of microgrids serving residential communities in near future and develops a comprehensive understanding of microgrid electricity market. A novel concept of Community Microgrids is introduced and the market and business models for electricity transaction are proposed and validated based on economic forecasts of key drivers of distributed generation. The most important contribution of this research deals with establishing a need for a trustworthy model framework for microgrid market and introducing the concept of reputation score to market participants. A framework of day-ahead energy market (DAEM) for electricity transaction, incorporating an approach of using the reputation score to incentivize the sellers in the market to be trustworthy, has been designed and implemented in MATLAB with a graphical user interface (GUI). Current implementation demonstrates a market place with two sellers and nine buyers and is easily scalable to support multiple market participants. The proposed microgrid electricity market may spur the deployment of residential microgrids, incorporating distributed generation, thereby making significant contribution to increase the overall reliability and power quality of the local grid. / Master of Science

Energy forms a vital input and critical infrastructure for the economic development of countries and for improving the quality of life of people. Energy is utilized in society through the operation of large socio-technical systems called energy systems. In a growing world, as the focus shifts to better access and use of modern energy sources, there is a rising demand for energy. However, certain externalities result in this demand not being met adequately, especially in developing countries. This constitutes the energy demand – supply matching problem. Load shedding is a response used by distribution utilities in developing countries, to deal with the energy demand – supply problem in the short term and to secure the grid. This response impacts the activities of consumers and entails economic losses. Given this scenario, demand – supply matching becomes a crucial decision making activity. Traditionally demand – supply matching has been carried out by increasing supply centrally in the long term or reducing demand centrally in the short term. Literature shows that these options have not been very effective in solving the demand-supply problem. Gaps in literature also show that the need of the hour is the design of alternate solutions which are tailored to a nation's specific energy service needs in a sustainable way. Microgrids using renewable and clean energy resources and demand side management can be suitable decentralized alternatives to augment the centralized grid based systems and enable demand – supply matching at a local community level. The central research question posed by this thesis is: “How can we reduce the demand – supply gap existing in a community, due to grid insufficiency, using locally available resources and the grid in an optimal way; and thereby facilitate microgrid implementation?” The overall aim of this dissertation is to solve the energy demand – supply matching problem at the community level. It is known that decisions for the creation of energy systems are influenced by several factors. This study focuses on those factors which policy-makers and stakeholders can influence. It proposes an integrated decision framework for the creation of community microgrids. The study looks at several different dimensions of the existing demand – supply problem in a holistic way. The research objectives of this study are: 1. To develop an integrated decision framework that solves the demand – supply matching problem at a community level. 2. To decompose the consumption patterns of the community into end-uses. solar thermal, solar lighting and solar pumps and a combination of these at different capacities. The options feasible for medium income consumers are solar thermal, solar pumps, municipal waste based systems and a combination of these. The options for high income consumers are municipal waste based CHP systems, solar thermal and solar pumps. Residential consumers living in multi-storied buildings also have the options of CHP, micro wind and solar. For cooking, LPG is the single most effective alternative. 3. To identify the ‗best fitting‘ distributed energy system (microgrid), based on the end-use consumption patterns of the community and locally available clean and renewable energy resources, for matching demand – supply at the community level. 4. To facilitate the implementation of microgrids by * Contextualizing the demand – supply matching problem to consider the local social and political environment or landscape, * Studying the economic impact of load shedding and incorporating it into the demand-supply matching problem, and * Presenting multiple decision scenarios, addressing the needs of different stakeholders, to enable dialogue and participative decision making. A multi-stage Integrated Decision Framework (IDF) is developed to solve the demand - supply matching problem in a sequential manner. The first stage in the IDF towards solving the problem is the identification and estimation of the energy needs / end-uses of consumers in a community. This process is called End-use Demand Decomposition (EUDD) and is accomplished by an empirical estimation of consumer electricity demand based on structural and socio-economic factors. An algorithm/ heuristic is also presented to decompose this demand into its constituent end-uses at the community level for the purpose of identifying suitable and optimal alternatives/ augments to grid based electricity. The second stage in the framework is Best Fit DES. This stage involves identifying the “best-fit‘ distributed energy system (microgrid) for the community that optimally matches the energy demand with available forms of supply and provides a schedule for the operation of these various supply options to maximize stakeholder utility. It provides the decision makers with a methodology for identifying the optimal distributed energy resource (DER) mix, capacity and annual operational schedule that “best fits” the given end-use demand profile of consumers in a community and under the constraints of that community such that it meets the needs of the stakeholders. The optimization technique developed is a Mixed Integer Linear Program and is a modification of the DER-CAM™ (Distributed Energy Resources Customer Adoption Model), which is developed by the Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory using the GAMS platform. The third stage is the Community Microgrid Implementation (CMI) stage. The CMI stage of IDF includes three steps. The first one is to contextualize the energy demand and supply for a specific region and the communities within it. This is done by the Energy Landscape Analysis (ELA). The energy landscape analysis attempts to understand the current scenario and develop a baseline for the study. It identifies the potential solutions for the demand - supply problem from a stakeholder perspective. The next step provides a rationale for the creation of community level decentralized energy systems and microgrids from a sustainability perspective. This is done by presenting a theoretical model for outage costs (or load shedding), empirically substantiating it and providing a simulation model to demonstrate the viability for distributed energy systems. Outage cost or the cost of non supply is a variable that can be used to determine the need for alternate systems in the absence/ unavailability of the grid. The final step in the CMI stage is to provide a scenario analysis for the implementation of community microgrids. The scenario analysis step in the framework enlightens decision makers about the baselines and thresholds for the solutions obtained in the “best fit‘ analysis. The first two stages of IDF, EUDD and Best Fit DES, address the problem from a bottom-up perspective. The solution obtained from these stages constitutes the optimal solution from a technical perspective. The third stage CMI is a top-down approach to the problem, which assesses the social and policy parameters. This stage provides a set of satisficing solutions/ scenarios to enable a dialogue between stakeholders to facilitate implementation of microgrids. Thus, IDF follows a hybrid approach to problem solving. The proposed IDF is then used to demonstrate the choice of microgrids for residential communities. In particular, the framework is demonstrated for a typical residential community, Vijayanagar, situated in Bangalore and the findings presented. The End-use Demand Decomposition (EUDD) stage provides the decision makers with a methodology for estimating consumer demand given their socio-economic status, fuel choice and appliance profiles. This is done by the means of a statistical analysis. For this a primary survey of 375 residential households belonging to the LT2a category of BESCOM (Bangalore Electricity Supply Company) was conducted in the Bangalore metropolitan area. The results of the current study show that consumer demand is a function of the variables family income, refrigeration, entertainment, water heating, family size, space cooling, gas use, wood use, kerosene use and space heating. The final regression model (with these variables) can effectively predict up to 60% of the variation in the electricity consumption of a household ln(ElecConsumption) = 0.2880.396*ln(Income)+0.2 66*Refri geration+ 0.708*Entertainment+0.334*WaterHeating+0.047*FamSize+ 0243*SpaceCooling.+580*GasUse+0.421*WoodUse–0.159*KeroseneUse+ 0.568*SpaceHeating ln(ElecConsumption) = 0.406*ln(Income)0.168*Ref rigeration+0.139*Entertainment+ 0.213*WaterHeating+0.114*FamSize+0.121*SpacCooling+0.171*GasUse+ 0.115*WoodUse–0.094*KeroseneUse+0.075*SpaceHeating   The next step of EUDD is to break up the demand into its constituent end-uses. The third step involves aggregating the end-uses at the community level. These two steps are to be performed using a heuristic. The Best Fit DES stage of IDF is demonstrated with data from an urban community in Bangalore. This community is located in an area called Vijayanagar in Bangalore city. Vijayanagar is a mainly a residential area with some pockets of mixed use. Since grid availability is the constraining parameter that yields varying energy availability, this constraint is taken as the criteria for evaluation of the model. The Best Fit DES model is run for different values of the grid availability parameter to study the changes in outputs obtained in DER mix, schedules and overall cost of the system and the results are tabulated. Sensitivity analysis is also performed to study the effect of changing load, price options, fuel costs and technology parameters. The results obtained from the BEST Fit DES model for Vijayanagar illustrate that microgrids and DERs can be a suitable alternative for meeting the demand – supply gap locally. The cost of implementing DERs is the optimal solution. The savings obtained from this option however is less than 1% than the base case due to the subsidized price of grid based electricity. The corresponding costs for different hours of grid availability are higher than the base case, but this is offset by the increased efficiency of the overall system and improved reliability that is obtained in the community due to availability of power 24/7 regardless of the availability of grid based power. If the price of grid power is changed to reflect the true price of electricity, it is shown that DERs continue to be the optimal solution. Also the combination of DERs chosen change with the different levels of non-supply from the grid. For the study community, Vijayanagar, Bangalore, the DERs chosen on the basis of resource availability are mainly discrete DERs. The DERs chosen are the LPG based CHP systems which run as base and intermediate generating systems. The capacity of the discrete DERs selected, depend on the end-use load of the community. Biomass based CHP systems are not chosen by the model as this technology has not reached maturity in an urban setup. Wind and hydro based systems are not selected as these resources are not available in Vijayanagar. The CMI stage of IDF demonstrates the top-down approach to the demand-supply matching problem. For the Energy Landscape Analysis (ELA), Bangalore metropolis was chosen in the study for the purpose of demonstration of the IDF framework. Bangalore consumes 25% of the state electricity supply and its per capita consumption at 1560kWh is higher than the state average of 1230kWh and is 250% more than the Indian average of 612kWh. A stakeholder workshop was conducted to ascertain the business value for clean and renewable energy technologies. From the workshop it was established that significant peak power savings could be obtained with even low penetrations of distributed energy technologies in Bangalore. The feasible options chosen by stakeholders for low income consumers are The second step of CMI is finding an economic rationale for the implementation of community microgrids. It is hypothesized that the ‘The cost of non-supply follows an s-shaped curve similar to a growth curve.’ It is moderated by the consumer income, consumer utility, and time duration of the load shedding. A pre and post event primary survey was conducted to analyze the difference in the pattern of consumer behaviour before and after the implementation of a severe load shedding program by BESCOM during 2009-10. Data was collected from 113 households during February 2009 and July 2010. The analysis proves that there is indeed a significant difference in the number of uninterrupted power systems (inverters) possessed by households. This could be attributed mainly to the power situation in Karnataka during the same period. The data also confirms the nature of the cost of non-supply curve. The third step in CMI is scenario analysis. Four categories of scenarios are developed based on potential interventions. These are business-as-usual, demand side, supply side and demand-supply side. About 21 scenarios are identified and their results compared. Comparing the four categories of scenarios, it is shown that business-as-usual scenarios may result in exacerbation of the demand-supply gap. Demand side interventions result in savings in the total costs for the community, but cannot aid communities with load shedding. Supply side interventions increase the reliability of the energy system for a small additional cost and communities have the opportunity to even meet their energy needs independent of the grid. The combination of both demand and supply side interventions are the best solution alternative for communities, as they enable communities to meet their energy needs 24/7 in a reliable manner and also do it at a lower cost. With an interactive microgrid implementation, communities have the added opportunity to sell back power to the grid for a profit. The thesis concludes with a discussion of the potential use of IDF in policy making, the potential barriers to implementation and minimization strategies. It presents policy recommendations based on the framework developed and the results obtained.