The purpose of this study is to analyse how a battery energy storage system (BESS) can support the frequency and voltage stability for an islanded microgrid containing a hydropower plant. Two different microgrids, both situated in Sweden, are evaluated. Modelling and dynamic simulations are conducted in the PowerFactory tool. The result shows that both the frequency and the voltage control can be improved with the BESS. However, with the allowed limit of ± 1 Hz, not all simulated scenarios including a BESS meets the requirement. A large difference between the BESS and generator capacity might be a possible cause for this. By dividing the larger loads so that smaller loads are attained, the frequency deviation might be reduced. Furthermore, by adjusting the systems PID-parameters according to the island mode operation, faster regulation can be attained. The system operates according to the Master slave control strategy, with the hydropower being the master unit with voltage control and the BESS being a slave unit with PQ control. The ability to operate an islanded microgrid can ensure the supply of electricity to inhabitants and vital functions in society. By utilizing a BESS for increasing electric stability, emission of CO2 is indirectly mitigated. As cost for BESS are expected to decrease rapidly, they will be accessible for utilization all over the world.

A microgrid is a subnetwork of power system that consists of a group of distributed energy sources and loads. It is designed to integrate distributed generation, loads, energy storage devices, converters, and monitoring and protection devices. Generally, a successful microgrid could run both in island mode (off-grid) and in grid-connected mode (on-grid), being able to convert between two modes at any time. With continuous development of the power system, distributed renewable generation unit accounts for an increasing proportion, since microgrid could effectively connect these generation units to the main grid, thereby improving the energy efficiency and the energy structure. Microgrid is increasingly playing an important role in the power system. This thesis focuses on reducing the cost of microgrids through economic operation, including both static and dynamic economic operations. Three cases are tested based on these two methods. Also, each case will include four situations including one without ESS and three situations with 2MWh ESS, 3MWh ESS, 4MWh ESS, respectively.