Time of use pricing strategy for Indian microgrids subordinate to grids with unreliable coverage

Abstract: In the last decade microgrids has become a usual way of providing electricity resilience in rural India. With the electrification of rural villages happening rapidly the national grid fails to provide reliable electricity distribution, and microgrids has proven a good way of improving upon the lacking electricity quality. Although many cases exist where a microgrid and the national grid serves the same village, in very few of these cases the microgrid and the national grid interconnects exporting and importing electricity from each other, but instead operates in parallel, rendering the microgrid in to a backup system. This lack of interconnection is partly due to the lack of experience and increased complexity of operation. For many microgrid systems in India the preferred electricity pricing strategy has been to utilize a fixed tariff with one price per kwh regardless of the current distributed electricity mix or the time of day. But recent introduction of smarter electricity meters creates the possibility to implement a more complex pricing strategy such as time of use tariffs. This thesis looks at how microgrids subordinated to an unreliable grid can use electricity meters to create a dynamic time of use tariff increasing operational freedom. To assess a time of use tariff, microgrid setups (generic to microgrids in rural India) are generated for different cases of national grid unreliability, then using optimization software a time of use tariff is generated tailored to that specific operational environment, these tariffs are discussed and compared to the traditional use of fixed tariffs. The simulations show how that a time of use tariff of four price levels can be used to better assure high return for consumption during hours of low production while stimulating consumption during hours of high power production. The tariff suggested in this thesis shows tendencies to increase the risk for the stakeholders while also creating a market structure better suited when expecting growth of electricity consumption.