Economic Dispatch Strategy for Grid-Connected Microgrids with Renewable Energy and Battery Energy Storage Integration

Abstract

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The rapid deployment of renewable energy technologies has significantly supported the shift toward cleaner and more sustainable power systems, particularly in countries with growing electricity demand such as India. Nevertheless, the variable and intermittent nature of photovoltaic (PV) arrays and wind turbines (WTs) creates operational challenges for maintaining microgrid reliability and economic performance. This paper presents an economic dispatch optimization framework for a grid-connected hybrid microgrid in India, comprising PV arrays, wind turbines, a diesel generator, a battery energy storage system (BESS), and utility grid connection. The dispatch problem is formulated using a Mixed-Integer Linear Programming (MILP) approach aimed at minimizing total operating costs, including diesel fuel cost, grid electricity purchasing cost, and battery degradation cost, while satisfying technical and operational constraints within a 24-hour scheduling period. The simulation results indicate that the proposed framework achieves a 38.7% reduction in daily operating cost compared with a conventional diesel-based configuration and a 14.2% cost reduction compared with a renewable-based system without battery storage. In addition, sensitivity analyses involving battery investment cost, electricity tariff changes, renewable energy penetration, and load growth show that the proposed model maintains robust economic performance under different operating scenarios. These results demonstrate that considering battery degradation in MILP-based economic dispatch can improve operational flexibility, increase cost efficiency, and promote the long-term sustainability of renewable-intensive microgrids in India. Therefore, the proposed framework offers a practical optimization strategy for future distributed energy systems and smart grid applications.