Siting and Sizing of Distributed Generation for Optimal Microgrid Architecture

Mallikarjuna R. Vallem, Student Member IEEE, Joydeep Mitra, Senior Member IEEE Electric Utility Management Program The Klipsch School of Electrical and Computer Engineering New Mexico State University Las Cruces, NM 88003
Abstract- This paper presents a method for optimally siting and sizing distributed generation (DG) units in a microgrid. The optimization is based on stipulated reliability criteria. Power system planning based on reliability gives rise to efficient architectures which can meet the consumer requirements with minimum system upgrade. This paper develops a technique for determining the optimal location and sizes of DG units in a microgrid, given the network configuration and the heat and power requirements at various load points. The method is based on simulated annealing. Thermal output and utilization of Combined Heat and Power (CHP) units are considered. The paper presents the development and implementation of the method, and demonstrates its application on a six bus test system.
Index Terms- microgrid, distributed generation (DG), simulated annealing, siting and sizing, reliability.


alternative to conventional generation systems [1]. With new technologies like microturbines, fuel cells, wind generators, solar cells, etc, getting cheaper their deployment into the grid will increase. Combined heat and power generation (CHP) is one of the benefits of several DG technologies [2]. Adding new components to a system should comply with better reliability and minimum costs. US Department of Energy has published a vision to make DGs practical by 2020. Moreover there are several benefits from DGs both in terms of environmental and economic considerations [3]. Microgrids are small DG based interconnected systems which will be easy to design, operate and sustain. Our vision of microgrid is that they not only network DGs with load points, but should also have the ability to operate in both gridconnected and islanded modes. Microgrid architecture includes planning issues such as optimally designing the interconnections, sizing and siting the DG units to maximize reliability, reduce costs and improve security of the system. System planning based on reliability makes the system more robust and complies with the requirements of the consumers. System outage costs have been estimated which prove that an increase in system cost should be a compromise between the affordable price and the achieved reliability.
0-7803-9255-8/05/$20.00 2005 IEEE

Distributed generation (DG) is proving to be a viable

Moreover planning the systems based on reliability gives us a view of the weaker portions of the system which could be taken care of in further upgrade whenever possible thus leading to long term planning. Deployment of DG differs from the conventional generation. Based on the type of DG, system planning can vary to maximize the benefits from the options available. For example, solar panels become more viable in places where there is more insolation. Microturbines and fuel cells have CHP which could be used at places where more heat is required. Ocean thermal energy conversion may be more feasible for tropical countries having long coastlines. In view of these limitations it becomes extremely important to build an optimal strategy for deploying such units within a microgrid. As we are dealing with a microgrid, we assume the operational cost of all the DERs is constant with respect to their operation anywhere in the microgrid. In this paper we have developed a model to address the siting and sizing problem of the optimal microgrid architecture. In a prior research effort an optimization method was implemented to determine the DG siting using the simulated annealing technique [4]. In this paper we extend the technique to solve the siting and sizing of DG simultaneously. The problem of siting and sizing of DGs has been addressed in various references cited. Ref. [5] describes a successive elimination algorithm to site and size the DGs. Ref. [6] describes a new heuristic approach based on cost benefit analysis to optimally detennine the capacity and location of the DG from the prospect of a distribution company. Ref. [7] has used a Mixed Integer Programming (MIP) formulation, with branch and bound optimization for an industrial power plant. Ref. [8] deals with a genetic algorithm optimization for deploying a DG resource in a distribution system. Ref [9] proposes a framework for embedded generation planning in line with special emphasis on risk and uncertainities. Ref. [10] computes capacity based on risk factor and addresses about the reliability issues which arise as a consequence of transmission bottle-necks. In this paper we present a technique to design the location and capacity of DG into an existing microgrid to achieve certain reliability with minimal additional cost. The cost function has been modeled as a Nonlinear Programming problem and Simulated Annealing (SA) optimization has been used to achieve global optimum.



Planning of a microgrid to optimally site and size the DG is achieved by formulating the model as an optimization problem. The objective function is the total system cost per year which includes costs like deployment costs and heat compensation costs. The heat compensation cost takes into consideration the extra cost of the system which has to be spent to supply the excess heat demand which could not be supplied by the heat output of the DGs. The network constraints and the stipulated reliability criteria make the problem a non-linear mixed integer optimization which is solved by simulated annealing. Consider a system with NB nodes, NG generators, and NT transmission lines. The system load might increase and additional capacity needs to be installed to achieve certain reliability. We consider installing DG into this system which could be deployed at different nodes. Further the energy demand is divided into heat demand and electrical demand. Then it is possible to model the use of CHP from the DGs. In practice, separating heat demand and electrical demand in a system is not that easy, there is a responsibility and necessity of estimating them to achieve better efficiency of the system. A unit resource is defined as a DG which has a unit power and heat capacity. These units of power and heat can be specified depending on those commercially available or feasible. The costs arising from the strategy of deployment are modeled and a cost optimization is done. The total cost involved can be classified as deployment costs and heat compensation costs which will be detailed below.
A. Deployment Cost An NB vector of deployment cost 'J' is developed such that its ith element is the cost of deploying a unit of DG at the ith node. The solution space 'F' is the selection of the number of units of DG at every node which will be an integer vector of size NB. A linear depreciation is assumed where annual depreciation rate will be r. Then the cost for deploying the resource in our system is, (1) rX JTXF where r = rate of depreciation per year F= NB dimensional solution vector where the ith element is number of units of DGs at node i. J = NB vector of deployment costs.
B. Heat Compensation Cost If the heat demand at any node is not supplied by the CHP at that node, excess heat demand is compensated by gas heating. So there is an excess cost for gas required to supply the additional heat demand which is proportional to the heat curtailment. The heat curtailment is given by a vector CH Of dimension NB,

where H = NB vector of heat demand at the nodes. UH = heat output of a unit of DG. and the superscript '+' denotes the following operations. The ith element of the vector CH is, if a>O a+=a a+O if a<O For simplicity we take the units for heat as power units. The additional costs for the heat compensation will be (3) Jpowver X UN X CH where UN = unit vector of dimension NB. Jpower = cost of gas to produce a unit of heat. Mathematically the problem can be expressed as follows. Minimize

r xT JX F + J 70u1el0


(i) (ii)

Subject to:

where EIR = Energy Index of Reliability [1 1] RO = minimum reliability desired C = NB vector of bus power curtailments. Constraint (i) specifies the minimum reliability the system is required to meet. Constraint (ii) eliminates solutions which may never be able to meet the complete demand of the system.
C. Reliability Evaluation To obtain the energy index of reliability, a DC load flow is solved to minimize the curtailment [12]. The DC load flow model is as follows.


Loss of Load = Min.


subject to:

BO + G + C = D

G .G max
C. D


bAO < Fm ax 0 unrestricted


= NB vector of bus load Gmax = NB vector of available generation at buses Fmax = NT vector of flow capacities of transmission lines = NT x NT primitive (diagonal) matrix of b transmission line susceptances. A = NT X NB element-node incidence matrix. = NB x NB augmented node susceptance matrix. B


EIR is calculated by


= NB vector


of bus voltage angles.








X, LOL i x prob



1- EPNS D Tot


where EPNS = expected power not served. DTo, = total power demand. NC = number of contingencies.

where a < 1 and it is better to choose an 'a' around 0.9[13]. The neighborhood for the next iteration is changed so that half the numbers of previous solutions are accepted. Then the cooling schedule is followed till we reach a final temperature or a temperature where we have consistent minimum in the last few temperatures.

The optimization is a nonlinear programming type and this section demonstrates how simulated annealing technique is applied to solve the problem.
A. Simulated Annealing

Simulated Annealing is a stochastic global optimization technique which has an asymptotic convergence to the global minima [13]. The concept is based on the manner in which liquids freeze or metals recrystalize in the process of annealing. In an annealing process a melt, initially at high temperature and disordered, is slowly cooled so that the system at any time is approximately in thermodynamic equilibrium. This method can. get over the local minima as we not only consider downhill moves but also uphill moves with a probability based on the temperature 'I' using the metropolis criteria [14]. At higher temperatures a lot of uphill moves will be accepted but their acceptance reduces with the temperature decrease and the search asymptotically converges to the global minima. A proper choice of neighborhood and cooling schedule will give near optimal solution in a reasonable time.
B. Algorithm

The Simulated Annealing algorithm is as shown in Fig. 1. Simulated annealing starts at a high temperature with an initial feasible solution. Initially the neighborhood is assumed to be the entire solution space. The temperature is then decreased following a cooling schedule. At every temperature a fixed number of solutions are visited. For each solution the new objective value is compared to the current one. If the new solution has objective value lesser than the current one, it is directly accepted. But if the new objective value is greater than the current one, it is accepted with an acceptance probability given by,

AT (i, i ) = exp (- Q"



Fig. 1. Simulated Annealing Algorithm.
In our optimization the solution is an integer vector of dimension NB. The solution space is an integer space with limits zero and the total deficit capacity in the system. The solution space might have a lot of local minima but only one global minimum. In the search, if only downhill moves are allowed, the search will get trapped into a local minima. So the initial acceptance probability of uphill moves should be reasonably high. Temperature significantly varies the

This is how it is able to escape from local minima. At higher temperatures a lot of uphill solutions are accepted, but as the temperature is reduced, the uphill moves get reduced. After N iterations at a temperature, the temperature is reduced using a geometric cooling schedule.

Tnew = a x Told



acceptance probability. So the temperature is chosen high. It should be much greater than the objective function at the initial solution and the cooling process reduces the temperature. Another important factor is the neighborhood. Every time we sample a random solution in the current neighborhood. Initially the neighborhood is very large which is taken as the entire solution space and with every cooling schedule, we reduce the neighborhood depending on the current global solution. In a way we are moving among solutions 'closer to the current global solution which finally gets concentrated around the global minimum. The algorithm is terminated when the temperature reaches a minimum value.
C. Implementation The simulated annealing needs proper choice of neighborhood, initial temperature, a and operational parameters like change of neighborhood in successive cooling. The initial neighborhood is the entire solution space. Successively, after every cooling schedule, the neighborhood of the solution at one of the node is changed by reducing the neighborhood by one unit. The initial solution accelerates the optimization process. To start with, a capacity increase proportional to the load growth is assumed and is equally divided among all the nodes. 'a' is taken as 0.9. The initial temperature should be taken as some value large enough to accept a large number of solutions. So it is assumed here as million times the cost of the initial solution. At lower temperatures the search becomes a local search which will be sufficient when we are near global solution.

B. Selection and initialization ofparameters The reliability indices for the generators and DG units are taken to be the same. Mean time to failure (MTTF) and mean time to repair (MTTR) are taken as 2940 and 60 hours correspondingly [16]. The average outage duration for the transmission lines is 35 hours.



Z (p.u)

1.646 1.646 1.646 1.646 1.646 2.123 1.205

122 2 3 4 3 4 5 5 6 1 6 5 1 1

0.2238 +j 0.5090 0.2238 +j 0.5090 0.2238 +j 0.5090 0.2238 +j 0.5090 0.2238 +jO0.5090 0.2276 +j 0.2961 0.2603 +j 0.7382


Generator 1 2 3 4
2 3 4 5 6

10 8 5 5

Location Node 1 Node 1 Node 5 Node 5
(x 106 BTU/hr.)


Electrical Load (MW)
4 7.5 5.5 0 5

Heat Load
0 6.824 10.236 6.824 0 8.53


A. System Description The optimization strategy was applied on a 6 bus test system [15]. Four generators are available, two each at nodes 1 and 5 which can supply a maximum power of 28 MW. Nodes 2, 3, 4 and 6 are load buses with a total electrical demand of 21 MW. Also the load is separated into electrical and heating loads. The system data is tabulated below.

The deployment cost is assumed at an average of 600$/kW. The cost of gas heating is assumed at 10.75 $/106 BTU. A unit of DG is assumed to have a capacity of 0.1 MW electrical and 0.1706x106 BTU/hr heat. The deployment cost for a unit DG at each of he nodes is tabulated below.


1 0.05



4 0.08

5 0.04




Fig. 2. Six Bus Test System.

The solution determines the number of units of DG to be placed at each node. Whatever may be the solution the entire DG capacity at that node is assumed to be one component for computing EIR. The cooling process starts with temperature of 1.6637e+01 1 and final temperature 1.7, and the neighborhood is changed after every 5 cooling routines. Convergence was achieved when any of the three conditions was satisfied. Condition 1: Current global solution remains unchanged for 10 consecutive cooling routines. Condition 2: The neighborhood is small enough to have a



Condition 3: The final temperature is reached.

optimal solution.

C. Results The simulated annealing approach explained above is applied to the test system. Out of the possible 5.314e+011 solutions, the optimization converged in a near optimal solution after sampling just 4700 solutions. The cost of the optimal deployment plan is $0.88 million per year excluding the running power costs. The optimal solution has an EIR of 0.9703. The optimal solution for the capacity of DG to be deployed is tabulated below.




Node No. of units

1 0

2 20

3 40

4 30

5 0

6 40

It is a valid observation that nodes 1 and 5 are not load points. So the optimization has rightly shown no DG installation at that point. Though the solution space was quite large the optimization arrived at the global optimum very quickly. The ratio of the solutions sampled to that of the entire space will decrease with increase in system size which saves a lot of computational time for larger systems. The simulated annealing optimization promises an asymptotic reachability of the global optimal with a probability 1.0 [13].
V. CONCLUSION This paper presented a simple yet efficient technique to estimate the capacity and location of DG required to achieve a desired reliability in a microgrid with optimal cost. The simulated annealing technique proves to be highly practical in view of application to large systems which could be otherwise computationally intensive. The heat compensation cost plays a significant role in the optimization performed. At the same time as DGs become more commercial, utilities need to estimate the heat loads of various consumers to better use the benefits of CHP. Though simulated annealing is a heuristic technique, a global optimum could be assured by the proper selection of parameters. Research is being done to analyze the role of each parameter on the optimality of the solution. Further research is being done to differentiate the types of DGs, so that we can determine the right choice of the mix of DGs to be deployed in a microgrid. The results will be reported in due course.





[10] [ 11]


The work reported in this paper was supported in part by the National Science Foundation, under grants ECS-0134598 and ECS-0140092, and by the Electric Utility Management Program. This support is gratefully acknowledged.
REFERENCES [1] A. R. Wallace, G. P. Harrison, "Planning for optimal accommodation of dispersed generation in distributed

[13] [14]

networks," 1 th International conference on Electricity Distribution, CIRED 2003, Barcelona, Spain. Consortium for Electrical Reliability Technology Solutions "Integration of distributed energy resourcesthe CERTS microgrid concept," April 2002. T. R. Casten, M. J. Collins, "Optimizing future heat and power production," Executive Summary, Private Power LLC & The World Alliance for Decentralized Energy, Oct 2004. M. R. Vallem, J. Mitra, S. B. Patra, "Distributed generation placement for optimal microgrid architecture," to be presented at IEEE/PES Transmission and Distribution Conference and Exposition, New Orleans, Oct. 2005. R. E. Brown et al, "Siting distributed generation to defer T&D expansion," IEEE/PES Transmission and Distribution Conference and Exposition, 2001. vol. 2, pp. 622-627. W. El-Khattam, K. Bhattacharya, Y. Hegazy, M. M. A. Salama; "Optimal investment planning for distributed generation in a competitive electricity market," IEEE Transactions On Power Systems, vol. 19, No. 3, Aug 2004. S. W. Illerhaus, J. F. Verstege, "Optimal operation of industrial CHP-based power systems in liberalized energy markets," IEEE Industry Applications Conference, 2000. vol. 2, pp. 901-908. B. Kuri, F. Li, "Distributed generation planning in the deregulated electricity supply industry," IEEE/PES General Meeting, 2004, vol. 2, pp. 2085-2089. N. S. Rau, F. Zeng, "Adequacy and responsibility of locational generation and transmission-optimization procedures," IEEE Transactions on Power Systems, vol. 19, no. 4, pp. 2093-2 101, Nov. 2004. EIA, Department of Energy, "Annual energy outlook 2005," Feb 2005. J. Mitra, S. B. Patra, S. J. Ranade, "A dynamic programming based method for developing optimal microgrid architectures," in Proceedings of IEEE Power Engineering Society General Meeting, San Francisco, June 2005. C. Singh, J. Mitra, "Composite system reliability evaluation using state space pruning," IEEE Trans. Power Systems, vol. 12, no. 1, pp. 471- 479, Feb. 1997. Tao Wang, "Global optimization for constrained nonlinear programming," Ph.D Thesis, University of Illinois at Urbana-Champaign, 2001. N. Metropolis et al, "Equation of state calculations by fast computing machines," Journal of Chemical Physics, 21:1087-1092. 1953. N. S. Rau, Y. H. Wan, "Optimum location of resources in distributed planning," IEEE Transactions on Power Systems, 1994, pp. 2014-2020.


[16] IEEE Committee Report, "IEEE Reliability test system", IEEE Transactions on Power Apparatus and Systems, vol. 98, no. 6, Nov./Dec. 1979.