Economic Viability of Community Microgrids in India and Australia

Providing sustainable and reliable electricity to remote and regional communities remains a significant challenge. Many such communities still rely on diesel generators for power, resulting in high fuel costs and substantial carbon emissions. Extending national grids over vast distances is often impractical and expensive, especially in challenging terrain. In this context, community microgrids have emerged as a promising solution for areas without access to grid power. By integrating local renewable energy sources (such as solar, wind, and biomass) with battery storage, microgrids can deliver dependable, affordable, and clean power while reducing reliance on diesel and maintaining supply even during outages.

Both India and Australia are increasingly adopting community microgrids to improve energy access in rural and remote regions. Falling costs of renewable technologies and growing climate pressures have spurred interest in these decentralised systems. National initiatives reflect this trend – for example, India’s draft policy targets the deployment of at least 10,000 renewable-based mini and microgrids (500 MW total) to serve approximately 237 million under-electrified people [1]. Similarly, Australia has funded numerous microgrid feasibility trials to bolster reliable electricity in off-grid communities. Community microgrids thus play a crucial role in both countries’ strategies for sustainable, resilient energy infrastructure.

Despite this momentum, significant research gaps remain in the economic planning and operation of microgrids. Traditional studies tend to emphasise technical performance, whereas key commercial aspects – such as business models, market integration, electricity pricing, and investment viability – are less well understood. Feasibility studies often reveal ambiguity and inconsistency in evaluating microgrid economic outcomes, underscoring the need for more robust frameworks [3]. Questions persist regarding the optimal sizing of microgrids, tariff design for consumers, and policies to ensure long-term financial sustainability. A focused investigation into these economic dimensions is required to bridge the gap between engineering potential and real-world viability.

This research will address these gaps by focusing on the economics, policy, and optimisation of community microgrids in India and Australia. The aim is to develop models and frameworks that evaluate and enhance the economic viability of microgrids under diverse conditions in both countries. Using techno-economic modelling, optimisation techniques, and comparative case analysis, the study will identify best practices to make microgrids financially sustainable. The key objectives include:

- Optimisation Models: Develop and apply optimisation models for microgrid planning and operation that minimise life-cycle costs while meeting community energy needs and reliability targets.

- Economic Feasibility Analysis: Assess the economic feasibility of various microgrid configurations (e.g. different renewable mixes and storage capacities) through cost-benefit analysis and levelized cost of electricity, under different market and policy scenarios in India and Australia.

- Policy and Market Frameworks: Analyse how differing policy and regulatory frameworks (tariff structures, subsidies, incentives, market rules) in each country impact microgrid viability, and identify supportive measures or reforms to improve economic outcomes.

- Pricing and Business Strategies: Propose sustainable pricing strategies and community-oriented business models (such as cooperative ownership or public-private partnerships) that can attract investment and ensure long-term economic sustainability of community microgrids.

[1] Business Wire: https://www.businesswire.com/news/home/20200414005914/en/The-Microgrid-Opportunity-in-India-2024-2025-Identifying-Unelectrified-Locations-that-are-Best-Fit-for-Electrification-Through-Microgrids---ResearchAndMarkets.com

[2] Microgrid Knowledge: https://www.microgridknowledge.com/editors-choice/article/11428876/australian-government-awards-132-million-for-microgrid-feasibility-studies

[3] Wright, S.

Frost, M.

Wong, A.

Parton, K.A. Australian Renewable-Energy Microgrids: A Humble Past, a Turbulent Present, a Propitious Future. Sustainability 2022, 14, 2585. https://doi.org/10.3390/su14052585