Microgrid Planning by Stochastic Multi-Objective Multi-Year Optimization with Capacity Expansion and Non-Linear Asset Degradation

Decentralized microgrids have been proven to enable socioeconomic growth in developing countries. However, they are long-lasting investments whose profitability is highly uncertain due to unstable local socioeconomic contexts, which may delay the breakeven point, if ever reachable. Over the long term, capacity expansion and non-linear degradation of components also arise. Moreover, policymakers and developers are increasingly focusing on environmental and social considerations, raising the complexity of project development. Accordingly, multi-year planning has been simplified by addressing single challenges independently. In this paper, we propose a comprehensive procedure to efficiently solve stochastic multi-year problems for off-grid microgrids in developing countries, including capacity expansion and the non-linear degradation of battery and renewable assets. The novel procedure combines the efficient A-AUGMECON2 methodology for multi-objective formulation, the iterative decomposition of the non-linearities of the battery, and the inclusion of a two-step capacity expansion. A case study developed for Soroti, Uganda shows that the proposed model is suitable for planning purposes, with savings even beyond 20%. The Pareto frontier highlights the trade-offs among the net present cost, total emissions, and land use, which can support policy and business decision-making under uncertainty. The methodology renders these complex modeling challenges solvable and is scalable to energy system applications.