Comparative study of levelized cost of electricity for grid-connected and off-grid solar photovoltaic and battery based microgrid systems

The levelized cost of electricity (LCOE) is commonly used to evaluate the economic viability of renewable energy systems. However, there is limited analysis comparing grid-connected and off-grid operational modes under uncertainty. This study fills that gap by presenting a Monte Carlo simulation that evaluates LCOE for solar photovoltaic (PV) and battery-based microgrid systems. The study investigates three operational modes: grid-connected with feed-in tariff (FiT) export, grid-connected without export, and fully off-grid. The study also looks at three capacity configurations: 20 MWp, 40 MWp, and 60 MWp PV, each with a 50 MWh battery. Results indicate that the off-grid mode has the lowest LCOE in smaller systems (20 MWp). However, as PV capacity increases, the grid-connected mode with export becomes more cost-effective due to revenue from selling surplus electricity. On the other hand, the off-grid mode experiences higher LCOE at larger scales, highlighting the cost burden of depending on batteries. Sensitivity analysis reveals that higher grid tariffs and lower FiT rates raise LCOE, while dropping PV and battery costs greatly enhance system competitiveness. These findings emphasize the critical role of system sizing, export policies, and technological cost trends in determining the economic feasibility of solar microgrids. They provide practical insights for policymakers, investors, and system planners who want to optimize renewable energy deployment in changing market conditions.