The implementation of capital budgeting analysis for distributed generation allocation problems

For the last 7 years, the Republic of Croatia has been witnessing a sudden increase of distributed energy resources connecting to its power system. However, a significant problem is how to find the financial equilibrium which will satisfy the independent power producers on one side and the distribution system operator on the other. In this paper, the authors discuss the capital budgeting analysis of distributed generation projects with a goal of maximizing their net present values. The evaluation of net present values will be the central tool for finding the optimal position and size of distributed generation units in the network. By simultaneously minimizing active power losses the interests of distribution system operator will not be neglected in this study. The power production of distributed generation and power consumption of network loads will be modeled with characteristic average daily power curves with discrete hour intervals. The problem will be solved using genetic algorithm, and realized in Matlab programming environment.