Evaluating Modeling Approaches for Analyzing Macroeconomic Impacts of Microgrid Projects

Publication Type: 
Adam Rose
Dan Wei
Microgrids are playing an increasingly important role in supporting a more flexible, efficient, and reliable electric power system in the U.S. As with any major energy production facilities, Microgrids have various types of impacts on the local and regional economy. This paper evaluates three models—REMI, IMPLAN, and RIMS II—that are capable of estimating the regional macroeconomic impacts of Microgrid projects. The models are first compared and assessed based on a set of criteria for evaluating economic impact models in general. They are then applied to a comparative simulation exercise of the economic impacts of a stylized Microgrid project. The simulations indicate some variations in the results across the models. All three models indicate net positive economic impacts in the Microgrid investment year, with RIMS II yielding the highest impact and REMI the lowest. The simulation results differ more in the noninvestment years. Both IMPLAN and RIMS II estimate very small net impacts, while REMI yields steadily increasing positive impacts over the entire Microgrid operating period. Overall, we conclude that the REMI Model performs the best of the three models in relation to the evaluative criteria in general. We also conclude that the REMI Model simulation results for the stylized Microgrid project are the most accurate of the three models due to the Model's more advanced structure, forecasting capability, dynamic features, and ability to capture the price impact and cost pass-through effects that extend beyond ordinary multiplier effects.