Around the world, conventional power system is facing the problems of gradual depletion of fossil fuel resources, poor energy efficiency and environmental pollution. These problems have led to a new trend of generating power locally at distribution voltage level by using non-conventional/renewable energy sources like natural gas, biogas, wind power, solar photovoltaic cells, fuel cells, combined heat and power (CHP) systems, microturbines, and Stirling engines and their integration into the utility distribution network. This type of power generation is termed as distributed generation (DG) and the energy sources are termed as distributed energy resources (DERs). The term 'Distributed Generation' has been devised to distin guish this concept of generation from centralised conventional generation. The distribution network becomes active with the integration of DG and hence is termed as active distribution network.

This chapter discusses Microgrid. Microgrids appear to the main grid as aggregated units of loads and microsources. Microgrids have remarkable impact on existing electricity and gas markets. To harness their benefits fully, their market participation must be encouraged. Suitable market reforms must be made to allow such participation, and financial incentives should be provided for owners to invest in Microgrids. Major changes in conventional electricity market have already been initiated in some countries.

A Microgrid is an aggregation of electrical/heat loads and small capacity on-site microsources operating as a single-controllable unit at the distribution voltage level. Conceptually, Microgrids should not be thought of as conventional distribution networks with additional local generation. In a Microgrid the microsources have sufficient capacity to supply all the local loads. Microgrids can operate both in synchronism with the utility (grid-connected mode) and in autonomous power islands (stand-alone mode). The operating philosophy is that under normal condi tion the Microgrid would operate in the grid-connected mode but in case of any disturbance in the utility, it would seamlessly disconnect from the utility at the point of common coupling (PCC) and continue to operate as an island.

The overall control and management of a Microgrid will have to be implemented through an intricate network of state-of-the-art IED devices interlinked through SCADA and high-speed communication channels. The central con troller for Microgrids will perform functions like energy management, management of ancillary services, metering and protection co-ordination, grounding co-ordination, inter-tripping and fast tripping of circuit breakers through its Energy Management Module (EMM) and Protection Co-ordination Module (PCM). The entire operation of these modules will depend on high speed communication and interoperability between the devices. Therefore, the development of communication standards for microsource sub-station automation with SCADA will have immense significance in designing, developing and implementing EMM and PCM for a Microgrid and an active distribution network. Standardised communication protocols will also help in the integration of several Microgrids to form a quality power park.

Microgrid's market acceptability and its viability are significantly related with several economic issues. The current policy on standby charges, net metering, Microgrid's public utility status as well as the regulatory issues on the capability of small generators to serve neighbouring customers are more akin to distributed energy resources (DERs) but not sufficient to make Microgrid a commonplace. Therefore, Microgrid-related economic issues need to be assessed and addressed in their paradigm to get Microgrid the status of a viable public utility. Regulatory issues in relation to economic issues need to be devised carefully to establish efficient participation of Microgrids in the open market of electricity as well as several ancillary services. Many regulatory barriers need to be revised to establish the viability of Microgrids.

This section discusses the modelling and simulation of a microturbine generator (MTG) system consisting of a microturbine (MT) coupled with a synchronous generator. The model is then used to perform the load-following analysis of the MTG system in both stand-alone and grid-connected modes. Simulation is done in MATLAB Simulink platform.

This section describes two dynamic models of a proton exchange membrane fuel cell (PEMFC) for dynamic performance analysis. The first model uses a proportional-integral (PI) controller to control the fuel flow to the reformer of the fuel cell system and the second model uses a fuzzy logic controller (FLC). The dynamic behaviour of the fuel cell system with a step load change is studied and the outputs are compared for both models. The PEMFC power generation system has three main parts, the fuel processor, power section, power-conditioning unit. The fuel processor converts the fuel into hydrogen and by-product gases. The power section generates electricity using a number of fuel cells. The power conditioning unit (PCU) converts the generated DC power into output AC power with current, voltage and frequency control to meet the demand as per requirement.

Photovoltaic (PV) plants consist of inverter-interfaced PV arrays. The inverter keeps the AC output voltage at the specified level irrespective of solar irradiance E (W/m²) and ambient temperature T (K). The inverters are provided with maximum power point tracking (MPPT) feature that sets the operating point voltage of the array such that maximum power can be extracted from the array. This section discusses the development of a robust and very simple mathematical model of a polycrystalline PV array in MATLAB Simulink that (i) imposes low computational burden on the system, (ii) has low data storage requirement and (iii) can be represented by standard block set of MATLAB Simulink. At the same time, the model can take into account the variation of the PV array output with solar irradiance and ambient temperature by incorporating the MPPT feature. This feature shifts the operating voltage set point of the model to its maximum power voltage so that maximum power can be extracted from it. The model is used to (i) study in detail the performance of the PV array with varying weather and loading conditions, (ii) simulate a stand alone PV plant for studying the effect on load variation on the AC side bus and (iii) develop a simple load-shedding scheme for the PV plant.

Due to growing power demand and increasing concern about the environmental pollution caused by fossil fuelled-power plants, the distributed generation concept is gaining greater commercial and technical importance all over the world. Distributed generation encompasses the interconnection of small-scale, on-site DGs with the main utility grid at distribution voltage level. DGs constitute non-conventional and renewable energy sources like solar PV, wind turbines, fuel cells, mini/micro hydro, tidal and wave generators and microturbines. These technologies are being preferred for their high energy efficiency (microturbine or fuel cell-based CHP systems), low environmental impact (PV, wind, hydro, etc.) and their applicability as uninterruptible power supplies to PQ (power quality) sensitive loads. Electricity market reforms and advancements in electronics/communication technology are currently enabling the improved control of geographically distributed DGs through advanced SCADA (supervisory control and data acquisition). Research has been carried out on how interconnected DGs can be operated as Microgrids in both grid connected and stand-alone modes.