Techno-Economic and Operational Reliability Assessment of an AC-Coupled Hybrid Distribution Microgrid for Remote Communities in Canada

Remote communities in Canada face high electricity costs, energy insecurity, and significant greenhouse gas emissions due to heavy dependence on diesel generation. This study proposes and evaluates an AC-coupled hybrid distribution microgrid for remote off-grid communities, using Black Tickle, Newfoundland and Labrador as a representative case study. The system integrates two 200 kW wind turbines, a 200 kW diesel backup generator, a 16 MWh lithium-ion battery storage system, and a bidirectional converter, modeled and optimized in HOMER Pro 3.18.3 using local meteorological data, community load profiles, and a cycle-charging dispatch strategy. The optimized configuration achieves 86.7% wind penetration and 100% supply reliability with zero unmet load, yielding a total net present cost of USD 13.6 million and a levelized cost of energy of 0.999 USD/kWh over a 25-year horizon. Battery storage accounts for 73.5% of annualized costs, representing the primary economic challenge for wider deployment. Sensitivity analyses show that diesel price fluctuations exert approximately 4.1 times greater influence on system economics than equivalent carbon pricing changes, while the optimal configuration remains robust across all tested policy scenarios. These findings demonstrate that AC-coupled wind–diesel–battery microgrids offer a viable pathway for reducing fossil fuel dependence and supporting clean energy transition in remote, harsh-climate communities.