# Valuing Resilience Benefits of Microgrids for an Interconnected Island Distribution System
## 1 Introduction  
Electricity is an essential service, and electrical infrastructure is a critical and essential element supporting a productive society [1]. Unfortunately, the electricity grid in some jurisdictions is susceptible to frequent and extended outages due to its physical vulnerability, increased risk of major weather events, and in some cases both. Major weather events are becoming more frequent due to climate change and associated weather patterns, which have become the single main cause of service interruption in many jurisdictions. While electric utilities traditionally have constructed their systems to operate under normal weather [2, 3], the emerging need to account for high impact events and resilience has started to drive electric utility design standards, guidelines and best practices [4]. Electric infrastructure is capital-intensive and upgrading all components, from generation to end-use services, to withstand the most extreme weather disruptions is not cost-effective [5]. Targeted strategic investments are necessary. Alternative solutions that fall under the industry moniker of non-wires alternatives (e.g., distributed energy solutions, energy storage) can, and should, be evaluated against traditional solutions through comprehensive cost-benefit analyses. Among the alternative solutions, the infrastructure, technological advances, and control systems that are the underlying foundation of microgrids have been shown to not only be an option that can provide the necessary resilience a community needs, but in a more economical way than traditional solutions [6]. Currently, most electric utilities do not have distinct predictive evaluation metrics included in cost-benefit analysis processes to estimate the resilience value of potentialtechnology investments [7]. The goals of reliability and resilience are related, in that they both focus on avoiding outages [8]. However, in the case of resilience, these outages may be so rare that investments to avoid their effects may or may not pay dividends in their lifetimes. Similarly, utilities may not have sufficient data on how their system responds to extreme events because they have seen very few such events in recent history. Finally, a resilience valuation differs from a reliability valuation because the consequences of longer-duration outages can scale nonlinearly with the duration of these outages [9]. Therefore, a probabilistic approach to resilience-focused cost-benefit analysis that balances the likelihood that a disruptive event will occur with the consequences, which reflects the scaling of the consequences of outages over time, is needed. Such an approach could offer confidence and guidance for policymakers and regulators who may need to see estimates of resilience value before allowing utility ratepayers to cover the costs of resilience-enhancing investments. There is a strong theoretical foundation for quantifying the value of a grid resilience investment, despite challenges that remain to instantiate these methods within utility planning practice. [PERSON] et al. overview a host of analytical practices to value the resilience impact of distributed energy resources (DERs), along with an evaluation of the established methods using four criteria [9]. The established methods reviewed are the contingent valuation method used by the Interruption Cost Estimator (ICE) tool, the damage cost method within the Federal Emergency Management Agency's Benefit Cost Analysis Toolkit, and the input-output methodology within tools such as IMPLAN and REMI. The synthesis shows that none of these methods capture the benefits of avoiding especially long-duration outages, and that these approaches do not reflect the full scope of benefits that electric utility regulators may value. Reference [10] discusses the theoretical underpinning of several of these methodologies, while providing research directions that may overcome the gaps identified by [PERSON] et al.