This article examines the trade space between the resilience and cost of an island microgrid. The article presents two models for the resilience and the cost of the microgrid. The resilience model considers the invulnerability and recoverability of the microgrid and represents the power balance of the microgrid, energy storage, and maintenance policies. The cost model adapts the levelized cost of energy measure to the context of island microgrids. We conduct experiments to investigate two microgrid architecture decisions of how much excess generation capacity and redundancy to provide. The experiments show that redundancy of generative sources provides greater resilience for similar cost, and resilience improves quickly as excess power capacity is added while the cost grows more slowly. Case studies for island microgrids show how a redesign of the microgrid can improve resilience without increasing costs. The article contributes to the literature a model for decisions makers to evaluate the tradeoffs between resilience and cost for island microgrids that must depend on their own distributed energy resources.

This article develops a method to model, analyze, and design military microgrids with the objective to improve their resilience in the face of disconnections from the larger electrical grid. Military microgrids provide power to installation and base facilities to enable base mission objective accomplishments that are related to national security. Previous research, tools, and methods for microgrid design and assessment do not adequately address resilience in terms of accomplishing mission objectives and instead primarily focus on economic outcomes. This article proposes a novel metric to quantify microgrid resilience in terms of its ability to minimize the impact of power disruption on missions supported by the microgrid. The metric is used in a novel design method to ensure an islanded military microgrid can continue operations while disconnected for a two-week duration. Our model examines the ability to continue mission operations subject to various microgrid disruptions as well as equipment reliability.

For sustainable defense management, it is essential to acquire weapons systems that can adapt to future uncertain threats and, at the same time, to invest efficiently with limited budgets. Economic analysis is used to examine the costs, benefits and uncertainties of alternatives. In particular, the use of the real options valuation, which is one of the methodologies of economic analysis, is expanding. The real options valuation has shown effectiveness across various industries to evaluate investment strategies. In this paper, we apply the real options valuation to the weapon systems development case and confirm its usefulness. Unlike previous studies, the real option valuation methodology is applied retroactively to the finished project, compared to existing research mainly applying real options to value research and development (R&D) without knowing how the project completed. We use the following procedure. (1) Define the uncertainties of the three acquisition alternatives (development, technology adoption, and purchase). (2) Calculate the benefits of the three acquisition alternatives with expected and actual data without uncertainties. (3) Model the decision tree without options and with options. (4) Analyze and compare results with benefit and benefit cost ratio. We analyzed the Korea K2 tank powerpack development case by applying real options. We could see that the real options could have reduced the risk of losses when the development risk is high and market uncertainty exists. From the case study of the development of the powerpack, we learned the following three lessons. First, we reaffirmed the importance of objective value analysis in project decision making. Second, we need to analyze the project value continuously and revise the acquisition strategy accordingly. Third, the effectiveness of the real options valuation was confirmed for sustainable defense management. In addition, the real option analysis data acquired from similar finished projects can be useful for establishing a new product acquisition strategy and, at every decision-making phase, the real option evaluation should be continuously performed with updated information. In this paper, we first perform real option valuation of finished weapon systems in the Korean defense field. This paper is valuable in establishing a rational methodology for applying economic analysis to weapon system acquisition projects.