Recently, the new concept of microgrid (muG) has been emerging on distribution networks as a way to ease the integration of micro generation in LV networks and increase reliability. A muG is an association of a low voltage distribution network, small modular generation systems (micro-generators), loads and storage devices having some local coordinated functions. This entity can operate in two different modes: interconnected or emergency. In the first mode, the microgrid is connected with the distribution network, importing or exporting electricity and/or ancillary services. When in emergency mode, the microgrid operates isolated from the distribution network and uses local resources, changing from power control to frequency control and, if necessary, shedding load. A micro grid will only be established if its promoters achieve sufficient advantages that justify the incurred costs, namely the investment, operation and maintenance costs. The main purpose of this paper is to identify all the relevant costs and benefits and build a decision model for the situation, taking into account the regulatory framework, which is essential for the definition of some of the benefits. The paper also shows how to include in the evaluation the risk associated to the uncertainties in data and parameters. An illustrative example is included that shows a possible situation of equilibrium between global costs and benefits

The emergence of micro-generation as a technically sound alternative has lead, in recent times, to the concept of micro grid, a network of LV consumers and producers able to export electric energy in some circumstances and also to work in a isolated way in emergency situations. Research work about the organization of micro grids, control devices, functionalities and other technical and economic aspects is presently being carried out, in order to establish a consistent technical framework to support the concept. Among other aspects, the effect of micro grids in the reliability of the distribution network has been pointed out as an important advantage, due to the ability of isolated operation in emergency situations. In order to address this topic, the present paper identifies the situations where the existence of a micro grid may reduce the interruption rate and time and thus improve the reliability indices of the distribution network. The relevant expressions necessary to quantify the reliability are also presented. An illustrative example is included, where the global influence of the micro grid in reliability is commented.