The rapid integration of renewable energy sources, including photovoltaics (PV), presents operational challenges for distribution networks, such as reverse power flow, voltage fluctuations, and network congestion. In industrial parks, growing demand for on-site and shared renewables has spurred interest in deploying microgrids, where the concentration of variable generation creates hosting capacity constraints at feeder and substation. Conventional firm connection policies impose strict capacity limits based on worst-case scenarios, delaying interconnection and underutilization of the grid. To address these limitations, this study introduces a time-series bi-level optimization framework for evaluating flexible connection policies that allow controlled PV curtailment. A linearized power flow-based hosting capacity optimization model is developed and applied to evaluate maximum hosting capacity and optimize the siting of PV systems under firm and flexible connection cases. A case study on an IEEE 40-bus networked microgrid system demonstrates that allowing modest annual PV curtailment (1–11 %) can significantly enhance the hosting capacity of the network—up to 45 % greater than that achieved under firm connection approaches—while maintaining or even increasing the total annual renewable generation. Furthermore, an economic analysis reveals that although curtailment may slightly reduce developer profitability, significant savings from deferred grid upgrades provide substantial benefits to both microgrid and distribution system operators. Therefore, we establish a cost-effective pathway for large-scale renewable energy integration by proposing practical incentive mechanisms, such as net present value and benefit-cost ratio-based compensation. These findings emphasize the importance of strategically flexible connection policies in enabling efficient, economical, and high-capacity renewable energy integration into future power grids.
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