Microgrid is generally defined as cluster of small distributed generators, energy storages and loads. Through monitoring and coordinated control, microgrid can provide various benefits such as reduction of energy cost, peak shaving and power quality improvement. In design stage of microgrid, system dynamic simulation is necessary for optimizing of sizing and siting of DER(distributed energy resources). As number of the system components increases, simulation time will be longer. This problem can restrict optimal design. So we used simplified modeling on energy sources and average switching model on power converters to reduce simulation time. The effectiveness of this method is verified by applying to prototype microgrid system, which is consist of photovoltaic, wind power, diesel engine generators, battery energy storage system and loads installed in laboratory. Simulation by Matlab/Simulink and measurements on prototype microgrid show that the proposed method can reduce simulation time not sacrificing dynamic characteristics.