Energy and exergy analyses are effective tools to characterize the microgrid performance in different operating conditions and, to identify the scope of making system more efficient. Exergy analysis provides details information regarding maximum possible work, losses, types of losses and its locations. In present study an attempt has been made to characterize the performance of photovoltaic (PV) and fuel cell (FC) based AC microgrid using the energy and exergy analyses. A microgrid comprising of PV (5 kW(p)) and FC (1 kW) as primary and auxiliary generators respectively is developed at Centre for Energy Studies (CES), Indian Institute of Technology (IIT) Delhi. Excess PV electricity is used to generate the hydrogen using electrolyzer that is stored in metal hydride (MH) tank. Experimental energy and exergy analyses are carried out for different operating conditions that give energy efficiencies of PV system, FC system, MH and electrolyzer as 12.6%, 59.1%, 83.4% and 49.4% respectively. Maximum exergy efficiencies of PV, FC, MH and electrolyzer are estimated as 13.5%, 59.4%, 82.8% and 49.6% respectively. The exergy values are calculated at various environment reference temperatures (0 degrees C, 8 degrees C, 16 degrees C, 20 degrees C, 25 degrees C, 30 degrees C, 35 degrees C, 40 degrees C and 45 degrees C) to estimate the seasonal effects on the exergy performance of system. The exergy efficiency of entire hydrogen generation and utilization cycle increases with increase in reference environment temperature. The overall energy and exergy analyses of entire AC microgrid in different operating modes are also performed. According to the obtained experimental results maximum overall energy and exergy efficiencies of AC microgrid are 12.57% and 13.47% respectively.