by Joe McCabe
Where is the money in microgrids? My goal at this years Intersolar event was to try and answer this question; to figure out the value proposition of microgrids as they relate to distributed generation, storage, renewable energy and photovoltaics.
A microgrid is an electrical supply and use system that can operate autonomously. Although all microgrids are small relative to the electric grid as a whole, the huge size of the grid leaves a broad range of what can count as “micro.” Microgrids can be as small as a single building, but range on up through schools and military bases and an entire community, such as San Diego Gas and Electric’s Borrego Springs CA microgrid which includes Spirae equipment. Even my plug-in-prius with an an AC inverter can be considered a microgrid.
Islands have microgrids already, with Hawaii leading the experience curve on what an electrical grid looks like with increasing levels of intermittent renewable energy power sources. On the US mainland, research and development projects have funded microgrids using words like resilience and reliability as justification for the work. But it is hard to find the monetization of these concepts which is needed to justify any return on an investment for microgrid functionality.
At this past week’s Intersolar NA 2015 held in San Francisco, microgrid companies were exhibited more frequently than in past years (see my previous articles from Intersolar NA events on racking, storage and what not). Jerry Brown’s most recent inaugural address included the word “microgrid”. Microgrids provide an added value for uninterruptible power. Unreliable grids are typically found in developing nations, so the US with today’s relatively reliable grid doesn’t typically have a realistic value proposition. The term resilience is being used more often as it relates to the grid with increasing levels of intermittent renewable energy. The cyber security of the grid is and will continue to be increasingly scrutinized. Hurricane Sandy prompted New Jersey to develop the Energy Resilience Bank with funding for systems sized to provide energy to critical loads during a seven-day grid outage.
Use-cases driving the discussions around microgrids are used by the California Smart Inverter Working Group to develop rules around the advanced functionality of inverters with and without electrical storage. A growing group of electrical utility and solar industry professional meet weekly to discuss the new California Rule 21 language, the communications/security/rules/scheduling of valuable advanced functionality. All inverters sold into California will be required to have this advanced functionality starting at the end of 2016.
Greensmith is a company that exhibited again at this years Intersolar discussing their ability to work with all manufacturers of storage and inverter equipment.
Other companies whose products and services that relate to microgrids at Intersolar included Princeton Power Systems (developers of the Alcatraz Island microgrid),
Dynapower developers of the Green Mountain Rutland City, VT microgrid which includes a PV system on a brownfield landfill privately owned by Frankston Holdings.
Ideal Power has an interesting 125 kW inverter that will take PV, charge and discharge storage and integrate with a generator to provide AC power on a microgrid.
Solar Energy International held a workshop which included microgrid content. In future years you will probably see a focus on microgrids at Intersolar as you saw with the evolution of storage that this year dominated one floor of the Moscone Center’s West hall exhibit space.
Duke, American Electric Power, Berkshire Hathaway Energy, Edison International, Eversource Energy, Exelon, Great Plains Energy and Southern Co. have grouped together on microgrid issues under the umbrella of Grid Assurance.
One of the biggest announcements for this space was the July 1st submission of Southern California Edison’s Energy’s Distributed Energy Plan to the California Public Utilities Commission. Edison indicated they will be opening up their ~20,000 distribution lines to third party vendors of electrical services because Edison’s business is being a wires company. In my view, this opens up the opportunity to genuinely value microgrids at each of the connection points for residential, commercial and industrial customers on the distribution lines. I wasn’t able to answer the question of the value for microgrids within large scale grids in $’s/resilience or $’s/reliability. Perhaps in the not too distant future each utility customer will be charged accurately for the safety, security, resilience, and reliability of its electricity with the help of Edison’s new awareness around their Distributed Energy Plan.
Microgrids will become increasingly important to the storage, solar and wind power industries because they will add security, resilience and reliability values. Off grid and island systems continue to be successfully implemented.
Rule 21 equipment being required at the end of 2016 and PJM’s frequency markets are enablers for the monetization of microgrids values, possibly by as early as 2017. When you see these values monetized as is currently done with energy ($/kWh), power ($/kW), frequency regulation (PJM) and power factor correction ($/kVAR) are monetized, then microgrids will become widespread.
Joseph McCabe is an international solar industry expert with over 20 years in the business. He is a Solar Energy Society Fellow, a Professional Engineer, and is a recognized expert in developing new business models for the industry including Community Solar Gardens and Utility Owned Inverters. McCabe has a Masters Degree in Nuclear and Energy Engineering and a Masters Degree of Business Administration.
Joe is a Contributing Editor to Alt Energy Stocks and can be reached at energy [no space] ideas at gmail dotcom. Please contact Joe for permission to reprint.
Thanks to Ravi Manghani of GTM Research, Steven Strong of Solar Design Associates and Solar Energy International for help with content on this article.