Microgrids Take Utilities by Storm
By Russell B. Cohen, Esq.
Energize Weekly, April 22, 2015
Driven by the desire to cut costs, ensure reliability, and reduce their carbon footprint, large industrial, municipal, and commercial energy users are increasingly adopting alternative energy resources and technologies to supply their electricity needs. This article series will take an in-depth look at the ways some large energy consumers and load centers have embraced these new technologies, and how utilities can help.
American communities have been increasingly devastated by ravaging storms which strand millions without electricity for days on end, and leave billions of dollars of damage in their wake. As a result, communities are looking for new ways to mitigate service interruptions and safeguard against future disasters which could once again knock-out power to thousands of businesses and residents. “Building in grid resiliency has gained greater urgency in recent years, as demonstrated by the economic and personal losses from electricity outages due to severe weather,” says Ernest Moniz, U.S. Energy Secretary. “Keeping the power on during extreme weather events and other electric grid disruptions is essential.”
One solution is the microgrid. Essentially a localized set of generation and storage assets with a central control protocol, microgrids offer municipalities, along with any other large energy user, the ability to be connected to and disconnected from the main power grid simultaneously. So when a major storm knocks out a substation or power line, which would normally leave an affected area without power until the damage gets fixed, the area can disconnect from the main grid while relying on the microgrid, using power from local sources (such a diesel generator or a solar panel), to keep the lights on until the main power grid is back online. This ability to disconnect, or operate independently, from the larger utility grid, known as “islanding,” makes the microgrid attractive to many of its proponents.
While microgrids are not new, they traditionally only served a single user, such as a university or hospital, rather than an entire community. But recently, microgrids have evolved from controlling simple generator backup systems into sophisticated smart grids that can ensure reliability, resiliency, and energy independence on a larger scale. Powered by distributed generators, batteries, or renewable resources, a microgrid might be able to run indefinitely.
The local connection to energy supply is one of the most important features of a microgrid, according to Jason Meyer, a senior associate with the Rocky Mountain Institute.
“Microgrids can really create a stronger connection between a customer or user or participants in the energy supply and energy system,” said Meyer. “In the case of a fully islanded system, customers are very in tune in how they are generating power.”
And with the development of more sophisticated microgrid capabilities and localized control of energy generation, comes a more integral role for renewable energy technology. Since local grids cannot be expected to rely on power being supplied by a coal or natural gas-fired power plant hundreds of miles away, utilization of renewable energy, along with installation of reliable storage capabilities, will become essential as microgrids become more self-sufficient.
RMI has seen this shift to renewables in its Ten Island Renewable Challenge project, which challenges island communities, where electricity costs are high, to take advantage of local, renewable energy resources.
“Storage can play a large role in allowing a microgrid to incorporate increasing amounts of renewables,” said RMI Associate Kaitlyn Bunker. “Several microgrids that we’ve studied use batteries or flywheels, or a combination of the two. We’ve also seen a great example pairing wind with pumped storage hydro.”
For many rural and remote communities, the development of microgrids and integration of renewable energy can represent a change in your way of life. Meyer recounts his experience working with remote Alaskan communities, which are historically dependent on shipments of fuel for diesel generation. For these communities, microgrid development and the integration of renewable energy sources can mean grid security, not just grid resilience.
“These communities get fuel shipments once a year, a barge will come in, they’ll offload these shipments, and those will be stored for an entire calendar year,” Meyer said. “You get very cognizant of fuel supply, so there’s a lot of value and interest in renewables in that scenario. It’s much more about being secure and lowering your reliance on supply chain. That reduces costs, and creates local pride, in terms of seeing a wind turbine or solar panel.”
For most U.S. energy consumers, the key role microgrids will play will be in keeping the main grid resilient to disruption. And microgrids are booming. “Not much of a factor a decade ago, microgrids are expected to explode into a $40 billion-a-year global business by 2020,” according to Navigant Research. “In the U.S., about 6 gigawatts of electricity — enough to power as many as 4.8 million homes — will flow through microgrids by 2020.” Today, microgrids account for 1,051 megawatts (MW) of power, according to a 2014 report by GTM Research, which sees an additional 800 MW of growth by 2017, driven in part by recently announced state-level resiliency programs and concerns over the reliability of the U.S. grid, particularly as storms have become more severe.
The business opportunity of microgrid technology has not gone unnoticed by those who currently control most of the nation’s energy grid. Though 51 percent of utility executives believe microgrids will adversely affect their revenue, according to a data compiled by Accenture, many in the utilities industry see opportunity. “Rather than view microgrids as new competitors to traditional electricity distribution utilities, perhaps these local networks of distributed generators, smart electricity loads, and energy storage devices should be seen as a new business opportunity,” says Anthony S. Campagiorni, Vice President of Business Development and Governmental Affairs for Central Hudson Gas and Electric Company, a regional utility. The 2014 Utility Dive survey of more than 250 utilities executives, produced in partnership with Siemens, reveals such support, reporting that traditional utilities are interested in becoming microgrid partners, rather than opponents. More than half of the respondents said they see themselves getting into the microgrid market within the next five years, with 97 percent viewing microgrids as a business opportunity. “This defies the perception of utilities as often slow to innovate and resistant to disruptive change,” wrote the survey’s authors.
Bodhi Rader, RMI Senior Associate, says that one exciting element of microgrids that utilities can take advantage of is the unique relationship between customer and energy provider that only exists within a microgrid-macrogrid dynamic.
“That relationship between a microgrid and macrogrid, where you no longer are just a simple one-way end user or a customer, becomes a more collaborative relationship, that enables innovations and services for the macrogrid that might not exist when you don’t have a microgrid in place,” he said.
One state embracing this change is New York, which recently announced the launch of a $40 million energy competition, called NY Prize, which will provide funding to support the construction of community microgrids throughout the state. As one of the states hardest hit by 2012’s “Superstorm” Sandy – which cut power to more than 11 million New Yorkers for nearly two weeks – the goal of developing microgrids that can island in the case of weather-related outages is paramount. “Having a reliable source of power is crucial when extreme weather strikes,” said Andrew M. Cuomo, New York Governor.
One such project brought together the New York State Energy Research and Development Authority with Clarkson University, National Grid, General Electric, the State University of New York (SUNY) at Potsdam, and the Village of Potsdam to plan and design a large microgrid system to generate electricity for the entire village. Home to some 9,700 residents, and located just south of the Canadian border, Potsdam is prone to ice storms that damage utility lines and other above-ground power infrastructure, including as recently as December 2013, when an inch of ice coated the region and disrupted power to thousands of homes and businesses. “This whole project is the brainchild of some really horrific events,” says Virginia Limmiatis, a National Grid spokeswoman. “What we’d like to do is give customers who are in these hard-hit areas some assurance that should something like this befall them again, the microgrid could supply essential energy.
With the ability to island in an emergency, the Potsdam microgrid will use existing natural gas, fuel oil, and hydroelectric generation, as well as a planned 2 MW photovoltaic (PV) installation to keep the town’s electricity system up and running for several days should it become disconnected from the main power station. When completed in 2017, Potsdam’s underground microgrid should be capable of delivering electricity to all of the village’s essential services, including local police, fire, hospital and emergency response facilities, and the campuses of Clarkson University and SUNY Potsdam.
On the West Coast, San Diego Gas & Electric (SDG&E) recently announced plans to create one of the country’s largest renewable energy microgrids as a result of a $5 million California Energy Commission grant it received this year. Currently, the 3,500 resident town of Borrego Springs, California, operates the Borrego Springs Microgrid, which serves 1,000 customers. Under the new grant, the microgrid will expand to power the entire 2,800 customer community by tapping into a nearby 26 MW solar PV plant developed by NRG Energy. The solar plant will provide enough energy to power the town during the day. Large batteries will store the solar energy to provide power when the plant’s output is low. If the batteries exhaust their power, the system can access traditional generation. According to SDG&E, the microgrid has already averted several outages. When a severe rainstorm knocked out utility power to the town in 2013, the microgrid’s collection of rooftop solar panels, micro-turbines and batteries was able to keep electricity flowing to nearly half the town’s customers, including buildings sheltering the elderly and ill from the desert heat. With the expansion, if a large outage were to impact the whole town, the microgrid can switch from running in parallel with the main grid to islanding mode. The expansion is expected to be completed by mid-2016.
Less than 78 miles away from Borrego Springs, at the University of California at San Diego (UCSD), one of the most advanced microgrids already generates 92 percent of the electricity used on campus annually, which saves UCSD as much as $850,000 in monthly utility bills. This expansive campus, covering 1,200 cliff-side acres overlooking the Pacific Ocean, and serving a community of 45,000 students, faculty and staff, has embraced the necessity of localized power generation. “At a research university like UCSD, the importance of ensuring a reliable source of energy cannot be overstated,” says Byron Washom, UCSD Director of Strategic Energy Initiatives. “We have an electron microscope that every time we have a supply disruption, it takes six weeks to recalibrate. We can’t let that happen.”
The UCSD microgrid is powered by a 2.8 MW fuel cell, 2.3 MW of solar provided by rooftop panels and two PV arrays, and a 30 MW natural-gas-fired heat and power system. All together, these assets generate roughly 75 percent of peak-demand electricity. Any additional power is provided by SDG&E.
The $8 million UCSD microgrid has already demonstrated its value. In 2009, when the rest of the regional utility grid was threatened by wildfires, UCSD was able to go from a 3 megawatt net importer to a 2 megawatt net exporter in 30 minutes by turning down its 4,000 non-critical thermostats by a few degrees while increasing onsite generation. According to Washom, these actions played a critical role in keeping the whole area’s lights on.