The great northeast power blackout of 2003 was a reminder that reliance on large grids has widespread implications. The power outage—lasting several days in some areas—affected millions in the US and Canada. Nearly a decade later, Hurricane Sandy left the area without power for weeks. Many in the energy industry seek microgrids—particularly community microgrids
—as a solution.
Defining the Community Microgrid
The US Department of Energy defines a microgrid as a “group of interconnected loads and distributed energy resources (DER) with clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid, and can connect and disconnect from the grid to enable it to operate in both grid-connected or island mode.” However, community microgrids are differentiated in several ways with nuances among various players in the energy sector.
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The Clean Coalition defines a community microgrid as a coordinated, local grid area served by one or more distribution substations and supported by high penetrations of local renewables and other DERs such as energy storage and demand response.
“A community microgrid has a footprint across the entire distribution grid area,” notes Craig Lewis, executive director of the Clean Coalition. “It covers thousands of utility customers and has many assets—whether those be local solar or energy storage—that are on the utility side of the meter. Assets can be coordinated within the entire mix of what the utility is bringing to the provision of its grid services, which is power and voltage and frequency support, and used to operate the grid in an optimal fashion and provide benefits to everybody being served by the grid.
“A standard microgrid’s assets are behind a single customer meter and only provide benefit to that single customer.
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The Clean Coalition is focused on community microgrids, which is a relatively new category of microgrids,” points out Lewis, adding that his organization coined the term four years ago.
“Community microgrids” imply stand-alone power systems for entire communities, says Marilyn Walker, COO of HOMER Energy (Hybrid Optimization of Multiple Energy Resources), pointing out that Alaska has been using microgrids for decades.
“There are 180 villages there that are not, and will never be, connected to the primary grid,” she says. “It’s a little different when you don’t have a grid for backup. In those cases, they are developing community power systems and that is where community microgrids began.”
Walker points out the Energy Policy Modernization Act of 2016, sponsored by Republican Senator Lisa Murkowski of Alaska and passed by the House and Senate on May 25, includes support for microgrids.
“In New York, and to a lesser degree in Connecticut and Massachusetts, they are looking at what we call resiliency microgrids—microgrids primarily as critical infrastructure backup,” she says.
Siemens defines a community microgrid as one involving all stakeholders, notes Maggie Clout, business development manager for Siemens Digital Grid.
“That makes the microgrid complicated in the sense that you’re not dealing with one entity when you sign a contract,” she points out. “You’re dealing with multiple entities which are owned by various customers, so that creates the complexity not only from the economics and technical sides, but also the regulatory side. Siemens helps tackle the multi-contractual vehicles to facilitate the community microgrid.”
However they are defined, everyone agrees community microgrids provide benefits. Centralized utility systems and aboveground distribution lines expose customers to regional and local outages, “and while they are highly reliable, centralized utility grids can’t ensure local resilience,” notes Peter Douglass, project manager for the Microgrid Institute, a collaborative organization supporting global development of microgrids and distributed energy assets through market development and analysis, regulatory and financial models, and microgrid feasibility, structuring, and deployment.
Such resilience is vital for health and safety facilities, street and traffic lights, municipal water and wastewater utilities, telecommunications, military bases, and critical retail facilities such as gas stations, grocery stores, and pharmacies.
“Community microgrids promote the resiliency and reliability of local power distribution systems,” he points out, adding that they also improve environmental performance and integrate renewable technology.
According to the Clean Coalition, community microgrids use efficient load design, including local balancing and load flattening, to reduce costly peaks and transmission costs.
They minimize water use and promote land preservation by siting local renewables on rooftops, parking lots, and other underutilized spaces within the built environment. They establish a scalable solution spanning one or more substations.
Other benefits include the establishment of a foundation for more precise and efficient grid operations, a pathway for utilities to thrive in the distributed energy future, and a systemwide approach to reduce dependency on vulnerable, inefficient, and expensive remote generation and associated transmission infrastructure, adds Lewis.
Additional benefits are affordable and stable energy prices as well as a stronger local economy through attracting private investment, job creation, and keeping energy dollars close to home, according to the Clean Coalition.
A key feature of community microgrids is their capability of operating independently from the utility system in an island mode in the event of a utility failure.
There are community microgrids which provide value in terms of total energy costs “where we can shift the solar consumption—which we call ‘self-consumption’—so that rather than back-feeding solar to the grid, they’re consuming more of it themselves,” says David Miller, director of business development for Greensmith Energy.
“Or we can set it up where we are actually depending on the jurisdiction to be able to provide grid services with the microgrid, with frequency response, or spinning reserves where we get value from the microgrid during hours where there is not a
Credit: Schweitzer Engineering Labs
Schweitzer Engineering Labs’ powerMAX power management and control system.
More complicated multi-zone community microgrids have the ability to operate as a single system and, if necessary, each zone can operate independently, Douglass points out.
“Distributed generation has a shorter distance to reach the end-user and less energy is lost to heat as it travels over power lines,” he adds.
Additionally, many microgrids use combined heat and power (CHP) or cogeneration systems designed to achieve higher fuel efficiency than is offered by separate power plants and heating systems.
“Microgrid control technologies optimize the use of energy and result in higher efficiency than the utility system as a whole,” says Douglass. “Advanced community microgrids reduce overall energy requirements and ensure that energy can be used as intelligently as possible.”
Advanced energy systems help foster economic growth and reduce community dependence on distant or imported energy sources, Douglass adds.
“Exploitation of local renewable energy resources can keep more of a community’s energy dollars in the local economy,” he says.
Planning a Community Microgrid
Microgrid planning begins with consideration of specific local needs among communities and individual customers, notes Douglass.
While the drivers may come from a variety of sources, the most common is the need for greater resilience to maintain critical services during extended utility outages, he says.
Other drivers include the increasing use of renewables, reducing emissions, managing energy costs, and improving energy self-reliance, leading to federal and state government regulations and incentives, and utilities re-evaluating traditional service models, he adds.
Justin Day, senior program manager for Schweitzer Engineering Laboratories (SEL), says one of the primary steps needed before establishing a community microgrid is to involve the local utility or municipality.
“When you start interfacing with the utility through the point of common coupling, that utility is going to need to be involved one way or another,” notes Day.
Funding is another consideration, be it government grants, private equity, or capital expenses, he adds. Another factor: Who in the community has the capability to operate and maintain it?
Once local needs and priorities are identified, a feasibility study needs to be conducted to examine the viability of the potential microgrid. The study assesses the community’s needs, objectives, as well as required and available technologies, such as electric and thermal systems and equipment and demand energy resources.
Also assessed, are opportunities to develop strong stakeholder partnerships with vendors, local authorities, generators, and beneficiaries.
After identifying the microgrid’s capabilities, a preliminary technical design is created. A business model is developed to account for the responsibilities and relationships of the various microgrid participants with a view of establishing the proposed project’s commercial, legal, and financial viability, says Douglass.
“If the feasibility study shows strong viability for the proposed project, a more thorough evaluation needs to be performed,” he says. “This should involve detailed engineering design and commercial, legal, and financial analysis and structuring. This involves establishing key agreements necessary to secure a reliable revenue stream for the project, including agreements with system vendors and service providers. It also would include consideration of siting and permitting requirements, and interconnection studies and agreements with the utility if the system is to be connected to the grid.”
Douglass points out that some situations call for an entirely off-grid system, eliminating the need for interconnection studies and associated equipment.
In doing a site-specific analysis, Greensmith Energy evaluates the size of the system and the solar profile, modeled for different areas.
“We look at the loads for how much energy demand there will be and what those typically look like over the course of a day, and a year, and the different time frames,” says Miller. “We’ll model out the requirements and assets.”
In doing so, the company examines the different ways in which the assets can be used: what is the lowest cost power generation component that will be used the most and what is the most expensive that will be used the least?
“We work together on an operating scheme that has a set of rules for how the system is supposed to behave in different times,” says Miller. “That might be optimized to reduce costs, reduce greenhouse gas emissions, or for some other set of requirements.”
Siemens Digital Grid aims to assess a microgrid’s viability from the economics and technical aspect as well as regulatory challenges, notes Clout.
The three pillars of a community microgrid Siemens uses to produce a holistic design are generation, load, and interconnect to the utility, says Clout.
“We look at their facilities’ characteristics and load profiles and come up with technical, viable solutions,” she says adding energy management is part of that solution. “Advanced control technology loops everything, so the microgrid can isolate and provide continuous power to those critical loads within a microgrid footprint.”
Clout points out that feasibility studies need to take fuel supplies into account. Loads need to be considered before generation assets, she says, adding that a unit could be improperly functioning and wasting energy.
“Reduce energy consumption first and then look at how much of a load or electrical consumption you actually have,” she says, adding it strengthens the business case for creating a microgrid.
Siemens works primarily with utilities and leverages the knowledge of how utilities function.
“They have concerns about the impact to their grid stability when there are multiple microgrids on the network that try to go offline, island, and resynchronize to the grid,” she adds.
The business case is not only resilient power, but also clean energy and perhaps less expensive energy, says Clout.
HOMER microgrid software—originally developed at the DOE’s National Renewable Energy Laboratory—is designed to enable facility managers, project developers, program planners, and technology developers to design cost-effective and sustainable hybrid conventional and renewable energy technologies, either as a microgrid or as distributed generation within a larger grid.
The software is predictive in helping those involved in a community microgrid planning project determine its feasibility and prioritize potential project components using either approximate or highly detailed data.
For example, the software helps microgrid developers determine the viability from among choices in power sources such as solar, wind, biomass, small hydro, and generators with various fuel sources, the electric utility grid, microturbine, and fuel cell. It models the viability of storage (lead-acid, zinc, vanadium, nickel, lithium, flywheel, or hydrogen) technologies.
A load analysis offers daily profiles that consider seasonal variation, deferrable (water pumping, refrigeration), thermal (space heating, crop drying), and efficiency measures. Chronological simulation models variable resources, such as solar and wind power, and for CHP applications where the thermal load is variable and is designed to determine the potential impact of uncertain factors such as fuel prices or wind speed.
The analysis flags cost-effective solutions and what load management, CHP, and other diesel optimization options make sense, as well as the optimal capacity for each. The software can also be customized to give engineers more technical detail such as algorithms or financial structures specific to a project or proprietary technologies.
At the end of a feasibility study, there should be a solid understanding of the project and the general timeline, costs, and structure, Douglass points out, adding, “Once the detailed analysis and contracting work is complete, construction can begin.”
How Are They Structured?
Clout says the primary components to the structure of a community microgrid include:
- Renewables such as wind, solar, or hydro on the location of the microgrid system to leverage clean energy.
- Base load generation. “If the main grid is not available, how long can the community microgrid sustain itself?” she points out. “The base load contributes to the resiliency factor.” That may include cogeneration or trigeneration, depending on a site’s thermal needs.
- Energy storage. Prices for energy storage solutions are expected to decline in the next several years, making the economics of utilizing them favorable by bringing the microgrid owner an additional revenue stream, says Clout.
- An energy management platform with advanced controls that encompass renewables. Siemens’ remotely-hosted Spectrum Power Microgrid Management System (MGMS) control solution allows microgrid operators to dynamically manage and control distributed energy resources with integrated weather and load forecasting, helping to project capacity from solar or wind in a given time frame. Additionally, the control platform offers historical data for a building—”how the building is actually using energy and project the load for the next 15 minutes, hour, or 24 hours,” says Clout. It allows those operating the microgrid to be more proactive in managing generation resources to match loads for a stable system for the reliability and regulation perspective. Load shedding is also available for the need to drop non-critical loads to preserve the critical loads for more time duration.
Other factors affecting microgrid project development include network design and configuration, optimal technology mix, system integration, regulation and legal requirements, contracting, financing, and ownership and operations factors, says Douglass.
The permitting process on various system components can take six to nine months, with some components, such as a diesel generator or wind turbine, possibly taking longer says Miller.
Caterpillar recently launched Cat Microgrid technology, a suite of power systems that adds solar panels, energy storage, and advanced monitoring and control systems to Caterpillar’s traditional line of power generation equipment. The technologies are available as turnkey installations or design-to-order solutions. Ranging from 10 kilowatt (kW) to 100 megawatt (MW), units can be added in a modular fashion to create systems customized for a variety of power needs.
Cat Microgrid applications can include any combination of the following elements:
- Thin-film solar modules, which capture more energy, especially in high-temperature, high-humidity, desert, and coastal climates;
- Energy storage such as ultracapacitors, lithium-ion, or rechargeable metal-air storage, designed to provide the most economical and advanced energy storage with controls and monitoring down to the cell level;
- Cat generator sets powered by diesel, heavy fuel oil, natural gas, biogas, or dual fuel, to offer high-power density, high-part load efficiencies, and optimal capability to follow loads;
- The Cat Microgrid Master Controller to monitor and optimize power usage in the microgrid.
The monitoring and communication and control system is the most complicated element of a community microgrid, notes Lewis.
“It’s bringing these various distributed energy resources together and coordinating them through a monitoring and communication and control system where the secret sauce of a community microgrid is really housed,” says Lewis.
“There are multiple providers of monitoring and communication control systems—DC Systems, IPERC, 1Energy Systems are a few—and we’re working with all of them to make sure they have the appropriate features set to provide the monitoring and communications and controls solutions needed for a true community microgrid deployment,” says Lewis.
Technology and Software Platforms Incorporate Renewables
The Clean Coalition is collaborating with electric utilities and technology firms to ensure that grid modeling software enhances visibility and management of energy at the distribution grid level.
Optimization analysis for the location and mix of distributed energy resources allows for a quick and accurate assessment of an individual substation’s potential capacity for local renewable energy, according to the Clean Coalition.
Utilities can then rapidly deploy local renewables in communities, based on simplified integration scenarios of the amount and location of local renewables that can be brought online, such as:
- Lower cost capacity: using existing voltage regulation and advanced inverters, with minimal investment in the distribution grid;
- Medium cost capacity: cost-effective storage and some investment in the distribution grid;
- Higher cost capacity: islanding essential services with additional storage, local reserves, and more substantial investment in the distribution grid.
Microgrid control hardware and software technology allows the microgrid to balance demand response measures that help reduce total energy costs and emissions while streamlining coincident peak power loads and resource requirements.
Schweitzer Engineering Laboratories provides microgrid control systems to control and protect renewable and conventional power generation, designed to ensure a constant supply of energy after loss of utility point of common coupling, as well as manage energy storage to maximize renewable generation and reduce peak charges.
As an energy storage software company, Greensmith Energy offers systems integration expertise.
“Energy storage is really a system of systems,” points out Miller. “It’s very flexible in what it can do.”
Unlike solar power, where the value lies in producing energy when the sun is shining, the value of energy storage is more complex, Miller points out.
“It’s important to have a mature software platform able to understand all of the complexities required to provide value to the grid,” he says. “Sometimes that’s responding to signals on a second-by-second basis or monitoring the output of a renewable facility and charging or discharging upon the local weather’s impact on wind and solar.”
Additionally, battery and inverter technologies are changing on an ongoing basis as companies compete to manufacture better, more efficient, and low-cost products, says Miller.
Because the Greensmith Energy management system is technology-neutral, the same control center can be used when switching among different technologies as needed, he adds.
Greensmith Energy also acts as a service provider to monitor or operate the system. In some cases, the end-user may want to monitor and control various assets on its own and the company provides training to do so.
One approach to using the software is through a web-based portal showing monitoring and controls, and featuring permissions for types of users for which the company offers training on project commissioning. In the other approach, Greensmith Energy builds a connection into an existing end-user’s control room.
Software is a common thread that runs through the microgrid process, from creating viability studies to operational resiliency. HOMER software runs scenarios over a years-long period to assess the total cost of energy—the levelized cost—for various systems before they are created.
“The other place where software is really important is in the operation of the microgrid,” points out Walker. “What is the control algorithm that’s being used? That’s the part about who makes the decision about exactly what to do. We can model that, but there is other operational software that does it in real time.”
The next step for software that Walker says doesn’t quite yet exist is the Internet of Things software.
“Not only will you have controller software, but software that knows what is happening and is communicating that outside the microgrid—a kind of microgrid smart grid,” she adds.
Some states are now on board in leading the charge toward community microgrids, such as the New York State Energy Research & Development Authority (NYSERDA), which is helping communities create microgrids through its $40 million competition, NYPrize, supporting Governor Cuomo’s Reforming the Energy Vision plan to build a cleaner, more resilient, and more affordable energy system for New York.
The Clean Coalition—a nonprofit organization whose mission is to accelerate the transition to renewable energy and modernize the grid through technical, policy, and project development expertise—is working with municipalities and utilities across the country, primarily in New York and California, where it has active projects.
Credit: LO3 Energy
The Brooklyn Microgrid, a community microgrid project in the Gowanus and Park Slope neighborhoods
Clean Coalition has two community microgrids in the planning stages: one in the Hunter’s Point neighborhood of San Francisco, and another located in the east end of Long Island, where the grid is at its most constrained point in the state of New York, notes Craig.
The Clean Coalition is spearheading the Hunters Point Community Microgrid Project in San Francisco in collaboration with Pacific Gas & Electric (PG&E) to support the city’s goal to achieve a 100% renewable electricity supply.
The study’s geographic boundary, as defined by the electrical service territory associated with the Hunters Point substation, represents a current annual load of 236,520 megawatt-hours (MWh) of conventional electricity generation from 18,000 residences and 2,000 commercial customers. Additionally, the area currently supports 13,338 MWh of existing solar photovoltaic and biopower. The city’s redevelopment plans for the area will add 78,359 MWh of load, reaching a projected total annual load for the substation of more than 328,000 MWh.
The project will deploy 50 MW of new solar photovoltaic in the area, which would meet at least 25% of the local electric energy consumption. Once deployed, it is expected to bring $100 million in local wages to the Bayview-Hunters Point community, while reducing greenhouse gas emissions by 1.5 billion pounds over the next 20 years. The San Francisco project also involves CleanPowerSF, a community choice aggregation program, which is helping to procure local renewables and other grid services.
“PG&E has been a great partner up to this stage, but they haven’t rustled up the courage to take it to the deployment stage,” notes Lewis. “CleanPowerSF is being very nimble and is going to leapfrog PG&E in terms of getting local renewables in play through a feed-in tariff that will launch by January 1st at the very latest.”
The Long Island Community Microgrid Project in East Hampton, New York—one of the first projects awarded funding by NY Prize—is designed to achieve nearly 50% of its grid-area electric power requirements from local solar, in an effort to avoid hundreds of millions of dollars in transmission investments that would be required to deliver power to the region.
An optimized local energy system combining up to 15 MW of solar power with a 25 MWh energy storage system will also provide backup power to critical loads, including two Suffolk County Water Authority water pumping and filtration plants, and the Springs Fire District facility during outages.
“We’ve done grid simulations that show that community microgrids will be phenomenally successful in terms of saving ratepayers money from day one because we’re going to offset the need while the power quality and grid reliability is improved, and customers get local generation from renewables,” says Lewis.
Ratepayers are also being saved money because the operational cost of local renewables is less expensive than the operational cost of central generation combined with the transmission infrastructure, he adds.
“Finally, community microgrids will do something that central generation can never do, which is provide resilience to communities,” says Lewis. “When you have your energy generation local, you can combine it with energy storage and demand response strategies such that you can get ongoing indefinite power backup to critical facilities.”
That’s in contrast to central generation and transmission which can have single points of failure from long distances, he adds.
In the Long Island project, “more than 10,000 people are living and working within that substation grid area, which is a basic building block of the electric grid,” says Lewis. “Once we have one community microgrid in the Clean Coalition’s definition, then we can extend that across the utility’s service territory entirely because we’re taking the substation grid area—which is the building block of the electric grid—and stamp it out over every other substation grid area the utility wants to and we can easily replicate from one utility to another.”
LO3 Energy is a think tank engaged in research and development around distributed energy and distributed economy, notes Lawrence Orsini, founder and principal. It is now involved in a community microgrid project in Brooklyn’s Gowanus and Park Slope neighborhoods.
The microgrid has two clusters: One centered around city housing and the other around a fire station and community assets—places where people would go to in times of potential or real power loss. The two clusters will eventually be fully-islandable microgrids.
The clusters are meant to run grid parallel with the assets participating in the community energy market, unless there is a physical need for them to separate, such as when the utility grid goes down, Orsini adds.
The goals of the project are to increase the amount of clean, renewable energy generated in the community; develop and manage a connected network of distributed energy resources to improve electrical grid resiliency and efficiency; and to create financial incentives and business models encouraging community investment in its energy future, creating energy and jobs, while boosting the local economy.
Partners in the effort include Unison Energy, Schneider Electric, Imergy Power Systems, conEdison Solutions, SolarCity, Siemens, the city of Brooklyn, Geli, ABB, and Tesla.
In another project, Schweitzer Engineering Lab’s powerMAX and protection relays are being used at the University of California, San Diego (UCSD). The University hosts the Scripps Institution of Oceanography and a multi-building health system, both of which require reliable power. This led to the university’s decision to construct its own microgrid.
UCSD’s microgrid has more than 33 MW of installed onsite generation, including gas-turbine cogeneration and storage, solar, fuel cell, steam, and diesel—enough to support critical loads. The rest of the load demand is covered through additional power purchases from SDG&E.
During the 2011 Southwest blackout, the UCSD microgrid disconnected from the main grid, but did not shed load quickly enough, causing co-generators to shut down and many key facilities to temporarily lose power. While operators manually restarted the generators, it took five hours before power was restored to the entire campus.
To avoid a similar situation in the future, university engineers partnered with Schweitzer Engineering Lab’s Engineering Services to utilize the powerMAX Power Management and Control System, which features automated control functions designed to detect and mitigate system blackouts.
The primary load-shedding system is designed as a fast algorithm that sheds load on a predicted power deficit to reduce the total facility load to less than the calculated available capacity, and maintain power balance after a contingency event. A backup under-frequency-based load-shedding scheme provides additional security and reliability. The load-shedding logic is executed every two milliseconds and provides a total round trip time of less than 40 milliseconds.
The customized powerMAX solution also provides high-speed protection capabilities, including bus differential protection schemes, overcurrent elements for feeder protection, reverse power detection, and overcurrent elements to protect the generators.
Installed in summer 2015, the UCSD microgrid’s powerMAX control system detects unstable power in the main grid, quickly islands itself, and sheds noncritical load so that critical areas can maintain reliable operation.
Miller says his company has noted significant decreases in solar energy costs in the past few years as well as a cost reduction for lithium-ion batteries due to the limited success of the electrical vehicle market.
“The trend of microgrids led by decreasing solar costs by using more of that solar locally is going to be a trend that continues to grow as costs continue to come down,” says Miller. “If I were building a microgrid, I’d be thinking about how I could utilize these new, cheap solar and battery resources.
Orsini points out business models such as Uber that have started to create a circular economy can be applied to the energy industry in such cases as community microgrids.
The Brooklyn Gowanus and Park Slope neighborhood community microgrid project is a case in point. The company’s research there makes it clear the energy industry is moving toward distributed energy, says Orsini, noting that renewable prices are as such that a utility-scale PV plant can be constructed at less cost than a coal-fired power plant.
However, “a lot of the real benefit from distributed energy is being lost because folks are being forced to do net metering and pretend the utility grid is a battery instead of having a retail revenue stream from the excess electrons they’re producing,” says Orsini.
“We are testing business models for people in the community who might be ‘prosumers’—producers as well as regular consumers of energy,” adds Orsini. “The different ways to monetize and use existing technology should bring interesting new market drivers for the adoption of that technology.”
As for the economics of upfront investments in the hardware, “even though that might be pretty expensive, there are other savings in putting the solar and batteries in, even when it’s connected to the grid,” notes Walker. “The way utilities price electricity is a big part of the economics and I think the landscape is going to be changing over the next decade.”
Economic considerations also encompass selling the excess power back to the utility or using feed-in tariffs.
The community energy market is a broader virtual microgrid, where prosumers and consumers buy and sell energy back and forth, says Orsini.
Until recently, there didn’t seem to be much potential to do so in the US, but sweeping policy changes in New York, advances in California, and economic drivers in Texas have created three large circular economy- and community-driven markets, he notes.
LO3 Energy started in Brooklyn because of the community’s diverse building stock: light industrial, commercial, retail, and residential, spanning a broad socioeconomic stratum.
“It’s a good test bed to work out some of the business models that the new sharing economy of energy ought to be driven off of,” says Orsini.
The effectiveness of a community microgrid is still in the proving stages “because there is not a community microgrid that has been established and operational in the US yet,” notes Lewis.
As the emerging microgrid market starts to demonstrate success, regulations may ease up and investors may become attracted to their resiliency, notes Clout. One issue is how to quantify the resilient power piece.
“For some customers, it’s relatively easy to put a dollar amount behind the cost of an outage, being they have sensitive power electronic equipment that’s going to be damaged because of loss of power, or because the power quality is so poor that cost can be easily demonstrated or saved by having a microgrid system,” she points out, adding that the effectiveness of microgrids will also promote the benefit of the additional revenue stream.
While community microgrids offer numerous benefits, they also present challenges. Moving toward widespread national adaptation of community microgrids is one, notes Orsini.
“It’s going to take disruptive peer-to-peer markets,” he says. “I don’t think the rest of the states are going to come along of their own accord. There hasn’t been much interest at this point from policy and utility perspectives to move in that direction.”
Regulations are a prime concern, notes Clout. “When you talk about a microgrid, you will run into utilities’ franchise rights or right-of-way, so those are addressed at a high level at Siemens, which is actively engaged with the regulatory bodies to help shift the regulatory environment to facilitate more community microgrids,” she says.
Lewis adds that “utilities are afraid of stepping foot in this brave new world of changing the way the electric grid is designed and operated.
“You’re essentially changing from a business model to where utilities can rely on distributed energy resources—starting with local renewables—and they’re not going to have the same opportunity to invest in central generation and transmission infrastructure. Those two things are mutually exclusive.”
Transmission infrastructure is a “cash cow” for almost all utilities, Lewis points out.
“That’s where there are billions of dollars being spent and it’s a 50-year life cycle, so those utilities get to make guaranteed rates of return on transmission investments for 50 years on the backs of ratepayers who are oblivious to this,” he says. “The rates of return are 10%. There’s nothing anybody, other than utilities, can make as investments today, at multibillion dollar levels, and get 10% guaranteed rates of return.”
Lewis contends there is a business case for the infrastructure of community microgrids that offer investment opportunities with “good rates of return.”
The Clean Coalition is working with utilities to promote the understanding that “this is the way the world is going and we need to get in front of the curve rather than getting rolled over by it,” notes Lewis. “There is an opportunity for the utilities to continue to thrive in this brave new world.”
Policy makers can present another barrier. “They’ve taken it on faith that these solutions are going to work and I agree with that, but what is extremely important is that we don’t know exactly how they’re going to work,” says Lewis. “We don’t know if these systems are going to be flawlessly deployed, so we’ve got lots of local renewables and we’re able to balance power frequency and voltage without any hiccups.”
The use of battery systems and demand response in coordination with the local renewables to maintain power frequency and voltage at the local level needs to be proven out, he adds.
“We need to have time playing with these assets in a coordinated fashion to understand exactly how they’re going to work and their operational boundaries in terms of what they’re capable of,” says Lewis, adding that lessons learned can be replicated in future projects nationwide.
“Then we can start designing the policy and market mechanisms that need to be in place to incentivize the market and expand, and mature in the fashion that the policy makers want,” he adds.
Lewis sees the opposite occurring in New York. “The New York policymakers are jumping straight to trying to create policy and market mechanisms without having any real understanding of how the technology actually works,” he says. “We are working with the New York policy makers to understand if we don’t let the pilots happen in the way the incumbent utilities are motivated to deploy these community microgrids, play with them, and understand what the physical layer boundary conditions are, then the policy and market mechanisms that would get defined prematurely are going to result in suboptimal markets and suboptimal outcomes.”
It’s Lewis’ belief that New York policies incentivizing distributed energy behind customer meters “optimizes the scenario only for those customers whose assets are on their site, right behind their meters. That’s not a new and improved way to operate the electric grid. That’s the new and improved way to operate power serving a single customer. The Clean Coalition is pursuing an entirely new way to design and operate the electric grid in a manner that is based largely on local renewables and other distributed energy resources.”
The Clean Coalition notes that utility executives and policymakers are also reluctant to embrace local renewables due to fears that the existing power system cannot reliably integrate distributed energy generation.
“These grid reliability concerns have effectively limited local renewables to providing no more than 15% of peak power needs,” the organization states on its website. “Without empirical proof that the power grid can integrate greater amounts of local renewables in a cost-effective manner, this 15% limit will continue to slow the nation’s transition towards a clean energy future.”
Through its demonstration projects, the Clean Coalition’s Community Microgrid Initiative is designed to prove that local renewables connected to the distribution grid can provide at least 25% of the total electric energy consumed while, at least, maintaining grid reliability and power quality.
Other challenges include access to affordable capital, achieving the optimal technology mix to meet demand, utility interconnection, working within the constraints of or replacing existing distribution infrastructure with more resilient underground technologies, siting and permitting of microgrid assets, and conflicting regulations and policy initiatives.
Garnering consensus among stakeholders is another challenge. “The goals of individual communities, utilities, and financial institutions, as well as state and federal governments can be quite divergent on issues such as ownership structure, optimal technology mix, financial return on investment, business interests, and policy objectives,” notes Douglass.
For many communities, these conflicting challenges are difficult to manage over the course of a microgrid development project, which can take up to two years for completion, he adds.
One specific challenge involves lock-in of non-resilient energy resources. “To the degree that communities commit to long-term agreements to purchase energy from non-resilient energy sources—such as remote or virtual net-metered solar farms that are not sited or designed to continue serving critical infrastructure during an outage—those communities may be limiting their options and increasing the costs of installing resilient energy systems.”
A microgrid’s challenge lies in its complexity, notes Miller. “The simpler the need is, the easier it’s going to be to scope and size,” he says. “Every system is a little bit different, so it’s hard to completely get rid of all custom engineering. You want to minimize that work as much as possible and have a system that is similar to other systems in order to bring costs down.
“To do that, it’s easiest to solve one or two challenges at a time as opposed to trying to do a hundred different things from a single project. We see this problem especially on test sites trying out a bunch of different things.”
Costs balloon when doing so, Miller points out. “You want to have a few key benefits like reliability or bill savings,” he adds. “If you’re looking for a lot more than that, it can increase the customization costs and sink the return on investment for the system.”
There are technical challenges in transacting the value of energy, Orsini points out.
To address that, part of his company’s research and development, in a joint venture with Consensus Systems, has been to create a meter that registers energy production and consumption for peer-to-peer transactions based on the open source, cryptographically secure decentralized application platform of Ethereum.
TransActive Grid’s business logic layer delivers real-time metering of local energy generation and usage, and other related data.
The platform also transacts device control, so not only can a building occupant transact the consumption and production of energy, but also turn on and off modes, control smart inverters, and charge and discharge batteries, Orsini notes.
Day points out another challenge of operating a microgrid is “the fact that you now have bi-directional power flow, whereas traditionally when you’re grid-connected, you’re going to have uni-directional flow.”
That means having adaptive protection to ensure the system can adapt to fault currents that change ground-fault current paths, he adds.
Day says his company verifies a system through simulations. “We model the different distributed energy resources to make sure that, no matter what state the microgrid is in, it’s always going to be protected,” he says.
In getting the system online, Schweitzer Engineering Laboratories uses closed-loop testing that takes the constructed model and includes it with the hardware, testing the overall system in a controlled environment.
“We get all of the bugs out before it reaches the field because when it gets to the field, it’s a lot more expensive and difficult to make changes,” says Day.
While all of the technology has been proven for years, it’s the integration of it that presents another challenge, notes Clout.
“All of these generation assets take a great deal for integration, with different vendors and OEMs providing equipment,” she says. “How do we integrate all of these components and make sure we have expertise in pulling together the different resources and working with outside partners to make sure the integration is operating to the best of the clients’ interests?”