Exploring Microgrids with Dr. Peter Lilienthal, CEO of HOMER Energy


Microgrids, localized power networks of distributed energy resources, are increasingly advantageous in today’s energy landscape. Their ability to operate connected to the power grid or autonomously makes them ultra-valuable.

Microgrid configurations can incorporate natural gas or diesel cogeneration (CHP), fuel cells, energy storage batteries, microturbines, and renewables such as solar, wind, and biomass—an attribute that makes them remarkably dexterous. Energy management and automation software coordinates each generation asset as well as the electron flow.

Many communities are considering, researching, or implementing microgrid solutions. The underlying rationale often involves complex business, operational, and economic issues. See our FREE Special Report: Understanding Microgrids. Download it now!

In anticipation of the HOMER International Microgrid Conference—September 18–20, 2017 in Denver, Colorado—we thought it would be interesting to discuss the evolution of microgrid technologies. So we reached out to Dr. Peter Lilienthal, CEO of HOMER Energy, to share his perspectives on industry trends and emerging technologies. We’re grateful for his insight.

Since 1993, Dr. Lilienthal has been the developer of the National Renewable Energy Laboratory’s HOMER hybrid power optimization software, which has been used by over 170,000 energy practitioners in 193 countries. NREL has licensed HOMER Energy to be the sole licensee to distribute and enhance the HOMER model.

Dr. Lilienthal was the senior economist with International Programs at NREL from 1990–2007. He was the lead analyst and one of the creators of NREL’s Village Power Programs. He has a Ph.D. in Management Science and Engineering from Stanford University. He has been active in the field of renewable energy and energy efficiency since 1978. His expertise is in the economic and financial analysis of renewable and microgrid projects.

Distributed Energy (DE): For our readers unfamiliar with HOMER—tell us a little about the company, how it started, and what you do.

Peter Lilienthal (PL): HOMER Energy was incorporated in 2009 to commercialize the US National Renewable Energy Laboratory [NREL]’s Hybrid Optimization of Multiple Energy Resources [HOMER] model.  We are the exclusive developer and distributor of HOMER Pro, which has become the global standard for microgrid decision analysis and feasibility studies.

But, we do more than just microgrid modeling software. We’re experts in all aspects of microgrid and distributed generation system design and optimization, and we also apply that expertise to training and consulting services that help our clients identify how to navigate the complexities and trade-offs of building cost-effective and reliable microgrids and DER systems that combine traditionally generated and renewable power, storage, and load management.

DE: HOMER occupies a unique niche in the industry—how has interest in microgrids evolved over the life of the company?

PL: When HOMER first started at NREL in 1992, microgrids or, more specifically, the idea of hybrid systems, was just a research concept. We were interested in discovering how we could use renewables to provide power in remote areas. Up to that point, remote power was primarily provided by diesel generators, which are both dirty and expensive. We saw that renewables could integrate well with diesel, and that there was tremendous potential.

Dr. Peter Lilienthal, CEO, HOMER Energy

Over the years, the interest in the different markets for microgrids has evolved and grown as the technology has improved. In the energy access market, what really took off were solar home systems, which are stand-alone photovoltaic (PV) systems that can fulfill basic energy needs in rural areas. There are now millions of solar home systems in developing countries. As these areas develop further, the demand for power increases and microgrids can provide reliable 24/7 power at any scale. In fact, in developing countries microgrids are providing more reliable power than the national utilities.

The island power market really took off when oil prices where high and islands, such as in the Caribbean, felt an urgency around finding a more cost-effective solution to their energy needs. Oil prices have come down since then, but the cost of solar, storage, and microgrid controls have come down even faster. And using microgrids to increase resilience in developed countries became a priority after Hurricane Sandy knocked out power to lower Manhattan.

Factors like these have really driven interest in microgrids, on many different levels.

DE: And what about, say over the last 5 years? Are there new technologies or trends in consumer behavior that have had an impact on what you do, or the volume of projects?

PL: The declining cost of PV has changed everything. When photovoltaics were expensive, the market for renewable microgrids was limited to places with a good wind resource, which is expensive to assess. Now solar is cost effective basically everywhere and is by far the dominant technology for distributed energy. Inverters have gotten better as well, and are a lot more reliable than they were 20 years ago— they also have more capabilities, are more controllable, and provide higher quality power. The huge game changer that is coming is cost-effective, durable batteries. In the past, microgrid developers tried to avoid using batteries, if possible, because they simply weren’t durable enough. There are enormous changes going on in the battery industry. Lithium is being scaled up in a huge way in anticipation of a vehicle market. That is dramatically driving the price of lithium batteries down. There are also some very interesting other chemistries under development that may be a better technical match for stationary applications. The big question is whether the price of Lithium batteries will become so low that they beat out the other technologies, such as flow batteries despite the potential advantages of flow batteries.

With these advances in technology and reductions in cost, distributed electricity generation, especially PV, is spreading rapidly. Revenue loss to utility companies by cost-effective distributed solar has the potential to impact the utility industry in a very big way. We are starting to see push back from utilities. Where distributed solar has become significant, the utilities can justify that pushback by referring to problems with voltage stability and the impact of reverse power on their protection schemes, but coupling the distributed solar with batteries can overcome that objection.


DE: Are there any projects HOMER has been a part of that illustrate these changes?

PL: HOMER Energy played a central role in converting Virgin Limited Edition’s high-end resort on Necker Island in the British Virgin Islands from depending entirely on diesel power to a flagship, solar microgrid.

Although Necker Island is quite unique, with our HOMER model, we’ve demonstrated that most island locations can reduce their fossil fuel consumption by as much as 50–95% given current technology—far more than mainland utilities have achieved—and can decrease costs at the same time. The Necker Island system will set the stage for more islands to switch to a combination of renewable energy and storage, with diesel generators playing a relatively minor role as backup.

Hundreds of microgrids of all different types and sizes have been developed by our clients around the world. We are very proud of the accomplishments of our clients even though they deserve most of the credit.


DE: How can energy service companies, contractors, product manufacturers etc. become more involved with microgrids?

PL: The most important step is that they need to understand what makes sense when it comes to microgrids. When designing a microgrid, there are a lot of new technologies with very different characteristics. None of these can do it all. So which combination of technologies best serves which applications? The answer is that it depends. It depends on the locally available resources. It depends on local costs. The best solution is almost always a hybrid or combination of technologies.

HOMER Pro is a great tool for helping energy service companies, contractors, or product manufacturers understand what energy applications are most attractive for microgrids, both in terms of location and energy requirements, what the benefits of the microgrid will be, and what the best mix of technologies is for that microgrid application. It analyzes any place in the world and helps the user understand the least cost solution when combining multiple energy and storage technologies. HOMER Pro can help you understand what’s possible, driving informed decision making so that small, distributed power systems can be developed with confidence.

We also offer a suite of products and services to help companies access the global microgrid market.  This includes a monthly newsletter to over 85,000 people expressly interested in microgrids. We also have an Partner Program that includes listing their components in our library and providing quarterly feedback on trends that we see in out project database, which has detailed information on thousands of projects under development around the world.

DE: Tell us about the HOMER International Microgrid Conference.

PL: Beginning with our first conference in Mexico in 2013, the HOMER International Microgrid Conference has been the only event focused on experience over theory. Our conference has consistently focused on providing reality-based guidance on the design, implementation, and operation of cost-effective microgrid systems.

The conference is also special because of its strong international attendance, and because it brings together both the financial and technical aspects of microgrids. Attendees and speakers from 28 countries have attended previous HOMER International Microgrid Conferences, sharing their experiences with implementing microgrids in developed and developing countries, remote and grid-connected systems, and applications with different reliability and resilience requirements.

DE: Who should attend?

PL: The conference is a great educational and networking opportunity for all microgrid professionals, from equipment and service suppliers, to project owners, developers, and financial professionals who are looking to deploy microgrid projects around the world, or even just learn more about the industry.

DE: What can folks expect form the conference?

PL: At its core, the conference is a great opportunity for microgrid professionals to connect with others in their industry to discuss projects and collaborative opportunities. The conference will carefully examine the business models, optimal technology mix, and critical steps for successfully deploying remote, island, and grid-connected microgrid systems. There will be several case studies of successfully deployed microgrids from multiple different countries. We’ll discuss refining the business model, as well as effectively planning, designing, and deploying microgrids.

Attendees will come away with a concrete understanding of the best practices, design tools, and technology strategies for deploying microgrid and distributed energy systems, reinforced by case study presentations of leading deployments from around the world.

We have a number of really exciting presentations lined up for the conference. For example, Karl Rabago, executive director of the Pace Energy and Climate Center, at the Pace University School of Law in White Plains, New York, will give a keynote on Microgrids and Reforming our Energy Vision, a New York perspective. Cathy Zoi, former CEO of Sun Edison’s Frontier Power and co-founder and president of Odyssey Energy Solutions, a new business helping to bring distributed, renewable electricity to communities and businesses in emerging economies, will also give a keynote address. And I’ll be speaking about microgrid lessons from global markets.

For this year’s event, we are also looking forward to offering even more training for users of HOMER Pro, and are happy to be bringing the conference home to our own state of Colorado.DE_bug_web


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