Microgrids Are On The Rise
EP Editorial Staff | April 16, 2018
Alternative-energy integration, expensive-energy-storage, and aging-infrastructure barriers are falling.
The new energy landscape comprises increasingly distributed and decentralized power sources, such as renewables, that are drastically changing the way energy is procured, deployed, and managed. While this increases the complexity of the electricity model, it is also ushering in new levels of efficiency, sustainability, and energy resilience. While the centralized, one-way electric-grid model was the norm for the past century, the proliferation of distributed-energy resources (DER) will continue in the foreseeable future. In fact, according to Navigant Research, Boulder, CO (navigantresearch.com), annual installed capacity in the DER market is expected to grow from 109.9 GW in 2015 to 335.8 GW in 2024, representing a cumulative investment of $1.9 trillion over the next decade.
This industry-wide shift has brought about new challenges for facility decision-makers and energy managers. Now, given the need to respond to stakeholder demands for alternative-energy sources, such and wind and solar, as well as energy efficiency and sustainability and an increasing focus on adding Industrial Internet of Things (IIoT) connectivity to operations, facility managers are turning to microgrids to better manage power consumption. Still, although their benefits far outweigh their challenges, some microgrid deployments are becoming stalled—not because of the maturity of the technology or the complexity of adding it to an operation, but because of questions about payment structures.
Many facility managers incorrectly categorize microgrids as infrastructure projects, i.e., the types of initiatives that incur high upfront costs before a shovel hits the dirt. These days, though, it is possible—and much more cost effective—to integrate microgrid solutions within the framework of existing facility infrastructure. Additionally, innovative payment models such as Microgrid-as-a-Service (MaaS) can help finance microgrid projects with zero upfront cost.
DEFINING A MICROGRID
The two key microgrid definitions include:
• A system of DER and groups of loads that can operate within a definable electrical boundary.
• DER that can be an “island,” i.e., separate from the main power grid.
To unleash the advantages of DER, it is often necessary for managers to incorporate non-transmission alternatives (NTA) to upgrade existing transmission and/or electrical systems.
ENSURING A GOOD FIT
Microgrids have historically been best-suited for facilities in the size range of 20 to 100 MW. The types of sites that fall into this range include critical-power operations, universities, commercial buildings, and military bases. The advent of onsite power-control-center hardware, however, has made microgrids more modular, leading to the feasibility of deploying these solutions for small- to medium-sized facilities in the 1,500-kW range. Additionally, Tested Validated Documented Architectures (TVDA) solutions have become more reliable and easier to execute. This democratization of microgrids minimizes the cost of one-time engineering and bucket applications for vendors, thus increasing DER options.
Alternatively, the increase in microgrid deployments has made possible more experimentation with DER. End users have the option to deploy fleets of grids around a single campus that work collectively to source power, or smaller sites can combine resources to support a common grid.
Microgrids can also be a fit for facilities hoping to unlock automation for cost savings. Utility-grade microgrids can skirt upfront costs by opting for a manual component rather than automating all switches, or operations can consider the MaaS model to support upfront costs.
While existing microgrids might also be operated manually because the DER are being added over time, advanced microgrid controls can ease that process by enabling flexibility to add DER post-installation. Advanced microgrids are often automated and dynamic to allow adaptation, based on changes to a facility’s energy priorities. The type of automatic island isolation they allow can be a major asset in ensuring energy resilience.
CASE IN POINT
Schneider Electric, Andover, MA, (schneider-electric.us), wanted to understand what its customers would experience were they to implement microgrid technology and the MaaS model. As a way of achieving that understanding, it installed a microgrid to increase energy resilience at its North American Boston One Campus (BOC) headquarters.
In short, Schenider Electric chose to test its microgrid and MaaS capabilities by becoming its own customer. The first step was to establish a team to evaluate the project from a customer standpoint. This provided some important take-aways. Among other things, the team found that savings from renewable energy can ultimately pay for microgrid costs. It also saw, firsthand, how the company’s MaaS model could spare upfront costs for customers. In the process, the company learned why it’s so important for vendors to fully understand the perspective of their customers when it comes to helping achieve energy objectives.
The entire project took four months to complete, which minimized corporate downtime at the BOC during installation. The microgrid includes a 354-kW (AC) solar array and a 400-MW natural-gas-fired backup generator and features Schneider Electric Energy Control Center as on-site hardware and EcoStruxure Microgrid Advisor as a Software-as-a-Service platform.
With the BOC’s microgrid now online, the headquarters operation is able to enjoy the benefits of solar energy. Adding solar to the site’s existing generator allowed the company to achieve microgrid resilience at the same price they purchased energy from the utility. In fact, green-power cost (with added resilience) is less than brown-power pricing from the utility. Advanced controls enable automatic optimization of the microgrid during normal operations and offer additional insights and information for the building’s energy managers.
According to Schneider Electric, its BOC headquarters now serves as a real-world demonstration of how the microgrid era will enhance electric resilience, boost use of clean energy, and provide economic energy management. It also offers a proof point for how MaaS emerges to help users solve the pain point of high upfront capital costs. EP
CRUCIAL IMPLEMENTATION ISSUES
Although the market for distributed-energy resources (DER) and microgrids is growing rapidly, general knowledge about the intricacies of these solutions is minimal in comparison to the centralized grid. Yet, decentralization of the grid is a major factor in optimizing energy-usage strategies within the new energy landscape.
Unfortunately, because widespread understanding of the new technology still seems to be lacking, there’s a general assumption that microgrids are complex systems that require customized high-end design expertise to implement—and even higher levels of project management and financing. The reality, though, is that microgrids are becoming easier to integrate within existing energy infrastructure, while allowing operations to become more efficient, sustainable, and resilient. Furthermore, due to the rise of microgrids and the specialization of products, the advantages this technology offers are available to a larger pool of facilities and energy managers than in the past.
When considering microgrids and DER deployments, end users and their engineering consultants, project-management teams, and/or other service providers should keep the following issues in mind:
• From a technical standpoint, how might DER combine with the end user’s existing energy infrastructure? Or how should the site incorporate alternative energy within the framework of distributed-generation technologies?
• From a financial standpoint, what will it cost the end user to add the necessary technologies to install solar power, energy storage, and/or advanced microgrid controls? How much will it cost upfront, and what business models can help offset that cost? Crucially, how much will it save in the long run?
• From a regulatory/compliance standpoint, what legal hurdles might the end user face by using the island approach to separate from the larger electric grid?
An end user will naturally be narrowly focused on the financial perspective, considering how a microgrid project will improve its bottom line through energy management, renewable-energy integration, and minimized downtime and outages. To make fully informed decisions, however, it’s also important for end users, along with other parties in possible projects, to be knowledgeable about the full portfolio of distributed-energy technologies and how to leverage specific tools or strategies for their respective energy situations.