Macrogrids and microgrids: another conversation
No sooner had we trotted out a few salient points and projections on microgrid adoption last week from Pike Research - three gigawatts of capacity, $7.8 billion in spend over five years - when a skeptical reader pooh-poohed the whole concept.
"It's an intriguing idea but I don't see a compelling value proposition other than an ability to completely disconnect from the 'macro' grid," wrote faithful commentator Jack Ellis, who heads his own Resero Consulting. "Something similar could be accomplished by making some minor modifications at the substation level so that the customers served by that substation can be islanded when and if necessary."
Ellis' skepticism was tempered on our forum by Shalom Flank, CTO at start-up Pareto Energy, Ltd., which not incidentally specializes in assisting clients with microgrid adoption.
"Microgrids can be a utility-friendly (or even utility-owned) approach for concentrating certain kinds of energy services: reliability, power quality, high penetration levels of renewables and distributed generation," Flank wrote to us. "They're also ideal for increasing the efficiency of any thermal generation, whether natural gas or zero carbon, because they're small and local, so you can capture and use all that waste heat that goes up the stack at central plants.
"As utilities get more comfortable with the new, inverter-based interconnection approaches and with some new regulatory/ownership models that protect their financial interests, we believe the adoption rate will increase even more," Flank said.
Back to our original source, analyst Peter Asmus at Pike Research, who seemed to underscore that Ellis' main acknowledgement - the microgrid's ability to disconnect from the macrogrid - is, in fact, its central virtue.
"It has become increasingly clear that the fundamental architecture of today's electricity grid, which is based on the idea of a top-down system predicated on unidirectional energy flows, is obsolete," Asmus said. Microgrids can be viewed as the building blocks of the smart grid or as an alternative path to the much hyped smart "Super Grid," the analyst continued.
"Perhaps the most compelling feature of a microgrid is the ability to separate and isolate itself - known as 'islanding' - from the utility's distribution system during brownouts or blackouts," Asmus added.
Though today's grid protocols for distributed generation call for shutting down when the grid goes down, new inverter technology may be assuaging utility opposition to microgrids due to unintentional islanding, a traditional safety concern, according to Asmus.
That's what's led to Asmus' forecast that institutional microgrids for core downtown areas, hospitals, military bases and industrial sites "offer the best near-term development opportunity" for microgrids. Right now, for instance, 322 megawatts of college campus microgrids are running in the United States. According to Asmus' forecasts, another 940 megawatts of new capacity valued at $2.8 billion will be added in the next five years.
Flank clearly has the motivation to find the glass half-full, but he paints a fairly impartial picture of the microgrid's pros and cons.
Pareto Energy has worked with the city of Stamford, Conn., to launch a microgrid for its city offices, which house among other things, public safety and emergency response facilities. Occasional power outages had underscored the city's vulnerability to loss of power, which the Electric Power Research Institute has estimated costs the U.S. economy as much as $50 billion per year.
In order to get the ball rolling, Stamford and consultant Pareto Energy convinced the state legislature to pass a law allowing entities to create "energy improvement districts" (EIDs) with the authority to issue tax-exempt revenue bonds for microgrid work.
We'll look further into case studies such as the city of Stamford and other entities in a future column. But the concepts bandied about here are appealing, certainly, at least as expressed by an advocate such as Flank.
Top-down is giving way to bottom-up, if only for practical reasons, Flank suggested to me. "Community-based energy options," or "local power" will get more attention if only due to the massive expense and tangled path to completion of the nation's macrogrid, he argued. Where development of the "Super Grid" will require gargantuan investments - a "herculean task," in Flank's helpful aside - "microgrids are for those who would suffer most from service interruptions," Flank said.
Please join the conversation, dear reader, and tell us your thoughts, fears, hopes or technical exegeses of this business and technological model. Will it work on a widespread scale? Who will adopt this path? We'll seek out a utility that's investigating the use of microgrids, as we hear there are several.
Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757
Comments
Microgrids: a Special Case of the Heterogenous Smart Grid
Microgrids are a disruptive technology to utilities traditional business model of winning rate cases to the regulator. This was recognized in a DOE report, which I quote in the EWPC article Just as Pogo, IOUs Found the Enemy. This is an excerpt from that article:
The insight about the rampant value destruction is confirmed on page 7 of the first EAC report, that repeats what I quoted in the GMH post U.S Power Service is Regulated as a 3rd World Country, saying that:
Start of quote.
According to the Galvin Electricity Initiative, ‘the U.S. electric power system is designed and operated to meet a ‘3 nines’ reliability standard. This means that electric grid power is 99.97% reliable. While this sounds good in theory, in practice it translates to interruptions in the electricity supply that cost American consumers an estimated $150 billion a year.
Missing from that quote is that the Galvin Electricity Initiative also wrote that “… In other words, for every dollar spent on electricity, consumers are spending at least 50 cents on other goods and services to cover the costs of power failures,” which confirms the anti-system conclusion or, better yet, as the late W. Edwards Deming would call it “the destruction of the system.”
End of quote.
If that may be percieved as insufficient, lets take a look at the general case. In the second part of the post Another Institutional Memory Warning: Do today's power grids have little centralized control?, I use a response given by Jack Ellis, to explain the real problem with the homogeneous Super Grid.
To warn the emerging community, I will repeat once again the following: the leaders of deregulation did not consider the two warnings given by Fred C. Schweppe (and his colleagues) in his book Spot Pricing of Electricity:
Start of quote.
"The deregulation concept of this chapter is based on a supply and demand marketplace. Most of the other deregulation literature is oriented only to the supply side i.e., to deregulating generation without altering the way users buy electricity. We believe that deregulation which considerers only the supply side of the supply-demand equation is very dangerous and could have very negative results… A second major difference between this chapter and most of the rest of the deregulation literature lies in our concern that the economics and physical security of power systems not be destroyed or compromised."
End of quote.
Concentrating on the first warning, Jack has pointed out some key characteristic of an effective architecture framework for the power industry system. These are two examples of my interpretation of Jack post: instead of one shot homogeneous smart grid architecture [now the Super Grid] that forces smart meters on customers, a transition heterogeneous architecture is needed to support customer choice; instead of retail prices that are based on wholesale prices, retail and wholesale prices mutually reinforce each other. In summary, those two key characteristics are in synchronicity with the emergent holistic Electricity Without Price Controls Architecture Framework (EWPC-AF), that is described in the link.
In addition, the EWPC-AF considers the second warning in order not to destroy or compromise the economics and physical security of the power systems. That way it does not bypass the non trivial institutional memory of the power industry as a complex adaptive socio-technical system. Instead of command and control, the power industry has practiced, for example, for quite some, the two complex adaptive processes of short run system security and long run system adequacy.
I assert that the main deregulation mistake was that lawyers and economists did not take into account those non trivial elements of the institutional memory of the power industry. I just hope that this time the information and communication community do not repeat that same mistake, which is bound to happen with the ongoing Smart Grid strategy.
MicroGrids
A couple of thoughts.
First, I'd be interested in seeing Peter Asmus or someone else explain the relationship between 922 MW of microgrid capacity and $2.8 billion in investment. If one does the math, that works out to around $3,000/kW and I wonder what it includes.
Second, microgrids may be worth the added cost and hassle for critical infrastructure and services to the extent those customers don't have less costly options. However it is also worth taking a careful look at the kinds of outages that occur and how frequently they occur. Large-scale blackouts for reasons other than natural disasters occur somewhere in the US on the order of once every five years. They occur in the same part of the country less frequently. Distribution outages are far more frequent, and the distribution network that underlies a microgrid will be no less vulnerable than the existing distribution network absent investments in a level of redundancy that exceeds current practice. Integrating DG within the existing network is more a political problem than an engineering problem. Unless the microgrid has substantial load and resource diversity, DG could be worse off.
Finally, if moving to a microgrid also means moving off the utility grid, that process may not be cost-free, since many utilities have been able to have their regulators agree to departing load charges. Stay and pay, or leave and pay.
I know these are down-in-the-weeds issues, but they matter. Similar questions asked during the evaluation of AMI projects might have avoided some of the intense debate over privacy and how customers will benefit that are only now being addressed after billions have been spent.
Micro-grids
The idea of combining distributed electric generators into islands of locally interconnected, protected and secure entities makes perfect sense. As we've seen in the major outages of the past half century, the need for wheeling large blocks of power over an increasingly fragile and largely unprotected grid infrastructure in order to service far flung power demands can backfire and cost us dearly.
The presence of many separate businesses with ample roof real estate in the many industrial parks here in the northeast makes the prospect of micro grid development attractive from the perspective of private investment in renewable energy versus quasi-public utility dollars and goverment incentive packages. I haven't seen any business models that have resulted in the creation of a "business community" power consortium in an industrial or commercial park setting. I'd be interested in reading a discussion of how a utility and a business group can coexist in developing distributed generation resources. What benefits to the community will derive from such a contribution to load serviceing, peak demand reduction and load balancing?
Super Grid: the Smart Grid that is Being Pushed
The Super Grid is a better name for the Smart Grid that is being pushed. It is based on the obsolete business model of utility winning rate cases to the regulator. We need to open the power industry to business model innovations.
To enable such innovations, state regulators need a new mandate to stop smart metering roll outs. The reason is that those roll outs are linked to the inhability of regulators capacity to make decisions about non-trivial high-tech marketing.
The main argument is that, by inaction, each State Government should be responsible to their constituencies for a very costly mistake that is being made by letting the Super Grid process continue without giving State Regulators the proper mandate. For the details, please read the EWPC article Is the Smart Grid that is Being Pushed a Costly Mistake?