Grid-tied microgrids: a utility's best friend?

Remote microgrids grow for under-served end-users

Phil Carson | Jan 03, 2012

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Today's column is just a quick look at developments in the microgrid sector, courtesy of a conversation I had last week with an analyst who studies the issue.

The two main types of microgrids are grid-tied and "remote," or those without grid connections.

It appears that grid-tied are perhaps most relevant to today's power utility in the United States, because of two developments.

First, an IEEE standard (P1547.4) has been adopted that addresses many of utilities' perennial concerns about distributed generation and islanded microgrids. Second, an increase in distributed generation in general—not just renewable energy resources—has driven interest.

"The main milestones this year (2011) was the IEEE standard and the other was the Federal Energy Regulatory Commission's regulations on demand response," said Peter Asmus, author of Introduction to Energy in California and a new research report for Pike Research, where he is an analyst. "So now utilities, instead of worrying about microgrids disconnecting their loads from the grid at will are now saying, 'Microgrids are the most secure form of demand response.' In fact, microgrids are an ideal demand response resource.

"Now there are engineering protocols you can point to that say if you do x, y and z, the safety issues that have historically held up microgrids are no longer valid," Asmus told me. "In that sense, the [adoption of the IEEE standard] is a major step forward. But it's non-binding and it's not going to immediately change everything. It's just part of a gradual change in policies and regulations and standards [that will encourage the growth of grid-tied microgrids]."

"Right now, grid-tied microgrids are the exception to the rule," the analyst added. "With the new IEEE standard, that may no longer be the case. This is an opportunity, not a threat."

Remote microgrids will see growth largely in developing economies that don't have a heritage of power infrastructure, Asmus said. Although, in the U.S., Alaska has what amounts to a large number of sometimes interconnected  microgrids. And in certain jurisdictions—say, the vast, often isolated rural service territory of BC Hydro in British Columbia, Canada—the "obligation to serve" includes assisting remote communities to develop "remote" microgrids.

In British Columbia, BC Hydro is building a microgrid in Bella Coola, B.C., 250 miles north of Vancouver. In that particular case, participants are harnessing river flow for power that gets converted to hydrogen, which can be stored and transported. The utility also is upgrading diesel-powered distributed generation and will add wind turbines to the mix. All networked and controlled to orchestrate changes in supply and load—one of the key aspects of microgrid operation.

As for the Lower 48, Asmus pointed to innovative utilities working on microgrids such as AEP Ohio (whose community energy storage project creates a microgrid of sorts), San Diego Gas & Electric (which is cooperating with the University of California San Diego's (UCSD) cutting edge microgrid and is conducting its own Borrega Springs pilot), ConEd (in New York city, the utility has helped facilitate a microgrid to serve a "Beer on the Pier" neighborhood with inadequate power for the breweries) and the Sacramento Municipal Utility District (which has created a microgrid to serve its corporate headquarters and central power plant).

In fact, the three main sectors seeing marked growth in microgrids are campuses (think UCSD), remote systems and military applications. Each has its pros and cons, according to Asmus.

Because of the complex regulatory structures governing investor-owned utilities, cooperative utilities and municipal utilities may move more quickly to take advantage of the microgrid's attractions, the analyst said.

These developments mean that pilot projects are giving way to commercial, grid-tied microgrid deployments, particularly in the U.S. 

"In the U.S., you assume that the grid is operating and is your main source of power," Asmus pointed out. "A lot of microgrids will only island for emergency purposes. The demand response angle—that they can become demand response resources—may induce them to island often. So a lot of people are saying that with the delays in transmission capacity and renewables projects, demand response will fill in the gaps until these other resources come online, short-term and long-term."

With FERC setting rules that provide guidance to the demand response market, microgrids have another factor in their favor.

Utilities may even go into the microgrid business, facilitating islanding within their service territory to develop the potential for demand response, which could be called on in emergencies or when supply otherwise cannot meet load.

"One of the main drivers of microgrids is distributed  generation and it's not all renewable resources, it's all forms of distributed generation," Asmus emphasized. "That's where the microgrid actually helps the utility. Because, until now, the amount of solar photovoltaics (PV) in any region, for instance, has been so small that utilities haven't paid attention to it. It wasn't enough to really matter. But in places like Europe where solar PV penetration is higher, it does matter. In Denmark, for instance, which is probably the leading country in terms of microgrids and virtual power plants—another whole topic—they need aggregation tools that are dependent on smart grid technology.

"You can view microgrids as building blocks of the smart grid," the analyst concluded. "They're an alternative to utility smart meter deployments. I view smart meters as a top-down technology, whereas microgrids are bottom-up. They can work together. But in California, where there's been a rebellion against smart meters, the microgrid may be more appealing, especially if it's designed by the end-user. Though you have to get the utility to go along with it, which has been the challenge in certain areas."

With recent developments, the old challenges are about to be overcome.

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757

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Comments

Economics of micro-grids

Now that 1547.4 has, presumably, addressed the interconnection issues, I understand that utilities are now saying the micro-grids could be a "secure" form of demand response. However, can someone please explain the economics to me? ...maybe someone from the Galvin Energy Initiative.

In which cases do micro-grids make economic sense to end-users? It's virtually impossible to beat $0.12/kWh when you're using small, locally-operated generation units. T&D costs and efficiency losses are minimal compared to generation and O&M costs. I'm not aware of many places in the U.S. where power reliability is so poor and the economic cost of outages so great that people wouldn't instead opt for a UPS solution instead of a micro-grid.

I can see why the military is working this problem...the cost of outages on mission readiness and potential casualties is frequently worth the investment. But how does it make sense for campuses? Why are UCSD and similar sites building micro-grids, other than for the cache of being first-movers?

I'm a strong proponent of micro-grids and all things "clean tech", but organizations "green washing" themselves frequently does more harm than good. I'd love to see the business case for micro-grids in commercial facilities.

Erik Limpaecher, Boston, MA
elimpaecher@gmail.com

Are IOU Managements Smart Enough

I agree with most of Peter's thinking but there are two important areas where he has to be working with a somewhat cloudy crystal ball.  First, investor-owned utilities will continue to resist micro-grids unless they can own them, because to do otherwise is tantamount to allowing unfettered competition, loss of market share, and a process of voluntarily shrinking the regulated business.  Second, what are regulators likely to do?  Candidates for micro-grids may also want to own them because doing so is clearly cost-effective, but allowing unfettered private ownership affects not only the utility, but potentially customers that do not choose the micro-grid option.

Jack Ellis, Tahoe City, CA