Microgrids: An Old Concept Could Be New Again
Self-contained, small islands of electric generation, storage and distribution inside the existing grid–microgrids–could be the next big thing in electricity. But some argue they may be just another over-hyped development in the line of the enthusiasm surrounding the smart grid.
A fire in a Pacific Gas & Electric distribution substation in San Francisco in April 2017 triggered a seven-hour power outage in the city’s busy downtown, knocking out traffic signals, shutting businesses, and stalling the city’s iconic cable cars.
The chaos prompted Peter Asmus, a Navigant Research analyst and well-known advocate of small, self-contained electricity systems, also known as microgrids, to comment in the San Francisco Chronicle newspaper that “the incident should serve as a reminder of the effects blackouts impose.”
Asmus asked whether “there is something San Francisco can do to make it through such events?” His prescription: “New cleaner energy technologies, such as solar panels and advanced batteries, can be bundled together with other energy sources into a ‘microgrid.’ Microgrids are the answer to bolstering the resiliency of crucial public and private infrastructure.”
Among the chattering energy analysis classes, microgrids appear to be the next big thing. More than a decade ago, the next big thing was the “smart grid” (see sidebar). That enthusiasm has cooled on the experience of the limited payoff for consumers of smart, communication-enabled, electric meters, and fears of a vulnerability to cyberattacks on communications between customers and utilities. Enter microgrids, which are getting widespread industry attention and exploratory investment.
Remember the Smart Grid? What Happened?
Ten years ago the next big thing for the electricity industry in the U.S. was the smart grid, which would turn our one-way electric power supply system into a two-way, interactive process to capture opportunities to save energy and shape loads, benefiting providers and customers.
Information would flow from customers to the distribution utility and back. Living spaces would be transformed and tuned in through smart appliances that could be interconnected to the electric company, saving energy and providing convenience. Smart grids were touted by the Electric Power Research Institute (EPRI) and forward-thinking electric company executives such as Jim Rogers, then CEO of Duke Energy.
A major federal law, the Energy Independence and Security Act, which President George W. Bush signed in 2007, contained a section (Title XIII) aimed at providing a legal framework for smart grid development. The smart grid seemed on its way to widespread implementation, with wild predictions about its rapid spread.
The smart grid began with smart meters. And that’s about where it has stalled.
A study released in June by the Smart Grid Consumer Collaborative found that 70% of U.S. electricity consumers are aware of the term “smart grid,” but only 4% participate.
Utilities have installed millions of smart meters, though often facing consumer resistance. The benefits of the technology appear to flow almost entirely to the utility, while customers pay for the equipment in their bills.
Security is also a concern. The British cybersecurity website SC Media, reporting on a study by the consulting firm PwC, commented, “Cyber-security and data privacy are increasingly becoming more recognized as risks to systems. Additionally, the growth of smart, connected propositions exposes new systems and controls to threats from external attackers.”
“It’s rolling out much more slowly than people expected,” Harvard Business School Professor Rebecca M. Henderson has said of the smart grid in her papers on the subject. “Consumers seem less interested in its capabilities. The regulation regime is difficult. People have been talking about the market for 10 years, but it’s not yet where it’s supposed to be.”
Are self-contained microgrids a significant part of the electricity future, as Asmus suggests? Or are they uneconomical fads, touted by advocates of a green energy revolution involving renewables and energy storage that don’t withstand economic and engineering scrutiny? Or, a third opinion: Are they reasonable approaches to particular utility needs, welcome solutions to particular problems but hardly panaceas?
What Is a Microgrid?
Navigant’s Asmus says, “It is what it sounds like: a small power grid. But when the larger utility grid goes down, a microgrid keeps running. Absent a microgrid, solar panels shut off like the rest of the grid, rendered useless when they could be providing the highest value.”
The Department of Energy’s Microgrid Exchange Group offers this more detailed definition: “A microgrid is a group of interconnected loads and distributed energy resources (DERs) within clearly defined electricity boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island mode.”
Navigant Research’s Microgrid Deployment Tracker database identified 1,681 projects worldwide as of the fourth quarter of 2016, “representing 16,552.8 MW of operating, under development, and proposed microgrid capacity and 126 new projects.” Navigant highlights three noteworthy new projects: a 100-MW energy storage project in India’s Andhra Pradesh state; 83 MW of solar photovoltaic (PV) and storage in California’s Imperial Valley; and an 80-MW remote project in Newcastle, Australia, that includes diesel generation as well as solar PV and energy storage. The research firm notes, “Diesel capacity remains the leading generation technology in terms of total capacity, though its lead is shrinking.”
According to Navigant, North America is the leading region in operating microgrid capacity, with 54% of the worldwide market share. “The United States leads all countries in terms of both capacity and total number of projects,” says Navigant.
Energy storage is a key to microgrids, providing resiliency, reliability, and if necessary independence from the conventional big grid, also known as “islanding.” Coupled with solar or wind, storage overcomes the intermittency problem of the renewable generation. Some analysts have dubbed energy storage “the great enabler.”
Costs of solar PV and battery storage are both declining. Bloomberg New Energy Finance in May issued a report—“2Q 2017 Frontier Power Market Outlook”—that predicts 2017 could be a big year for microgrids. “Storage companies and technology giants continue to lead the charge on solar and storage microgrids while island communities are test-beds for piloting new systems and ideas,” according to the report, with “energy storage companies such as Tesla, Fluidic Energy, and Electro Power Systems continuing to deploy significant capacity in the first quarter. Specifically, Tesla’s island microgrids represent 36% of the company’s total power storage capacity deployed to date.”
