Why the Upsurge in Microgrid Development?

Microgrids represent the next stage in the push toward electrification; a way to reach into the far corners where the big grids cannot go, and where they can go, to make electric service more reliable, clean and less costly.

For more than a century, advanced economies abided by the ‘bigger is better’ philosophy for electric power supply. The world built massive grids that connected power plants to homes and businesses via wires that traversed thousands of miles. As a result, the US grid, alone, now contains enough high-voltage transmission wire to circle the Earth six times over, making it what some describe as the world’s biggest machine.

The grid build-out served its purpose well; 84 percent of the global population now enjoys the benefits of electric power. But big grids have their limits. Most notably, they can be subject to domino-like failures. Damage to one part of the power grid can create an outage that cascades for miles, causing a blackout that affects millions of utility customers. Simple things can cause such failures; a squirrel gnawing on a wire or a tree falling on utility equipment during a storm. The power grid has demonstrated this vulnerability repeatedly in recent years. The Northeast US blackout of 2003, India’s blackout of 2012, Superstorm Sandy and Hurricane Maria offer examples.

To overcome cascading outages, power system planners have begun to segment the grid – create small scale sections that can provide power independently when the larger grid fails. These segments are known as microgrids.

As a consequence of the above issue, and other major contributing factors such as cost of utility grid extension and customer requirements, a mindset shift has begun to occur. It’s become clear that it’s not necessary to rely on a utility or government entity to provide electricity. Rather, generation can be locally managed and dispatched and even communally owned to benefit its users. The result is a form of distributed generation that offers efficient energy management, security of supply, redundancy and back-up power to safeguard against outages.

Annual cost of power-related outages (USA)
$150 billion
Microgrid market by 2021
$23 billion
Number of energy-poor people who will tie into a microgrid by 2030
34 million

What is a microgrid

A microgrid is a miniaturized version of the larger grid, a configuration of energy resources, distribution wires and buildings, all within a distinct geographic footprint. There is no size limit, but a microgrid tends to be scaled to a discrete operation, such as a business park, college campus, healthcare complex, mine, military facility, neighborhood, or critical municipal services (fire, police, water).

While microgrids can use any kind of power generation, newer projects tend to emphasize clean energy, such as solar and energy storage. These technologies are attractive because their costs are falling, and they help businesses, institutions and governments achieve carbon reduction and sustainability goals.

But their benefits extend beyond mere production of clean energy. What distinguishes a microgrid is its software intelligence, which imbues the power system with abilities not available to simpler energy projects. And with this added value, we get smart energy.

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How microgrids provide reliable energy

Most notable is a microgrid’s ability to enter ‘island mode’ – or operate independently - from the central grid. The microgrid accomplishes this by way of a microgrid controller, a master software manager that disconnects the microgrid from the point of common coupling with the power grid when it senses that the grid is failing. This spares microgrid customers from becoming part of a cascading grid failure. Once isolated from the central grid, the microgrid’s generators kick into action to serve local customers.

The term Microgrid today is applied to a broad range of energy system designs. Although there is no single universal definition, Microgrids are primarily distribution level networks connecting  various energy resources. These include distributed generation assets such as microturbines, fuel cells, photovoltaics and energy storage, in addition to flexible load and demand management systems. “Microgrids generally however fall into two categories. Those that are isolated from the public power distribution network and those that are connected but which can operate in “island” mode when appropriate”, said David Healey Smart Energy Director WSP.

The microgrid controller achieves other feats, as well, multitasking to leverage its energy resources to reach goals set by its operator. The microgrid may be programmed to attain best energy costs, highest efficiency, maximum use of renewable energy, lowest emissions, improved power quality or some other metric.

For example, when connected to the grid, the microgrid may:

  • Gauge market prices for power supply to determine whether it would be more cost-effective at any given time to buy energy from the central grid or rely on its own generators
  • Earn revenue by supplying services needed by the power grid, such as frequency control or demand response
  • Analyze weather forecasts to determine how much production the microgrid might get from its solar panels that day and accordingly orchestrate when to discharge batteries or operate other generators
  • Analyze the system for long-term maintenance and operations planning
  • Provide UPS services to critical infrastructures such as hospitals, datacenters or water treatments plants

Microgrids also offer up an ability to integrate smart technologies, such as smart meters, which allows the system to operate more efficiently. Smart technologies also improve a microgrid’s ability to participate in demand response, use energy storage strategically, and provide grid services.

“Something else to watch is growing use of microgrids in ‘peer to peer energy trading’ through emerging blockchain strategies,” said Tim Strange, Senor Engineer, Renewable Energy and Energy Storage in the UK. “This is still an emerging approach, but it is being piloted in Brooklyn, New York and at certain university campuses in the UK. Blockchain microgrids will allow households and businesses to trade energy directly, bypassing a utility or other central authority.”

 
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Saving money with microgrids

Because of these abilities, microgrids are sometimes described as the conductors of an energy orchestra. A project in Livermore, California offers a good example. Designed by WSP, the Las Positas College microgrid manages solar generation with two forms of energy storage. One is a battery system that stores electrical energy and the other is an ice-based system that stores thermal energy.

During daylight hours when the solar panels produce enough energy, the campus uses the energy to power mechanical chillers for building cooling and charge the batteries. As the sun goes down, the campus switches to stored ice for cooling and uses the batteries to reduce peak energy surges. When the campus closes overnight, the mechanical chillers recharge the ice storage system. The combination of cooling with ice and discharging the battery for peak demand reduction during high energy use periods benefits the local utility.

The system is also designed to operate critical campus facilities during a major grid failure by isolating (islanding) the solar panels, batteries and the operations center from the local grid to allow continuous operation using non-polluting solar power rather than diesel generation.

The microgrid uses a vanadium flow batteries rather than typical lithium ion type batteries.  The flow batteries are projected to have a longer service life and eliminate fire hazards associated with lithium batteries. However, they do require more space and have mechanical equipment to maintain.

The Las Positas College microgrid also communicates with the utility grid to determine if it is cost-effective to release power or if it’s better to absorb it. In doing so, the microgrid offers a resource to the local utility to manage power surges and reduce peak energy use.

“These abilities lead to cost savings. The project is now in testing. But when it is fully operational we expect the microgrid to provide savings of US$100,000 annually,” said Bruce Rich, Area Construction Manager for WSP. 

The California Energy Commission awarded the project a US$1.5 million grant to model the technology and serve as a demonstration for other facilities considering microgrid development.

Because microgrids not only serve their customers, but also the grid, utilities and governments are becoming increasingly interested in the technology.

Hydro-Quebec, for example, is developing a microgrid in Lac-Mégantic, in the province of Quebec, Canada, as a way to test new energy technology with the goal of rolling it out elsewhere. Being planned with the assistance of WSP, the project will include 30 residential and commercial buildings, with a total of 300 kW installed capacity, 300 kWh of battery storage and electric vehicle charging stations. 

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Bringing power to those off grid

While microgrids can bolster utilities and central grids, it’s important to note that not all microgrids are connected to a grid. In fact, microgrids are sometimes built precisely because there is no available grid. Known as remote or off-grid microgrids, these tend to be installed on islands and in rural areas, particularly parts of Africa, India or undeveloped Asia as well as remote communities in Northern Canada. Microgrids are considered a key tool in battling energy poverty and bringing power supply to the 16 percent of the global population – more than 1 billion people – still without electricity.

Other times islands choose microgrids to displace inefficient generators that use fossil fuels, often diesel or heavy oil, with those that rely more on renewable energy and ideally a storage system. Not only do these islands then enjoy a more environmentally sound choice, but they also avoid the high fuel transportation costs and the volatile pricing of oil and diesel.

A WSP project in South Africa, on an island 4.3 miles off of Cape Town, offers a window into how a microgrid serves those without utility grid access. Robben Island is a national landmark, once the site of the prison that confined Nelson Mandela for 18 years.  

Before the solar microgrid was installed in 2017, the island was reliant on diesel generators for electricity. WSP became involved when the National Department of Tourism of South Africa appointed it as advisor in the development of renewable energy projects at state-owned tourism attractions. With its clean generation, energy storage system, and microgrid controller, the island is now able to substantially reduce its use of diesel fuel and has cut energy costs by 52 percent.

What’s next for microgrids?

Given their many benefits, it’s not surprising that analysts forecast rapid growth of the technology. Navigant Research pegged the microgrid market at US$4.3 billion in 2013 and foresees it growing to US$19.9 billion by 2020 under a baseline forecast – or to as much as US$36.2 billion under a more aggressive scenario. GlobalData forecasts the market at $23 billion in 2021.

This growth is occurring because microgrids represent the next stage in the world’s push toward electrification; a way to reach into the far corners where the big grids cannot go, and where they can go, to make electric service more reliable, clean and less costly.


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