Microgrids are a hot topic in the energy industry. Governments and organizations are interested as well. The Department of energy is offering grants to back microgrid deployment, and several states are offering funding to support microgrid pilot projects, including California, Connecticut, New York, and Massachusetts. What exactly is a microgrid? Is it a good way for your organization to meet its energy demands and manage outage risk?
Distributed Energy Resources and the Microgrid: What’s the Difference?
The University of Maine at Presque Isle (UMPI) offsets approximately 33% of its annual campus energy use costs through a 600 kW wind energy generator on campus. UMPI is connected to the regional power grid but they are able to use the wind turbine as a distributed energy resource to offset a portion of its conventionally distributed power from the utility.
Tohoku Fukushi University in Japan, on the other hand, uses a combination of distributed energy resources (fuel cells, solar panels, and natural gas microturbines) to create its own microgrid. The University is connected to the electric utility grid; however, its grid is configured to island itself when the electric utility grid fails. This scenario happened during the Great East Japan Earthquake. The City of Sendai lost power, but the hospital and other resources connected to the University’s microgrid remained powered and heated by a combined heat and power (CHP) system.
Is a Microgrid Right for Your Organization?
The ability to use distributed energy and operate in island mode, isolated from the utility supply, is what fundamentally makes a microgrid. It moves beyond simple emergency backup power, as it also has clearly defined transmission boundaries and can manage power flows, voltage, and loads. Currently, this choice is beyond the means of many organizations.
However, as extreme weather events become more common and more expensive to endure, organizations are looking for ways to maintain resiliency and have reliable power in the event of a protracted outage. It is the balance of cost to risk that is the fundamental question to consider. A hospital in a hurricane-prone region or a military installation in a combat field has a greater need to retain full power than, say, an office building.
It is important to ask the right questions when developing a business case and considering the right approach. What provisions does your organization need to make for outage situations? What are your standby generator costs? Is your energy or fuel supply sufficient to operate without electric utility grid power for an extended period? What is the value of an independent, island-capable microgrid?
Equipment costs associated with microgrid and distributed energy systems are declining. However, as these power sources become more widespread, regional power utilities will seek fair and equitable ways to recover “stranded costs” (i.e. the cost for existing infrastructure the utility had planned to recoup but may not be able to in a more competitive energy market where the cost of generating distributed energy behind the meter is less expensive). Stranded costs are a complicated issue that states are only beginning to address. Regulations may now or will potentially be in place to recover stranded costs through fees or alternative rate structures for users and producers of distributed energy.
What Is the Right Approach?
Organizations should consider their costs and goals before deciding to implement a microgrid, emergency backup, or distributed energy solution.
For example, UMPI’s goal was to cost effectively reduce the campus’ carbon footprint. Designing and building a renewable source of power behind the meter achieves UMPI’s environmental, educational, community, energy, and financial goals.
Organizations should also think about the rate structure for their organization’s power resources. The cost of operating and using distributed energy assets such as IC engines, microturbines, fuel cells, and photovoltaics in balance with power from the electric utility grid may be advantageous. In many circumstances, an organization will use traditional grid resources far more often than distributed energy alone.
Furthermore, it may be more cost effective to use gas or oil backup generators to operate essential functions during an electric utility grid outage than develop a full island-capable system. A university may be able to power, say, its network servers, phone system, and dining services using generators and leave other facilities without power. The downside of backup generators is access to backup fuel. During a long outage, this can be problematic. As National Geographic reported, “Hurricane Sandy saw long lines for fuel throughout New York and New Jersey, and a number of failures of natural gas pipeline systems due to widespread structure damage.”
Organizations are learning from recent disasters that there is a need to determine the likelihood of electric utility grid failure and calculate the real cost of being without power. Power outages during Hurricane Sandy caused 50 deaths and resulted in billions of dollars in damages.
Communities and organizations will need to assess whether they can supply basic functions, like drinking water, wastewater treatment, or emergency services when the next big storm hits. Communities and organizations with distributed energy resources—the ability to generate power where it is used—through some form of backup power or full microgrid capability will be able to deliver fundamental needs when centralized generators (like nuclear power plants) are shut down or when transmission is disabled.
The technology to make microgrids a reality is already in place in some locations. During Hurricane Sandy, Co-op City, one of the largest housing developments in the country, was able to keep its lights on and its buildings heated using its 40-megawatt CHP plant. Likewise, during the storm Princeton University was able to depend on its own version of a microgrid. Ordinarily, the campus draws a portion of its power from the local power company, but when the storm knocked out service, the University was able to keep its critical buildings powered and heated using its CHP plant.
Residents and customers will soon have the expectation that utilities and organizations are moving in a direction that includes not only backup generator power, but some form of distributed energy or microgrid capability to maintain a reliable local supply of power and remain resilient when the centralized transmission grid fails.
What level of resiliency does your organization need and what is the likelihood of failure? Organizations that provide critical resources yet experience frequent power outages or are vulnerable to severe weather-related outages may have questions about creating a microgrid or backup power system that we can answer.
If your organization does not have redundant supply, and your power infrastructure is not sufficiently hardened to withstand typical weather for your region, then some form of microgrid or emergency backup generation will be required to meet your energy demands and manage outage risk. In the end, how you manage your electrical infrastructure will be a business decision balancing the cost of interruption with the cost to implement distributed generation, emergency systems, or a microgrid.