The business case for microgrids is improving by the day. Microgrids offer tremendous potential to enhance reliability, resilience, and long-term energy security. As microgrid technologies continue to advance and costs decline, business models and regulatory structures are beginning to shift in recognition of the potential benefits these systems offer – both to the end customer and to the utility.
Over the next five years, GTM Research forecasts overall North American microgrid capacity to more than double. Meanwhile, the annual North American market value is expected to nearly quadruple, increasing from $225.7 million by the end of 2015 to $829 million by the end of 2020.
Integrating Renewable Energy into Microgrids
The strongest capacity growth is expected to come from solar PV generation, eventually eclipsing today’s more common conventional sources of diesel and natural gas; and microgrid owners are increasingly integrating higher concentrations of non-dispatchable renewables into their systems. For many of these operators, their objectives go beyond achieving mere reliability. They may also seek to
- Maximize the amount of renewable energy consumed
- Minimize greenhouse gas emissions
- Minimize fuel consumption to reduce dependency on fuel imports
- Maximize overall economic benefit
- Operate at the highest possible level of reliability
Certain technical and operation challenges, like intermittencies and system-balancing problems, are inherent in high-renewable microgrids; however, they can be addressed with careful planning, automated controls, storage and other appropriate technologies.
When planning a microgrid deployment (especially involving high levels of renewables integration), it’s helpful to prioritize the owner’s objectives and consider which microgrid services might best support those ends. This decision-making process can guide technology choices, as well as highlight the long-term value of upfront investments in hardware and software infrastructure.
ABB’s comprehensive “8 S” concept is one way to evaluate a microgrid project and determine the best mix of generation, energy storage and control technologies for a particular project. The 8 S’s are a set of power system functions that microgrids may provide:
- Spinning reserves
- STATCOM (static synchronous compensator)
- Standalone operation
- Seamless transfer
For a detailed explanation of the 8 S’s, download this GTM Research white paper sponsored by ABB.
If, for example, a cleaner energy mix is the primary objective for a grid-connected microgrid, it may suffice to simply install a low level of renewable generation and leverage the grid to balance fluctuations in local production.
But in general, where the desired penetration of renewables is higher, and where loads are more complex (less flexible or highly dynamic), a microgrid will need to incorporate additional functions from the list of 8 S’s.
The microgrid market is undergoing a transformation from a niche technology application to a commercially viable modernization tool serving utilities, institutions and remote communities. As barriers are overcome, integrating renewable energy into microgrids is expected to drive the next growth phase in microgrid development.
Download this white paper from the Microgrid Knowledge White Paper Library to read more.