In this week’s Industry Perspectives, Clark Wiedetz, microgrid director for Siemens Energy Management, explores how to determine if a microgrid is right for today’s commercial and industrial players.
C&I market trends
The commercial and industrial (C&I) market is evolving into one of the most innovative microgrid segments yet, according to a recent C&I Microgrids report by Navigant Research. Noting the growth in the number of deployments of scale and purpose similar to what C&I customers might consider, the report suggests that even risk-averse energy managers are becoming interested in microgrids. A number of C&I market trends are driving this change in customer perception, including:
- Reliability as a Demand Driver – reliability is more valued among C&I customers than any other market segment
- Scalability for Larger Potential Cost Savings – project portfolios can scale up rapidly, replicating commercial success within shorter development cycles rather than slow moving segments, such as military, community, and utility microgrids
- Financially Strong, Investment-Driven Buyers – while highly diverse, the C&I market segment includes a large number of financially strong customers with management teams that are accustomed to evaluating and investing in new business opportunities without having to rely on external authorities for resources or approval
Clark Wiedetz, Siemens
C&I customers are also attracted by new contracting and delivery models that spare them from making large capital expenditures as well as improved project economics due to falling prices for solar, storage, and other components. As commercial deployment performance results are disseminated, C&I customers are becoming increasingly convinced of the economic, operational, and reliability benefits of microgrids.
C&I customers are also attracted by new contracting and delivery models that spare them from making large capital expenditures as well as improved project economics due to falling prices for solar, storage, and other components.
Important considerations
Many microgrids are not ‘green field’ developments, but are instead built upon existing electrical infrastructure, which helps reduce the overall cost of the total microgrid solution. Before investing in a microgrid, C&I customers must first determine if existing infrastructure must be upgraded with grid automation technology and how sophisticated the microgrid controller needs to be. Prospective buyers should ask themselves: “What is already installed within my energy infrastructure?” Perhaps an office campus has a solar array, but is interested in the reliability benefits of a microgrid realizing that solar alone cannot guarantee power availability when the grid goes down. Or, maybe a hospital network already operates a combined heat and power (CHP) plant, but would like to add solar and advanced optimization through a control solution.
Let’s look at others in the C&I sector who are rapidly expanding and solving reliability issues. For example, a large utility in the US is in the process of developing a data center microgrid with four different power lines fed from three generation sources to bring electricity to the on-site substation. As a result, if one line fails, the other lines provide redundancy to ensure that electricity keeps flowing to the data center. Perhaps most importantly might be the business structure for this particular project – it can be an operating service agreement instead of a direct capital purchase.
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Microgrid controller buying guide
Choosing the right microgrid control system is essential for ensuring reliability and for reducing cost and risk. If you feel that a microgrid is right for you, then it is extremely important to select the right type of controller for your configuration. Here are two general configurations as guides:
- Solar + Storage:
- This is the most common type of application with multiple available solutions
- Co-Generation (e.g., diesel, turbines) + Renewables + Other Generation Assets (e.g., fuel cell):
- A more robust control platform will be needed
- A diversity of generation assets means more flexibility and possibly greater ROI
Clark Wiedetz is microgrid director for Siemens Energy Management.
