What Color is Your Microgrid?

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Microgrids are “the key to a successful future for our electricity system,” according to Kurt Yeager, vice chairman of the Galvin Electricity Initiative and former CEO of the Electric Power Research Institute.

Yeager is not alone in championing these mini versions of the central grid. Interest has been heightening in microgrid since SuperStorm Sandy. Navigant Research estimates that microgrid revenue could grow from $4.3 billion in 2013 to as much as $36.2 billion worldwide in just six years.

But let’s face it, broad adoption of the microgrid  will depend largely on how well the industry gets out the word about microgrid’s ability to lower costs, reduce emissions and improve electric reliability. Our society seems to grasp a product’s worth when we rank, star, color code, thumb up, and in other ways rate it.  Such a system is now available for microgrids and could hasten their development.

Yeager and colleague Chris Carter Boyer described the rating system at the Next Generation Microgrids conference, held in Hartford, Conn., last week by Active Communications International.

Boyer is the microgrid director for the Perfect Power Institute, an offshoot of the Galvin Electricity Initiative, which wants to do for microgrid what LEED has done for green buildings with its certified, silver, gold and platinum ratings.

“Fifteen years ago, no one knew what LEED was. Now, today, LEED is very common, everyone is going for LEED, and it’s not considered something that is cost prohibitive. We’re hoping to make that same transformation in the electric industry with microgrids,” Boyer said.

To that end, the Perfect Power Institute is applying its Performance Excellence in Electricity Renewal, or PEER, to microgrids. The ranking system was created with the help of UL and 93 industry advisors. While LEED rates the building, PEER focuses on everything that delivers power to the building, Boyer said.

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The PEER system ranks the power system four ways: 1) How well it engages the customer 2) Cost or operational efficiency 3) Reliability, power quality, safety 4) Energy efficiency and environmental performance.

In addition, the institute also has put together guidelines that define terms and criteria to help make a business case for microgrid, conduct feasibility and sensitivity analyses, and devise performance specs and verification.

The industry is rife with speculation about what microgrid will do to utilities. Will it put them out of business? Be another player in its sphere like independent producers? Or will utilities eventually become the dominant owners and operators of US microgrids?

Yeager said that he does not see microgrid excluding utilities, but creating a new business model based on performance.  To bring utilities into the fold, the institute has launched a Utility Microgrid Campaign. Right now, both sides – the utilities and the microgrids – are “dumping in money,” Boyer said. “When you optimize two different systems independently, you waste a lot of money. So the Utility Microgrid Campaign is all about looking at the system as a single system,” he said.

Yeager described microgrid as a natural evolution of the electricity system. Thomas Edison’s first electricity systems were, in essence, microgrids – direct current systems with local generation. However, they weren’t suitable for the massive national electrification ahead, he said.

We had to go to a large centralized alternative current system,” he said. “But we finished that job 60 years ago. While that was the right job for an analog electric mechanical economy, it is not at all correct for today’s digital economy.”

But to achieve transformation, the US needs to rewrite its rules governing electric utilities, which in essence put shareholders and ratepayers in competition, he said. “We are still operating with regulation that was basically created during the Depression.”

Change is here, demanded by a younger technology-savvy generation, Yeager said.  The Perfect Power Institute is positioning to help the industry better define and explain the change and hopefully “perfect” the new power system.

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About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than three decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.