How RNG and big energy consumers are changing the microgrid proposition

Enchanted Rock struck gold when it figured out how to leverage Texas’ wholesale electricity markets to bring microgrids — and the energy reliability they offer — to retail customers in a cost-competitive way.

Over the last six years, the company has installed microgrid after microgrid — 280 in all — for high-visibility retail stores able to stay open and serve communities during power outages, medical and senior facilities, manufacturers, utilities, water plants and others. Moving beyond its Texas home base to other states, Enchanted Rock quickly became one of the most visible players in the North American microgrid arena. Others now imitate its model.

But the company has a problem — natural gas has been the primary fuel for its microgrids in an era when fossil fuels are a hard sell in parts of the US. It’s an issue shared by many other microgrid operators who, at the very least, rely on natural gas or diesel when other resources deplete: The grid is down, the wind stops blowing, the sun stops shining and batteries use up their charge.

But the rise of renewable natural gas (RNG) is quickly changing the conversation for Enchanted Rock and others.

Last week, Microgrid Knowledge talked to Enchanted Rock Founder and CEO Thomas McAndrew about RNG at the Decentralised Energy Forum in Ottawa, Canada, where McAndrew spoke on a panel about the topic. Hosted by Decentralised Energy Canada, an industry group, the event drew more than 100 people from energy and government.

RNG reduces greenhouse gases because it is made by capturing the methane from waste and repurposing it. So it's sourced from biological materials rather than fossil fuels. And because it draws methane out of the environment, RNG offers a climate advantage. Methane is multiple times worse than carbon dioxide in warming the planet, according to the US Environmental Protection Agency.

Another advantage of RNG is that it can be injected directly into pipelines to offset natural gas. Enchanted Rock made headlines earlier this year when it struck a deal with Microsoft to develop a data center microgrid in San Jose, California, to do just that. 

Had Microsoft not decided to go ahead with the microgrid, it would have used 20 3-MW diesel generators.

“And as you can imagine, there is a lot of push back in Silicon Valley in using diesel, even if they are Tier 4 diesel,” McAndrew said during the panel discussion.

How much is enough RNG?

But can we produce enough RNG? Is there enough waste to offset natural gas in the US?  McAndrew said it’s a question he gets all the time. 

Probably not, considering all the uses of natural gas. But for Enchanted Rock the question is moot because its microgrids use so little fuel relative to power plants. They run only about 2%-3% of the hours in a year, he said. During a grid power outage, they provide electricity to the host. Other times they offer emergency capacity to the central grid, so they run only when the grid experiences a shortfall.

And while RNG may be priced at a premium compared to natural gas, again, it’s not an issue for Enchanted Rock because microgrids do not use that much fuel. Further, Enchanted Rock can offset the cost with the payments it receives to provide grid resources. “When we run we get paid well, and so we can afford to pay the firm price of RNG,” he said. 

Second-class climate solution?

However, RNG faces challenges, particularly a misconception that it is a “second class” climate solution, McAndrew said.

“I don’t quite understand it. Methane is an incredibly potent greenhouse gas, especially in the very short term, in our lifetime, and so we need to capture it,” he said.

McAndrew sees a lot of opportunity ahead for RNG and microgrids, especially for data centers because they have corporate mandates to decarbonize.  

And concern about electric reliability is rising among a range of businesses because of increasingly severe weather conditions.

“In the past people would write it off — ‘Oh that’s just a one-time event.’ We're seeing a bit of a change where companies that never would've considered a resiliency microgrid before at their facility are doing that. They’re saying we can't afford to take this chance.”

Data centers, manufacturers and microgrids

Manufacturers in particular are turning to microgrids, he said, and their numbers appear to be growing as more of these companies move energy price-sensitive operations to the US.

The need for microgrids to bring stability to a grid that is increasingly reliable on wind farms and large solar facilities is also growing.

“We provide a very quick response — dependable, dispatchable capacity. We’re that buffer that can come in very quickly. It could be a 20 or 30 minute imbalance that we respond to or it could be a two or three day imbalance.”

The ability of Enchanted Rock’s microgrids to provide service for an extended time is what sets them apart from stand-alone batteries, he said.

“How does that work when you have a sustained grid emergency? When are they going to recharge?” McAndrew asked.

Stand-alone batteries work well managing California’s duck curve, he said, but when a blackout occurs as one did in August 2020 in the state, “you just need more emergency capacity,” he said.

Grid assets versus liabilities

The central grid’s shortfalls — and the need for more microgrids — became especially apparent last year when Dominion Energy warned of delays interconnecting new data centers because of a lack of capacity.

The situation underscored that if you are a large energy consumer, “You can’t just be a grid liability anymore. You have to be a grid asset too. And that's where microgrids come in,” McAndrew said. “That's something that we're super excited about, and we think the forward looking data centers will follow that path.”

The movement of manufacturers and data centers toward microgrids is part of a larger shift in the microgrid market. For a long time, convincing customers to adopt microgrids felt like “pushing a rope,” he said. “Now it feels like we are getting pulled — and quickly.”

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