The Connection between Microgrids and Energy Efficiency

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microgrids and energy efficiency

Jean Redfield, NextEnergy

Microgrids and energy efficiency go hand-in-hand, explains Jean Redfield, president and CEO of NextEnergy.

Historically, our electric grid is powered by large central station power plants that distribute energy to end users through the use of transmission and distribution lines. However, steady advancements in distributed energy generation technologies like solar, wind and battery storage – as well as the accompanying controls systems and energy efficiency strategies – have the potential to shift the balance from large central station power plants to local microgrids.

The opportunity is simple. In the traditional system relying on central station generation, six percent of power is lost in transmission lines (an ABB study estimates 6.1 percent), effectively creating a “shipping” cost. Distributed energy generation and microgrids have the potential to save at least this six percent in transmission losses, resulting in a more efficient system. And the opportunity gets even better. Some microgrids are designed to use the direct current (DC) power directly from the generation source, which has the potential for an additional seven to thirty percent energy savings.

For example, any device with solid state controls – such as a laptop – uses DC power. Traditionally, before the generated power can be used by the device, it is converted to AC so that it can be distributed through power lines at high voltages. Throughout this process, we “spend” an additional seven to thirty percent of energy by converting from DC to AC and then back to DC.

Microgrids have the ability to prevent these huge energy losses by using DC power directly from the source.

The next big idea of microgrids and efficiency involves managing multiple loads and properly “matching” them to distributed generation resources. Traditionally, we are all tied to the same grid, and the local utility is responsible for making sure that generation, transmission, and distribution assets are big enough to supply power to all of us when, for example, temperatures hit 98 degrees and we all kick on our air conditioners. There are two types of benefits from these large grids: 1) potential economies of scale from building “big” and 2) the value of load diversity (because it is unlikely that we all switch on our equipment at exactly the same moment). In essence, our group peak loads is less than the sum of our individual peak loads.

With microgrids and new technology, there is potential for users to more efficiently manage their power – both determining generation sources and tracking uses– to minimize their own investments. For example, if I am in charge of my own peak I would most likely invest in energy efficient devices and sophisticated controls so the total amount of energy I use, and energy at peak, is much less than it would be if the costs of energy efficiency technology was shared by all.

However, the jury is still out on whether microgrids will result in lower overall investment. Individuals investing in both energy and energy efficiency assets compared to the traditional approach where energy investment decisions are made for the group and energy efficiency investment (and behavior) decisions are made by the individual user, present an interesting match-up. Individuals building to meet their own peak lose the value of “load diversity”, possibly leading to an investment that is more than their share of a “group” system.

Determining the value of energy efficiency and microgrids can be difficult. Is it efficient to harvest energy from the sun or wind and use it as distributed generation in microgrids? Or, is it more efficient to mine (or frack) fuel from the earth, transport it to a central plant, combust it to make steam, and transport the electricity to end users, losing energy value at each of these steps?

At today’s dollar-based approach to calculating return on investment (ROI) for energy efficiency, it’s getting to be a closer call every day. However, if we were to utilize a “return on energy invested” (ROEI) calculation where efficiency was evaluated based on BTU spent for BTU returned, a very different definition of energy efficiency would emerge where the value of microgrids and distributed generation would more significantly impact energy efficiency.

Jean Redfield is the president & CEO of NextEnergy. This blog was originally written for and published by Noesis Energy

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  1. Distributed Generation was the common name for Microgrids. Ohm’s Law of Resistance still applied then as it does now. We used 5 to 10% for loss in the Transmission and Distribution (T&D) factors. This article below shows additional reasons for a use of the microgrid. We can look historically the great mid west blackout and cascaded failures. Data Centers and Hospitals are needing a more robust plan for reliable power.

    Princeton University’s Microgrid: How to Partner, Not Part from the Grid

  2. Good article Jean so thanks.
    One issue you’ve not considered is how microgrids enable more efficient investment at the systems-level through a tailored approach to the cost/reliability/sustainability trade-off. Centralised systems take a “one size fits all” approach, beyond which individual participants must make investments should their needs/objectives depart from the utilitarian solution. By way of example, data center operators require higher levels of reliability and increasingly sustainability. This is driving investment into DC microgrids that may include CHP resources, which on this interpretation is a more efficient investment approach than if the utility were to deliver it at the system level.

  3. Hand-in hand? Shift the balance? The jury on microgrid investment is out? Determining the value of energy efficiency and microgrids can be difficult? This article, its assumptions and arguments, or discussion points fail to rationally to support the assertion that power utilities and energy efficiency are “on Board;” whatever that means?

  4. Very Good article…….
    I am also working on one microgrid project in our system there is a solar, wind and pumped hydro energy resources and for storage we are using battery and hydrogen storage system. For that i have done roof top solar design in Pvsyst and whole system optimal design is done in HOMER software…………..
    Now we are looking for the software for designing a whole electrical infrastructure for our project site. So if you have any suggestion for that send me mail on my email ID:

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