Launched in Chelsea, Mass., Virtual Microgrid Concept Could Expand to Other Cities
The city of Chelsea, Massachusetts, broke ground early this month on the first phase of its virtual microgrid, an effort that invites other towns and cities to follow its example and reap energy justice, environmental and resilience benefits, along with income.
To date, the Massachusetts towns of Cambridge, Lynn, Milton and Salem and the Boston neighborhood of Chinatown have committed to the concept of deploying virtual microgrids, said David Dayton, CEO of Clean Energy Solutions, a consultant to the project.
These and other towns and municipalities could, like Chelsea, create virtual microgrids that can add distributed energy resources via cloud-based software, as opposed to poles and wires.
The long-term hope is to link the microgrids in a shared network, Dayton said.
Getting around utility restrictions
The virtual nature of the microgrid means that towns can circumvent utility restrictions that often make it difficult to include utility poles and wires in microgrid projects.
On Dec. 2, Chelsea began installing 1,000 kW of solar on its Municipal Public Works Yard building. Next, the city will deploy 1,000 kWh of batteries for the police station and city hall, said Sari Kayyali, microgrid manager for GreenRoots, an environmental justice organization.
Under the Chelsea model, the solar won’t directly feed the batteries, but the solar and storage will be packaged together under one virtual microgrid umbrella, said Dayton.
Solar will eventually lower bills for low-income residents
The solar deployed at the city yard will be fed into the grid and will be available to reduce the bills of low-income residents in Chelsea through bill credits. That’s possible under the Massachusetts community solar program, Dayton said. The project has been accepted into that program.
Renters in multifamily dwellings and others who can’t benefit from solar on roofs can be given bill credits under the community solar program.
Right now, project participants are working through mechanisms to deliver savings to low-income residents. In the immediate future, most revenues will go to paying off capital costs, Kayyali said.
“Community solar is a collective way of doing what middle class homeowners do in the suburbs. They put solar up and pay off the cost with energy produced and eventually sell energy back to utilities,” said John Walkey, director of waterfront and climate justice initiatives at GreenRoots.
In the case of Chelsea, paying off the capital cost means paying off the $3.6 million loan with Bank of America approved by the city council. The project also received $1.03 million in state grant funding from the Municipal Vulnerability Preparedness Program,the Green Communities Program and others.
Once the capital cost is repaid in 15 years, the microgrid will generate income for the 20- to 30-year lifetime of the assets, said Dayton.
Four ways the microgrid can generate income
Income and energy savings from the microgrid can be generated from a number of different sources. First, the project will yield energy savings because the solar and batteries will offset purchases from the utility, Eversource.
Second, the project is eligible for utility incentives available for storage in the state. Under the ConnectedSolutions program, commercial and industrial customers are eligible for incentives for lowering and/or shifting electricity usage during peak demand hours.
The Chelsea microgrid’s batteries could be dispatched by the cloud-based controller during peak hours to earn revenues. The microgrid can also island from the grid to reduce load during peak demand periods.
To generate a third source of income, solar can be sold to utilities under the state’s SMART program. With the SMART program, incentives are paid directly by the utility company to the system owner, whose project must be interconnected to the utility.
In addition, the microgrid could eventually participate in the Independent System Operator market in New England.
“The project will have a positive cash flow from the beginning. That’s what convinced the city council,” said Dayton.
More tasks to complete
While the Chelsea microgrid project has funding and assets have begun to be deployed, there’s still more work to do.
GreenRoots is now drafting a proposed governance document for the city council, said Walkey.
“On the legal side, we have to make sure this makes sense. On the management side, we need transparency. We need to do audits,” he said.
Money associated with the project has to be in a dedicated pot and managed in accordance with what the municipality wants, he added.
And it’s important to ensure that local people participate in governance. One idea is to create a conservation commission or planning board that includes residents.
“These people could be brought up to speed on issues like forward capacity markets, battery storage and make those decisions for the community,” said Walkey. This would be similar to the role of the city of Cambridge’s chief climate officer.
Utility interconnection may slow progress
Interconnecting the project to Eversource is another issue that needs to be resolved. Chelsea has an interconnection agreement with the utility, but Eversource has said that it needs to upgrade a transformer and hasn’t said when that work will be done – a common challenge for solar and microgrid developers.
“Eversource won’t initiate that work until our project is complete,” Walkey said. “Time is going to start ticking. It’s tough to tell when the first electrons will flow.”
Meanwhile, Dayton and his associates hope that the Chelsea microgrid will serve as a model for other cities and towns.
Chelsea’s model calls for working with community members and environmental and social justice organizations.
Partners in the project include GreenRoots, Climable, a nonprofit working to bridge the gap between scientific research and policymaking, the city of Chelsea and Synapse Energy Economics, an environmental consultant. Also included in the effort is the Green Justice Coalition, which includes Clean Water Action, the Chinese Progressive Association and Resilient Urban Neighborhoods.
“This is an approach from the community up, step by step, community by community. It can change the architecture of our antiquated grid,” Dayton said.
