The concept of the no-money down microgrid gained significant footing this week with the kickoff in Maryland of two Montgomery County microgrids.
The county government went live with a microgrid at its public safety headquarters in Gaithersburg and another at a correctional facility in Boyds. Developed by Duke Energy Renewables and Schneider Electric, the microgrids together will produce 11 million kWh/year using solar and combined heat and power.
Montgomery County correctional facility, home to a new microgrid. Courtesy of Schneider Electric
The proof-of-concept microgrids offer an example of a financing mechanism that Schneider Electric calls energy-as-a-service, basically a way for customers like Montgomery County to get the benefits of a microgrid without making a capital outlay.
Others use the terms microgrid-as-a-service, reliability-as-a-service, no-money down microgrid, or other variations to describe the approach that allows a customer to pay only for the output from the microgrid, in this case at a locked-in rate. In addition to gaining long-term price certainty, the customer doesn’t lose power when the central grid goes down.
Schneider Electric and partner Duke Energy Renewables sweetened the deal for the county by wrapping into the 25-year-agreement the costs of electrical infrastructure upgrades that the county needed to make to its 50-year-old public safety headquarters. The county was able to pay for the upgrades from energy savings the microgrid will generate.
“Our partnership with Schneider has enabled us to do over $5 million in capital improvements — major electrical switchgear and things like — because of the savings generated from energy reductions. Five million in capital improvements is significant,” said David Dise, director of the county’s department of general services, in a Facebook interview with Kevin Self, Schneider’s vice president strategy, business development & government relations.
The project developers earn their return by leveraging the microgrid’s output in wholesale markets or through renewable energy credits, demand response, or other mechanisms.
The new microgrids put Montgomery County on the map as an increasing number of institutions and businesses look at microgrids as not just a way to ensure reliable power but also manage energy costs and reduce emissions.
Mark Feasel, vice president of Schneider Electric’s electric utility and smart grid segments, described the county as a “north star” to other governments.
“The Montgomery County microgrid activation marks a significant point in the evolution of the energy industry,” Feasel said. “Municipalities have long understood how to leverage energy efficiency to fund their other capital priorities, but this project demonstrates the ability to extend that horizon to also include sustainability, and most importantly, resilience.”
Meanwhile state regulators reject another microgrid
The positive, national focus comes at good time for Maryland, a state which suffers from a somewhat bruised reputation in the industry after twice rejecting utility microgrid proposals.
The most recent rejection came last month when the Public Service Commission denied Pepco’s cost recovery for two microgrids that would keep the power flowing during emergencies for hospitals, pharmacies, gas stations and other critical facilities in Prince George’s County and Rockville.
Pepco had planned to socialize the microgrids’ costs – about 36 cents/month for the average residential ratepayer – across all of its Maryland customers. But the commission took issue with the idea and said it wanted local governments, businesses and various energy funds to help offset the cost.
The commission added, however, that it wants public purpose microgrids — a term used to describe utility microgrids — developed in the state and it encouraged the utility to submit a new proposal.
Two years ago, the Maryland commission also rejected a public purpose microgrid put forward by another utility, Baltimore Gas & Electric. In that case, the commission criticized the plan’s approach to cost recovery, treatment of the competitive market, and emergency planning.
The Montgomery County microgrids did not require commission approval because they were not built by utilities. The county instead turned to the private sector four years ago when it issued a request for proposals. Schneider Electric and Duke Energy Renewables won the contract.
Green goals and storm spurred Montgomery County microgrids
The sizeable county – 9,000 employees and 400 buildings – has been seeking ways to lower its greenhouse gas emissions for several years. In 2009 the county set a goal for an 80 percent reduction by 2050 and has been installing solar, buying clean energy and making energy efficient upgrades to its buildings.
But the seeds for the microgrids really emerged in 2012 when a derecho — a severe wind storm – swept over the county and knocked out power to 71 county facilities and 250,000 country residents for several days. The impact was felt beyond its border. Just outside of Washington, DC, Montgomery County is home to many Beltway commuters and itself is a force in the region, representing 16 percent of Maryland’s economy.
The county pointed out that because the microgrids required no upfront capital costs, they did not interfer with its other capital projects.
Montgomery County solar field. Courtesy of Schneider Electric
New business model for utilities
Duke Energy Renewables will own and operate both Montgomery County microgrids with the assistance of its subsidiary, REC Solar, and Schneider Electric.
The Mongomery County microgrids also stand out because of the involvement of Duke Energy Renewables – an unregulated subsidiary of North Carolina-based Duke Energy. The business model — utilities building microgrids though competitive affiliates — offers them new revenue opportunity, which many are seeking as electricity sales flatten in the United States.
“Our collaboration with Duke Energy Renewables showcases a business model where incumbent electric utilities can deliver new and accretive value streams to their businesses in an increasingly digitized, distributed, and decarbonized energy landscape,” Feasel said.
PEER winner
Feasel also noted that Schneider and Duke built the public safety headquarters microgrid around an accredited third-party standard — Performance Excellence in Electricity Renewal (PEER) certification — a program that measures and improves power system performance and electricity infrastructure.
PEER certification recognizes industry leaders for improving efficiency and sustainability, day-to-day reliability and resilience in the face of severe events. The project represents the first PEER Platinum certified municipal microgrid.
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