Utilities are serious about microgrids and are taking a lead in their development, according to Thierry Godart, president of Schneider Electric – Utilities.
Godart was interviewed on video by research firm Zpryme as part of Energy Thought Summit 2014, a November 12 thought leader event in North Carolina.
The largest and most electro-intensive and electro-sensitive utility customers are pursuing microgrids. So utilities are increasingly forced to decide “am I part of the game or just a bystander suffering from the effect?” Godart told H. Christine Richards, a senior research adviser for Zpryme.
Godart’s insights come as microgrid stakeholders keenly watch the evolving market and the utility role. The direction utilities take could profoundly influence market growth. With their strong balance sheets, they can quickly bring projects to market. Conversely, utilities can slow the speed at which microgrids become part of the U.S. grid if they try to obstruct the technology, especially in the regulatory arena.
He sees utilities taking a lead market role by forming subsidiaries that will build microgrids and eventually operate them on behalf of their large customers.
Utilities are not yet operating microgrids because it is still a very new market. “But I think that is where they will go. They will offer the service of setting it up and running it and maintaining it,” he said.
At the same time, Godart noted that the more traditional side of the utility business, the regulated distributed grid — will have to adapt to the changes microgrids will bring and learn to take advantage of their benefits. Microgrids, like other forms of distributed energy, are viewed as disruptive to the status quo of central power plants and transmission lines.
Financing remains a big question.
Regulators, utilities and the microgrid customer need to recognize the value they bring to each other and create a common business case to justify the investment, he said.
“In short, the number one priority is how do you finance a microgrid that can contribute to not only the owners goal but to the society’s goal,” he said.
He envisions microgrids mimicking the energy efficiency industry in use of performance contracting. Under these contracts, customers and energy service companies share in project benefits. Often the customer pays for the project through energy bill savings guaranteed by the contractor. In the case of microgrids, the contractor may operate the facility on behalf of the utility.
Project development often begins with an existing campus that can be formed into a microgrid. “You can start small, with a simple generator set and start augmenting that with solar panels or another source of renewable energy as you grow. You don’t need to do a big project at one time.”
Schneider Electric is making a strong play in the microgrid and distributed energy market and sees itself helping to design the economic and technical road map for the industry.
“We have always been very involved in energy efficiency from the facility point of view. We have made some acquisitions recently that takes us to the utility world , especially the medium voltage, the automation systems. Now we are marrying the two to be the leader in bridging supply and demand, using demand response and using distributed energy,” he said.
What’s ahead for Schneider Electric in 2015? Look for some big announcements of distributed energy projects, Godart said.
The full interview is here.
