How 2017 Made the Argument for Microgrids

Sometimes events make an argument more strongly than words can. Such was the case in 2017 when disaster after disaster spoke to the vulnerability of the electric grid and the need for microgrids to ensure power supply.

First came Hurricane Harvey in late August with wind and water knocking out 10,000 MW of generating capacity in Texas. Then on September 10 Irma left 8.5 million electric accounts (far more if actual people are counted) without electricity in the U.S. southeast, including about two-thirds of Florida.

Irma and Harvey were just a prelude to Hurricane Maria’s complete toppling of Puerto Rico’s grid on September 20. For years we had heard such a thing could happen. But never before had an entire electric grid collapsed in North America, nor has a widespread outage ever lasted so long.

Why we need microgrids during storms

And now we know that restoration can take months. Puerto Rico had hoped to have electricity working by the end of 2017. But as of late December, 1.5 million people remained without power. That is half of the island’s population. It is the equivalent of Rhode Island and Boston having no electricity for three months.

Worse, U.S. officials do not expect full restoration until sometime in the spring.

As if that weren’t enough, wildfires on the West Coast caused massive destruction in 2017. Even those not directly in the fire’s path felt the effects as the flames distorted transmission and distribution lines, causing widespread power outages.

And then, the last month of the year sent out a final big warning with an 11-hour power outage at the Atlanta airport, the busiest in the world. No hurricane this time; it was a calm day. Equipment apparently malfunctioned. (State regulators are now investigating the details.) The airport did not have a functioning, advanced microgrid to keep at least part of it operating. The outage is likely to serve as a wake-up call for more airports and transportation centers to begin developing microgrids.

The good news is that several major infrastructure and technology companies – among them Schneider Electric, Siemens, S&C Electric and GE – as well as smaller players saw the need for microgrids even before these events. Since Superstorm Sandy five years ago, they have been busy honing microgrid technology, business models and financing structures. So the industry is ready to fill the need for microgrids that emerged out of the events of 2017.

Here are some examples of how the microgrid industry strengthened over 2017.

Money moving

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GTM Research issued a report forecasting that $12.5 billion will be invested in microgrids over the next six years in the U.S.
Connecticut, one of the earliest states to advocate for microgrids, released its fourth round of microgrid incentives in September, this time offering $26.5 million in grants. Money for microgrids also became available in Connecticut through a new solicitation for low and zero emissions renewable credits.
New York granted $11 million to the Stage 2 NY Prize winners. Eleven projects in total each received $1 million. Those that advance to Stage 3 will vie for an additional $20 million of the total $40 million fund. In addition, the Stage 3 winners will have the opportunity to each secure up to $50 million in financing from the NY Green Bank.
California in August began accepting application for $44.7 million in microgrid grants, meant to woo projects that will help the state achieve its clean energy goals. The state expects to announce winners on January 17.
New Jersey regulators liked what they saw when local communities applied for funding to install town center microgrids. So rather than allotting $1 million as planned, they more than doubled the budget to $2,052,480, divvied up among 13 applicants. After announcing the grants, the Board of Public Utilities began touring the sites to learn more about the projects and promote the value of microgrids.

The Massachusetts Clean Energy Center (MassCEC) in May issued a request for expressions of interest seeking teams to develop community microgrids. Three to five applicants will each win $75,000 grants for microgrid feasibility studies.
Crescendo Power formed to offer an initial $30 million in equity financing for commercial and industrial microgrids and distributed generation projects in the 1-10 MW range.
Facebook and Microsoft are seeding a new $50 million investment fund to create profitable business models for energy access microgrids in areas of the world that lack electricity.
Texas microgrid company Enchanted Rock (ERock) in February won $10 million in institutional financing from Energy Impact Partners (EIP), a consortium of global utilities.

Making microgrids easier

Microgrid developer and technology providers increasingly honed business models, largely aimed at sparing customers from paying upfront capital costs for microgrid installation and handling ongoing operation and maintenance. Examples are microgrid-as-a-service offered by Schneider and reliability-as-a-service provided by ERock and Fairbanks Morse. Similar models for energy efficiency and solar helped spur those industries.

Meanwhile, Dynapower has been working on making it easier to piece together the disparate equipment from various vendors that often make up a microgrid. The company has invested heavily in inverter and site controller firmware that takes away the need to hardwire microgrid components together.

ABB has focused on bring an easy-to-install microgrid to the market that is modular and containerized. Called PowerStore, the technology is also interesting in that it can includes flywheels.

Microgrids made smarter

Companies continued to hone microgrid controllers and software to allow for more sophisticated management of resources within the microgrid and to improve the microgrid’s interaction with the central grid and wholesale markets.

The National Renewable Energy Laboratory (NREL) is expected to release results soon from a microgrid controller competition held in 2017 to further develop the “brain” of the microgrid. Schweitzer Engineering Laboratories is among the finalists. (See interview.)

Schneider Electric added several new features to its EcoStruxure Microgrid Advisor, its cloud-based, demand-side management platform

S&C and its wholly-owned subsidiary, IPERC, continued their strong focus on cybersecurity with the GridMaster microgrid control system, which in 2017 won a second Authorization to Operate from the Department of Defense.

Siemens is tackling one of the most difficult – and possibly most far-reaching – efforts to bring new intelligence to microgrids by developing blockchain for microgrids in partnership with LO3 Energy.

Eaton is offering a microgrid controller that takes into account the increasingly modular nature of microgrids. They often are built in phases, which Eaton’s Power Xpert Energy Optimizer is built to accommodate.

Arrivals from sister technologies

Meanwhile, the industry saw increasing diversification of players. Companies known for their energy efficiency and combined heat and power products are finding a compatible new niche in microgrid development and supply. These include Ameresco and Veolia.

In addition, energy storage companies continued to feed the growing demand for battery systems in microgrids. Rivals Tesla and sonnen quickly made their way into Puerto Rico following Maria to begin installing microgrids and battery systems. Tesla also has been focused on the remote microgrid, with island projects on the Outer Banks of North Carolina and Hawaii. Sonnen set up a factory in Georgia this year and is building a residential virtual power plant community in Arizona.

Another one to watch is the new company, Fluence, a partnership of Siemens and AES that has the ambitious goal to capture major segments of the energy storage market worldwide.

Last year also brought more fuel cell microgrids, with Connecticut continuing to be a center for the technology because of state-sponsored incentives.

Utilities wrestle with old rules

More utilities are proposing and building microgrids. But they continue to wrestle with finding the correct business models and rate recovery mechanisms that are acceptable to regulators.

National Grid continued to move forward with an innovative proposal before the New York Public Service Commission that would allow the utility to sell certain microgrid services competitively.
Arizona Public Service won approval for cost recovery for two microgrids and over the summer experienced the fruits of the technology when record high temperatures put the central grid under strain.
In Illinois, Commonwealth Edison is expecting a decision from state regulators by February 28 on its innovative $25 million microgrid cluster project in Bronzeville.
Also in Illinois, Ameren commissioned a sophisticated microgrid that is one of the few in the world that operates at utility-scale voltages and can seamlessly transition from grid-connected to island mode.
Duke continued to develop marquee microgrid projects, both through its regulated and competitive businesses. These include the Mt. Sterling microgrid, a non-wires alternative project that rid the Great Smoky Mountains of four miles of distribution wire and returned about 13 acres of wilderness to its natural state. On the competitive side, Duke Energy Renewables teamed with Schneider Electric on projects in Boston and Montgomery County, Maryland.

Pepco has filed a $44.2 million proposal with Maryland regulators to build two public purpose microgrids, designed to keep power flowing to essential societal services during a grid outage and bolster utility operations on normal days.
American Electric Power (AEP) Ohio reached a rate settlement agreement, which among other things allows the utility to spend up to $10.5 million on one or more microgrid demonstration projects.
Georgia-based Southern Company teamed with California-based Advanced Microgrid Solutions as part of its national microgrid strategy. Southern is developing microgrids through subsidiary PowerSecure, which it acquired in 2016.
In Pennsylvania, legislation is pending before the House Veterans Affairs and Emergency Preparedness Committee that paves the way for utilities to build pilot microgrids that serve a public purpose, such as protection of power supplied to water, police, hospitals, communications and other critical services during an emergency.
In Colorado, an anchor microgrid began operating at Denver’s Peña Station NEXT, offering energy for a transit station built as a connector between downtown and the Denver International Airport. The project came about as a result of a partnership between Colorado utility Xcel Energy, Panasonic, the city of Denver, NREL and Younicos, and is part of a much larger green community plan.

Add to the microgrid conversation. Submit a proposal to speak at Microgrid 2018. The deadline is January 26.