Say ‘oil’ and Houston comes to mind. Software is Silicon Valley. Steel is Pittsburgh. But for the fledgling microgrid industry, a regional identity has yet to form.
California and New York are strong contenders. But the title could go to Massachusetts.
Consider the company Massachusetts keeps. GE and Schneider Electric, two energy infrastructure and technology giants, chose to headquarter in or near Boston. Both are making a big push into the microgrid industry. Schneider’s new Boston One Campus even features a microgrid.
Italian utility Enel last month opened its North American green power headquarters in Andover, after making a splash into microgrids and energy storage with the purchase of Demand Energy.
And a range of other companies in microgrid-related technologies – combined heat and power (CHP), district energy, energy storage, solar and efficiency – have offices in the state. Among them are Siemens, Tecogen, Co-Energy America, Solectria, Typhoon HIL, Aegis, Veolia, NEC, Raytheon and Enernoc.
So why Massachusetts?
“The microgrid and smart grid clusters in Massachusetts leverage four of the state’s greatest strengths: a deep bench of IT experience, clean energy innovation, highly skilled workforce, and high value, precision manufacturing,” said Stephen Pike, CEO of the Massachusetts Clean Energy Center. “They also operate in the top innovation economy in the United States, according to Bloomberg’s U.S. innovation index.”
Further, two of the Boston area’s signature industries – universities and hospitals – also happen to be prime candidates for microgrids. In fact, some of the oldest microgrids are located in Massachusetts.
Meds and Eds as foundations
“The ‘meds and eds’ foundation of the Boston-area economy has long fostered technology and financial innovation in energy efficiency,” said Rob Thornton, president and CEO of the International District Energy Association (IDEA).
Thornton pointed out that more than 30 years ago, Harvard University built an “innovative district energy CHP microgrid to provide reliable, resilient and efficient power, heat and cooling for Harvard Medical School and the Harvard-affiliated hospitals of Longwood Medical Area, today known as MATEP.”
The educational institutions not only act as proving ground for tried-and-true technologies like CHP, but serve as hatcheries for innovation. One example is MIT Lincoln Labs, an MIT offshoot in Lexington that has built an innovative test platform for microgrid hardware.
Equally important, the universities offer the energy industry a stream of highly trained workers.
“Successful business clusters have strong talent sources, R&D functions, and production/manufacturing units,” said Travis Sheehan, senior infrastructure advisor for the Boston Planning and Development Agency. “Massachusetts and the metro Boston-area are home to world-class institutions that have energy-specific advanced degree programs, including Boston University, Northeastern, Massachusetts Institute of Technology, and Harvard. These institutions are key in matriculating top-level talent to energy companies.”
Of course, market conditions also play a big role in fostering an industry. Like much of the Northeast, Massachusetts has high electricity rates, a headache for regulators, but an opportunity for distributed energy technologies. Some of these technologies are still expensive because they’ve yet to reach scale, but can compete and maybe even undercut electricity rates in the pricier regions.
Equally important, for a decade or more government policy has fostered green and distributed energy in the state, going back to former Gov. Deval Patrick’s solar and CHP initiatives and the more recent push into energy storage by Gov. Charlie Baker.
Schneider Electric chose to locate its North American headquarters in Massachusetts partly because of its “world class universities, deeply talented and educated workforce, and thriving regional economy,” said Mark Feasel, vice president for Schneider’s Utility Segment, Smart Grid & Microgrid.
But the state’s commitment to clean energy played a big role too.
“Massachusetts continues to be a strong proponent of energy efficiency and clean energy. The state has made an ongoing commitment to encouraging technological advancements in renewables, advanced energy storage and microgrids, and moving the energy imperative forward in the Northeast,” Feasel said.
Government support fosters market confidence
It’s unlikely Massachusetts will put forward the kind of dollars attracting the microgrid industry to New York — $40 million through its NY Prize – but both Boston and Massachusetts state government are offering support in other ways.
For example, Massachusetts has strong greenhouse gas reduction goals. And Boston treats microgrid development as a climate strategy. In a report released last year, the city identified neighborhoods that would benefit from energy resiliency under severe weather conditions.
In addition, the city has mapped out 42 “hot spots” for microgrids and other forms of distributed energy based on preliminary cost-benefit and engineering studies. State government plans to adopt a similar mapping strategy and make grant money available for projects sought through a competitive solicitation.
Energy developers often say that government predisposition plays a big role in their willingness to invest in a region. Massachusetts appears to be sending signals that it welcomes microgrids and clean energy.
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“The City of Boston and Massachusetts’ state leadership on resilient energy and microgrids contributes to the market’s confidence that new market opportunities are supported by the government,” Sheehan said.
The microgrid industry is in its infancy, so there is still time for other states to emerge as leaders. Some already are percolating – Texas, for example.
So let’s check back in a few years and see if it’s Massachusetts, New York, California or some other place that rolls off the tongue with the word ‘microgrid.’
