What Does a Microgrid Cost? It Depends on the Problem it Solves

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Microgrid Knowledge asked industry thought leaders to weigh in on the question: What does a microgrid cost? In this entry in the series, Will Agate, VP, microgrid services at Ameresco, explores costs in the current market and how to develop a game plan for building and implementing successful microgrid systems.  


Will Agate, vice president of microgrid services, Ameresco

I really like the question, “What Does a Microgrid Cost?”. When we are working with our clients and prospects, and we get to that point in the discussion, this always causes us to pause, as there is not always a simple answer.  In fact, depending on the customer’s need, it is a question that can involve a wide spectrum of responses.

The short answer is: it depends. In order to work on a more useful answer for Microgrid Knowledge’s readers, first, we have to go back to answer another question, namely “what is a microgrid?”. The point is that microgrids, or the microgrid platform as I prefer to call it, come in many different shapes and sizes. As this market and all of the evolving value propositions is being discovered and developed, we see that the microgrid platform can be applied to a growing set of different circumstances.

So, to answer this great question, we must first stop and listen. We must understand the problem our customer is looking to solve.

By listening we can then help our customer develop a game plan — what are the challenges they are looking to address, how important to its overall purpose are such things as the integration of larger concentrations of renewables and achieving higher levels of resilience? Is our customer trying to integrate one, or a multitude of energy service outcomes (i.e.: just trying to produce and use electricity locally, or, for example, addressing its growing EV vehicle and fleet charging requirements, or creating full resiliency for its student body or manufacturing operations)? —From here, we can begin to understand and map out the required integration of the various energy sources to the end uses, that in many instances might even go beyond addressing the original stated problem and goals.

The bottom line is that the cost of microgrids can vary greatly. Instances that involve a simple, straightforward microgrid application, could be so low that it is nearly zero if absorbed by the rest of the project economics. However, in the more complicated, multi-user, multi-service outcome instances, the costs could be in the millions.

What matters most is to understand what problems our customer is looking to solve, and to work together in mapping out a microgrid platform that will solve for those in the most efficient and effective way possible.

Learn more about the perspective of Concord Engineering on microgrid costs in the previous entry in the series, and check out the first article from Microgrid Editor-in-Chief Elisa Wood to explore further whether “microgrids are expensive.”

Sign up for the free Microgrid Knowledge newsletter for the next two articles in this series: 

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  1. Robert Perry says:

    The currency value of a microgrid is resiliency. If transmission and distribution networks were 100% reliable, there would be no need for microgrids or distributed energy. The cost variable is the degree of resiliency targeted. The question is what minimum amount of renewable generation and storage is required for indefinite operation during an outage. For critical facilities, that value will be much higher than a small business looking to keep lighting and refrigeration up and running. Then take that number and compare it against loss projections without that measure of resiliency. I’m pretty sure you will find that in a multi-day outage scenario, the ratio for microgrid development is cost positive. Of course, there are also demand charge mitigation savings and emerging grid service metrics that will make the proposition even more attractive.


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