What’s getting in the way of microgrids in Michigan?

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Michigan wants more microgrids, but it won’t be easy, according to a state report.

microgrid deployment

Joshua Rainey Photography/Shutterstock.com

The Michigan Public Service Commission’s (MPSC) staff laid out the state’s microgrid deployment challenges in “Michigan Power Grid: Making the Most of Michigan’s Energy Future” — a document that echoes issues raised in other states.

The report is part of a multiyear initiative, under Case 20898, that aims to maximize the benefits of transitioning to clean distributed energy, including microgrids.

The staff report pointed out that microgrids can yield numerous benefits, some of them financial through use of peak shaving and energy price arbitrage and participation in demand response and other grid services. Microgrids can also yield sustainability benefits in the form of renewable energy credits, net-zero power generation, and greenhouse gas and carbon dioxide emissions reductions.

But a host of roadblocks can get in the way of realizing those benefits, and Michigan isn’t the only place the problems arise.

“The challenges discussed are not at all unique to Michigan but are national,” said Bill Schofield, vice president of future-grid services at Customized Energy Solutions, an energy consulting firm. Some utilities are more proactive about the future of energy than others, he said; proactive utilities are more likely to make it easier to deploy microgrids.

Doing the math

Case in point, consider the math around resilience.

Resilience is perhaps the attribute most sought in a microgrid, and it’s one that can save lives. As the report pointed out: “A decision to pursue a microgrid is based on a site’s need for increased resilience, such as critical site functions that could result in loss of life or equipment if disrupted.”

But how do you put a value on resilience? It’s tough to monetize and hard to develop planning objectives for, the report said.

Interconnecting

Interconnecting to the grid — a process that developers say utilities make slow and cumbersome in many states — also gets in the way of microgrid deployment in Michigan.

“Currently, there are many different interconnection processes which make it difficult for developers to navigate each one,” said the report.

Recognition of the value microgrids offer to utilities may help, the report said. For example, when a utility is trying to manage peak demand, it can request that microgrids island, which helps ease pressure on the grid.

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The staff also called for examining whether treating a microgrid interconnection as a distributed energy resource interconnection — the way it’s now done — is the best option. A standardized process would allow microgrid developers to achieve interconnection more easily.

“The bottom line is if the rules for interconnection with the distribution system [or in some cases, the transmission system] are designed in a clear and flexible way, then market participants will be able to figure out how to design microgrids in a way that adheres to these restrictions, while still being profitable,” said Schofield.

Right now, the restrictions make most microgrids impractical except for those developed by large electricity users that have centralized campus locations, he added.

Spooky language

Even using the term “microgrid” can spook utilities wary of competition.

In fact, in some cases, it makes sense for microgrid developers to describe a project with terms like on-site generation and storage when they are trying to make inroads with utilities and regulators,  said the report.

Utilities might regard microgrid projects negatively because they reduce demand for electricity. The MPSC staff suggested encouraging more collaboration between utilities and microgrid developers to address this issue.

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Archaic laws

Outdated laws and regulations, such as those pertaining to moving power across property lines by non-utility entities, also create problems for microgrid developers in Michigan.

“Michigan utility law has some vestiges from a long time ago that essentially makes it challenging for you to produce solar power on one parcel and move it to another parcel on that same property,” said John Kinch, executive director at Michigan Energy Options, a nonprofit that aims to guide communities toward sustainability and renewable energy.

His organization wants to put solar on closed landfills and transmit the solar to neighborhoods, industrial parks or, in one case, a zoo.

“Current utility law makes that challenging to do. We need to update the laws,” said Kinch.

The Michigan report called for several other actions to move microgrids forward, among them experimental and large-scale exploration of microgrids, pilot programs and examination of electricity rules, regulations and rate structures.

As more and more utility customers deploy solar, microgrids and electric vehicles, it’s important to change systems and policies that stand in the way, said Kinch.

“People are becoming prosumers, looking at solar, storage and electric vehicles,” he said. “Now it’s such a different world.”

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