Microgrid Opportunity: What Stands in the Way for 2017?

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Microgrid opportunity grew in 2016 and next year looks even better. But government policy isn’t keeping up with grassroots demand, said Randy Grass vice president at POWER Engineers.

microgrid opportunity

Randy Grass, POWER Engineers

Grass, who manages the transmission and distribution (T&D) division for the global consulting engineering firm, described the policy roadblocks during a recent interview with Microgrid Knowledge.

“People recognize the benefit of microgrids,” he said. “The American people like to hear about things like this. It is a bit of a grassroots effort that is driving microgrids forward.”

But to policymakers, microgrids are relatively new. So, they’ve yet to frame regulations to make the most of the reliability, economic, and environmental benefits that today’s microgrids offer.

POWER Engineers’ electric utility clients show a lot of interest in developing microgrids. But many appear stuck because of lack of regulatory clarity about how to recover microgrid costs.

“Utilities don’t have a way to put cost back into the rate base,” Grass said. “So, they are primarily doing pilot projects or projects funded with a grant.”

Indeed, the last several months saw utility projects stymied in Illinois, Maryland and Pennsylvania following confusion in regulatory and legislative arenas.

Microgrid opportunity is emerging more quickly for military, campus and commercial installations. But roadblocks even exist for these less encumbered markets.

“The current policies in most states don’t allow microgrids to put power back onto grid — you don’t get anything in return. So, a lot of microgrids are being built behind the meter, and they are not tied into the overall grid in an automated fashion,” Grass said.

This prevents microgrids from offering their full services, such as grid benefits, islanding during a storm, and renewable energy balancing.

Texas offers a particularly good example of a state that inadvertently stymies microgrid opportunity. Texas’ restructuring rules clearly define the roles of T&D and generation companies. T&D companies, for example, cannot sell generation into the grid.

Unfortunately, microgrids are neither generation nor T&D companies.  Or maybe, they are little bit of both.

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“It is sort of crazy,” Grass said. “A manufacturing facility happens to have this microgrid, and they are not able to put their power back on the system because they are not registered as a generator in the state of Texas.”

For POWER Engineers, a 40-year-old company with 2,100 employees in 45 offices in the U.S. and abroad, microgrids are an extension of work it has done for decades. The employee-owned company has focused on what Grass described as small grids for campuses and the military since almost the inception of the company. About five years ago, the company began turning attention to contemporary microgrids, which can island.

One of the company’s recent projects involved a relatively complex microgrid for the Mid-Atlantic headquarters of a large independent power company. The facility includes combined heat and power, solar, energy storage, standby and emergency generators and electric vehicle charging. POWER Engineers’ services included electrical model design and electrical studies.

The company worked on another, less traditional microgrid at an oil refinery in Salt Lake City. That project, which uses natural gas turbines, employs a power management system and controls to detect disruptions and island from the grid. The microgrid preserves critical plant processes, so that the refinery can keep operating if the grid goes down.

For 2017 and beyond, the company continues to look at microgrid opportunity across the United States.

It will unfold, he added, but “it is going to be important for legislative and regulatory bodies to determine a business model that will allow utilities, developers and consumers to participate fairly in the both the cost and the benefits of a microgrid installation. We are carefully watching several states for clues of how these rules will develop.”

Track microgrid opportunity by following us on Twitter @MicrogridNews.

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About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than three decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.