Microgrid Talk: What’s the single statistic microgrid customers need to understand?

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Microgrid Talk VideosIn this 10-minute Microgrid Talk interview, our experts answer the question: “What energy statistic do you wish microgrid customers better understood?” This is the first of three interviews in our “Microgrid Truths, Lucky Truths and Statistics” series. (Yes, we are flipping around Mark Twains’ words: “Lies, Damn Lies and Statistics.” — Elisa Wood)

 

Mike Byrnes, senior vice president of Veolia North America, wishes his customers had a better grasp of the statistics related to utility rate structures. He notes that defining utility rate structures is very difficult because they vary across the country and in every utility area. But understanding how your utility rates are structured is key to realizing the value of a microgrid. According to Byrnes, “Most people don’t understand the difference between their variable and their demand, and how different that is when you go to a microgrid.”

The aging grid infrastructure is one of the energy statistics that is top of mind for Jim Fonger, Canadian vice president at Ameresco. He cites a Department of Energy statistic that says 70% of the utility grid transmission lines and transformers are more than 25 years old, while large-scale generation plants are more than 30 years old. He explains that microgrids are “a much more efficient way of upgrading that infrastructure and providing greater control in terms of how it’s used.”

Tom Poteet, vice president of corporate development for Mesa Solutions, wraps up the discussion on statistics by sharing thoughts on internal rates of return. “I think it’s important for people to really understand the economics,” Poteet says. “What’s this going to cost me, what’s it going to gain me and over what time period?

“The thinking that got us here can’t be the thinking that’s going to solve the problem that we’re in. Putting more of the same architecture in place is not the solution to a changing energy infrastructure.” — Jim Fonger, Ameresco

The video concludes with an enlightening discussion about what it’s going to take to ensure grid reliability. Byrnes does not envision the grid ever going away because “even if we build microgrids everywhere, we still need to interconnect them because a stand-alone microgrid is exceptionally expensive and inefficient. Connected with others it makes sense.”

Fonger agrees and notes that creating grid reliability will require a new way of thinking. He says, “The thinking that got us here can’t be the thinking that’s going to solve the problem that we’re in. Putting more of the same architecture in place is not the solution to a changing energy infrastructure.” Poteet notes that “electric reliability happens pretty close” to things like transmission lines. No matter how smart the grid becomes, the efforts around reliability must also happen at the local level.

Watch the entire Microgrid Talk video here, and look for more interviews with microgrid experts in the Microgrid Knowledge Video Library.

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  1. “Tom Poteet, vice president of corporate development for Mesa Solutions, wraps up the discussion on statistics by sharing thoughts on internal rates of return. “I think it’s important for people to really understand the economics,” Poteet says. “What’s this going to cost me, what’s it going to gain me and over what time period?”

    People really don’t get into the “economics” of owning a washer/dryer, refrigerator/freezer, hot water heater or air conditioning system. They are all appliances of convenience and for the most part “assumed” part of a modern home package of appliances. The problem with IOU electric utilities is their understood assurance on rates of returns that can run from 8% up to around 12% on assets and services. No matter what the homeowner does, use an energy efficiency program and replaces all lights in the home with LED bulbs, purchase Energy Star appliances, your electricity use will go down, then as more folks adopt energy efficiency the utility loses revenues due to lower sales of electricity. This will allow the utility to file an electricity rate case to raise electricity rates due to “lost revenues”. When a utility decommissions an old inefficient generation plant a rate case for “stranded assets” will be filed to increase electricity rates to pay off an old asset that will not provide the ratepayer with a product but will still increase the amount of money for each kWh of electricity used by the ratepayer.

    • Skribanr says:

      All true. Until electric utilities are removed from the realm of profit-making stock corporations with guaranteed returns, they will continue to skew the system against ratepayers. This can only be accomplished through political action. At present, utilities’ PACs control the legislatures.