Microgrids, SDG&E and NRG Demonstrate the Future

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Jill Feblowitz, IDC Energy Insights

Jill Feblowitz, of IDC Energy Insights, explains why utilities might want to “lift the hood” to see the workings of the Borrego Springs Microgrid.

Momentum is building for alternative utility business models, and California is once again a leading state. The California Energy Commission (CEC) just awarded San Diego Gas & Electric a grant of close to $5 million dollars to expand the Borrego Springs microgrid to be powered by NRG’s Borrego Springs microgrid. This is clearly a development that utilities around the country will want to follow to understand the economic and technical aspects of what could be a new business model for utilities.

This is clearly a development that utilities around the country will want to follow…

While California has been out ahead, it is a harbinger of things to come. The state leads in customer and utility-owned photovoltaic installations as well as the penetration of electric vehicles. SDG&E has responded to customer trends and has been willing from the start to invest in smart metering and smart grid. Perhaps California is an anomaly, but the presence of NRG indicates that this may be a nationwide phenomenon sooner rather than later. NRG started with a portfolio of coal generation around the country and has transformed its business model in recent years to be a supplier of central station renewables in its generation business and customer renewables in its retail energy business. This is also a space where investment dollars continue to flow.

Even before the awarding of the most recent CEC grant, the Borrego Springs microgrid pilot, funded through the  American Recovery and Reinvestment Act, yielded important data on how the microgrid responds to planned and unplanned events. According to Steve Bossart of the U.S. Department of Energy’s National Energy Technology Laboratory, islanding has been tested, as well as planned outages, to determine how long the microgird could meet demand. The microgrid was also able to perform in real world events providing power during windstorms and thunderstorms and islanding during flash floods.

From an economic perspective, it will be important to understand how the customer will respond. How elastic is customer demand in the face of price signals? Will customers be active in choosing which end users to adjust? (confusing who is the customer, who is the end user? ) How will utilities and regulators construct pricing of grid resources and microgrid resources to build a profitable business? Or will organized economic markets evolve statewide or in conjunction with independent system operator territory? Will emerging economic and technical frameworks like transactive energy play a role?

From a technical perspective, the project is a way to understand the complex interplay of supply, demand, and storage as the microgrid adjusts to changing conditions. The Borrego Springs microgrid brings together on-site generation (diesel), regional renewable generation (solar), storage (sub-station, community and home), customer home energy management, micro-controllers and feeder automation, to orchestrate meeting demand. Customer energy management brings into play electric vehicle charging, smart meters, in-home displays, smart thermostats, portals, and in-home gateways to allow customers to adjust their demand according to price signals as well as allowing response to weather events.

Software is essential to balancing and at last report, Borrego microgrid operations were being managed by custom software. At the last report in 2012, one application supports the economics of demand response by delivering price signals to in-home devices to trigger actions. The second is DMS-like and was built to handle multiple dynamic interactions between the utility distribution grid, with storage, with customer resources including demand response and the customer-based distributed energy resources. Our advice for utilities: lift the hood to see how this is constructed. Our advice for DRMS and DMS vendors: understand the issues and get ahead of technical design.

This blog “Microgrids, SDG&E and NRG Demonstrate the Future,” originally appeared on IDC Energy Insights, IDC Community 2015.

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