Microgrid Customers, Hurdles Shifting with Economy and Growing Weather Challenges

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Elisa Wood, editor-in-chief at Microgrid Knowledge, interviewed Scott Kessler, microgrid  strategy and sales at Siemens, during Microgrid 2020 Global. Wood and Kessler discussed some of the hurdles to microgrids today, how customers can overcome these challenges, new microgrid customers entering the market — and the lowdown on a new business venture from Siemens. 

Kessler began by exploring hurdles microgrid customers may face today as they look to adopt a microgrid. He cited some key, recent issues.

“What we’ve really seen is customers that either can’t afford the upfront capital cost — especially the generation assets and the storage assets are expensive. And then there are customers who really aren’t designed to manage those assets themselves. They don’t know how to maintain them in a way that they actually get the returns on investment.”

So there’s a two-part problem: “one being a hard cost, one being a soft cost that customers have been facing,” Kessler pointed out.

And contributing to these challenges is a definite shift in the type of customer entering the microgrid market.

A few years ago Siemens’ microgrid customers were predominantly utilities with some military and university customers.

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“Now what we are seeing is a broader spectrum of customers, many more commercial industrial customers than we’ve ever seen before,” Kessler said.

This is being driven primarily by weather challenges, he said, including the fires in California, flooding in the middle states and hurricanes on the East Coast in 2020. Add to that a decline in the price for solar plus storage — a popular fuel choice for microgrids — along with options that are making microgid deployment easier, Kessler said.

So not only is the industry seeing shifts in microgrid customers and their makeup, but it also is identifying changes in the reasons the technology is growing in popularity.

However, the question remains: How can we help customers get into this market to deploy microgrids?

Siemens has recently partnered with Macquarie Capital to create a new venture called Calibrant Energy to address this very concern.

“We’re really excited about it because we think we are combining the expertise of Siemens on the technical side, on the project management side and some of the harder aspects of the project, and we’re also bringing Macquarie with a capital balance sheet, with large experience in developing renewables and a different way of looking at the risk profile of these assets.

“Through their experience, they have a very good understanding as to what pans out financially and what doesn’t,” he said.

Siemens believes this new offering will allow the company to serve a diverse set of customers — and provide a range of distributed energy resources for both large and small projects.

What does the future hold for microgrids?

Kessler sees two sides of the market emerging. On one side are large, sophisticated and complex microgrids. Some are even front-of the meter. On the other end of the spectrum, he sees a rise in smaller 1-5  MW microgrids sought by commercial and industrial customers. “They don’t really want to own the asset themselves. They don’t really want to operate the asset themselves, and they don’t really want the difficulty in designing a super unique microgrid that’s never been seen before,” Kessler said. “They are very happy to sort of think of a microgrid more like a product, and hopefully have a purchasing process that models that.”

Check back for more Executive Interviews from Microgrid 2020 Global, published regularly on Microgrid Knowledge.

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