Only through Standardization Can Microgrids Accelerate the Energy Transition

Updating the United States’ electrical grid has risen to the forefront as the White House recently announced the largest grid investment ever at $3.46 billion. In the announcement, the White House also set a deadline of 2035 to “convert the nation to a carbon-pollution free power sector.” However, 2035 is just over 10 years away and with extreme weather events and the climate crisis becoming a reality for millions nationwide, the energy transition must happen now.  

Microgrids will serve as an important catalyst in the ongoing energy transition as they promote energy resilience, availability, accessibility, independence and efficiency. Microgrids and other distributed energy resources (DERs) also introduce flexibility, which helps organizations reduce costs and even create virtual power plants that enable them to sell stored, excess energy back to the grid. 

Despite their promise, microgrids currently provide just 0.3% of U.S. electricity. While adoption has grown in recent years, the industry must overcome a variety of challenges to realize widespread use. However, there are now standardized solutions that make microgrid deployment and scaling faster, less costly and more attainable.  

Standardized solutions like EcoStruxure Microgrid Flex, a configured-to-order solution recently launched by Schneider Electric that reduces project time from years to months, includes everything needed to efficiently plan, deploy and manage microgrids such as:

• Tested and validated architectures, with a pretested library of DERs to speed up the commissioning process.
• Battery energy storage systems integrated with inverters, batteries, cooling, switchgear, output transformer, safety features and controls.
• Advanced software and analytics for the full life cycle including feasibility analysis, DER sizing, energy management, power management, control configuration and commissioning.
• Energy control center that helps optimize resources and ensure resilience through a single intelligent, pre-engineered, pretested DER and control system.
• Services for conceptualization, feasibility assessment, design operation and maintenance of the microgrid. 

Regulatory and financial obstacles loom 

The major obstacles to microgrid adoption are largely regulatory, technological or financial. Surmounting them will require thoughtful solutions that ensure continuity and growth. 

Microgrids comprise multiple pieces of technology and are intertwined with a diverse ecosystem of industry organizations, including end users, utility providers, storage vendors, and software and systems operators. Because of this complexity, no single regulation exists to guide microgrid development and operation. California and Hawaii have tariffs that cover either all or parts of the microgrid life cycle, and California Gov. Gavin Newsom recently signed a bill aimed at speeding up utility grid connections to promote electrification. However, the lack of a broad, federal regulatory framework may give organizations pause before embarking on projects. 

Given the complexity of DERs, like microgrids, it’s no surprise they can be quite expensive. Microgrids cost anywhere from $2 million-$4 million per MW. Securing the capital needed to break ground on a microgrid project can be difficult, especially given the uncertain regulatory landscape. However, through standardization and emerging financial models like energy-as-a-service, organizations can harness the power of microgrids without incurring cost overruns. 

Uniqueness is not a feature of efficiency or scalability 

Today, every microgrid system is custom engineered to integrate with the various technological pieces in its unique ecosystem, which requires significant time, planning and design. Because of this high level of specificity, deployment can take up to two or three years, with a potentially lengthy utility interconnection process before the system can operate. The complicated nature of this design and implementation arrangement makes it difficult for firms to realize a timely and impactful return on their investments (ROI). 

As standardization lowers the cost of entry for microgrids and unlocks economies of scale, it will invite more positive investor sentiment, paving the way for a market with strong growth potential and spurring the innovation needed to accelerate the energy transition and reach decarbonization goals. 

Consequently, standardization will be a cornerstone of accelerating industry growth as it provides the entire value chain with a better understanding of costs, enabling them to more accurately project capital needs and forecast ROI. 

Standardization will unlock microgrid potential 

Though they may not be deployed liberally, microgrids are already making an impact. They provide a resilient and more sustainable source of energy for critical infrastructure amid more frequent natural disasters and outages. However, only through standardization can microgrids reach their full and necessary potential. 

For microgrid trends shaping 2024 and beyond, please check out this blog by my colleague, Bala Vinayagam, senior vice president, microgrids at Schneider Electric.