ENGIE EPS recently launched what the company bills as the world’s largest microgrid project — a 100-MW solar-storage platform* that will be capable of meeting all of the Micronesian island of Palau’s power needs.
It isn’t surprising that the company chose Palau for the project. Island states struggle more than others to deal with the threat of rising sea levels.
Pacific island nations in particular have been at the forefront of global initiatives to reduce greenhouse emissions as they face rising temperatures and sea levels. The American Samoa island of T’au meets 100 percent of its power needs, and does so in zero- or low-carbon emissions fashion — using a Tesla-built microgrid.
Palau goes all-in for renewable energy
Dubbed Armonia (Harmony), the Palau microgrid will feature dispatchable, solar photovoltaic (PV) and lithium-ion battery energy storage — 35 MW of solar PV and 45 MWh of energy storage. It will be integrated with 28 MW-peak of existing diesel-fueled generation, which will be called on for the residual portion of the load, according to an investor call presentation by the company October 15.
The microgrid’s solar capacity should meet more than 45 percent of Palau’s total demand for electricity, significantly reducing the island-state’s imports of diesel fuel for electricity and the associated greenhouse gas emissions. ENGIE EPS will build, own and operate the microgrid, selling the power to Palau’s utility distribution grid operator at competitive rates fixed as per the terms and conditions of a 30-year power purchase agreement (PPA).
Palau will become 45 percent renewable when it completes the project in 2019, according to ENGIE EPS, the new brand that emerged as a result of the acquisition earlier this year of Electro Power Systems (EPS) by global energy giant ENGIE.
A nation of just over 20,000 residents, Palau expects to generate substantial energy generation cost savings as a result of the PPA tariff, and further savings as a result of optimization of residual diesel generation, according to ENGIE EPS.
Dependent on diesel-fuel imports for 90 percent of their grid power, island energy consumers pay an average of US$0.24 per kilowatt-hour for electrical energy produced by diesel. As a nation, Palau spends approximately 12 percent of its $272 million GDP on fuel and related imports.
“The project will deliver the lowest tariff ever registered in islands, well below the current generation cost, while upgrading the current grid with energy storage to secure reliability and resilience,” ENGIE EPS CEO Carlalberto Guglielminotti said in an interview. “This has been an unprecedented low tariff for ENGIE EPS and in the worldwide market, enabled by the bold Access to Energy strategy of ENGIE and by the strong support of the Palau Government coupled with a visionary role and care of people played by the National Congress.”
A signatory to the United Nations Framework Convention on Climate Change (UNFCCC) Paris Climate Agreement, Palau set a goal of achieving 45 percent renewable energy by 2025, as well as reducing energy-sector greenhouse gas emissions 22 percent below 2005 levels. ENGIE EPS says that Palau will be able to achieve those goals more than five years ahead of schedule as a result of deploying the Armonia microgrid and carrying out a newly crafted national renewable energy transition plan.
Steps toward the world’s largest microgrid
New York-based GridMarket originally developed the basis for Palau to pursue the Armonia microgrid project within the context of a public-private partnership. Using a data-driven approach to distributed energy, GridMarket lent support to the preliminary design of a national, clean energy transition strategy for the Palau government. The company is applying its machine-learning platform and predictive analytics capabilities to map out a plan to achieve the 45 percent renewable energy goal based on the island state’s unique energy footprint.
GridMarket then selected ENGIE EPS to build, own and operate the microgrid based on the results of a competitive bidding process. ENGIE EPS is carrying out the project’s final sizing, geotechnical assessment and project execution plan in accordance with Palau’s legislativ and regulatory framework and PPUC, the Palau Public Utilities Corp. as off-taker. Construction is slated to begin by the end of this year. Commissioning is expected to take place before year-end 2019.
Over 18 months, ENGIE EPS intends to work with government partners to convert Palau’s electricity grid to renewable energy. Doing so will cost Palau’s government and residents nothing in terms of upfront capital expenditures given the terms and conditions of the PPA and the project’s business model, according ENGIE EPS.
In addition, Palau, EarthX, Gridmarket, and the Global Island Partnership formed the Island Resilience Partnership to help other island nations shift towards sustainable and affordable energy.
ENGIE EPS noted that several other island states and countries have announced renewable energy transition plans. The Indian state of Tamil Nadu rolled out a renewable energy scheme earlier this year, while Togo announced Project CIZO last month. The latter aims to integrate solar energy into the African nation’s electrical grid, in many cases delivering energy to regions that previously lacked electricity.
Microgrids drive ENGIE EPS growth
Microgrids were the main driver of growth in ENGIE EPS’ project pipeline, which increased 53 percent, to $280.6 million as compared to 2017’s first half. Two-thirds of the company’s microgrid projects were in the Asia-Pacific region and about $80.5 million of its project pipeline is in the final stages of due diligence and development, with PPAs having been signed with off-takers, according to the corporation’s H1 2018 financial results.
*Editor’s note: Disagreement exists over who can claim the title world’s largest microgrid. For example, the term also has been applied to the University of Texas at Austin, which houses a 135-MW (62-MW peak) combined heat and power microgrid.
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