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Microgrid equipment at the National Wind Technology Center in Colorado. National Renewable Energy Lab
Microgrid equipment at the National Wind Technology Center in Colorado.

Microgrids Represent a Platform to Transform DER into Systems with Enhanced Resiliency Services

Utilities that move early and learn from pilot programs can help shape their own microgrid destiny and offer new models for the entire utility industry

A new report from Navigant Research examines how utilities that move now can shape future microgrid markets to create new revenue opportunities.

The electric utility industry is at a crossroads. Deployments of distributed energy resources (DER) will exceed centralized generation in 2018, and the gap between the two categories will only grow wider (and in favor of DER) over time. According to a new report from Navigant, microgrids represent one platform that can transform these DER into systems that offer enhanced resiliency services outside of traditional utility offerings.

“While the islanding functionality of microgrids was historically viewed with suspicion, a growing number of utilities are investigating what role this platform could or should play in this market,” says Peter Asmus, research director with Navigant Research. “Microgrids are inching their way into the mainstream, though most are being deployed by non-utility vendors for third parties.”

Growing interest in and regulatory support for community microgrids—as well as microgrids designed to bolster the overall distribution system—are opening the door for utilities to play a larger, mostly undefined role in the deployment of microgrids, according to the report. Yet, microgrids do not fit neatly into the current utility toolbox. The downside to this reality is that many utilities lack clarity on how best to proceed. The upside is that those that move early, experiment, and then learn from pilot programs can help shape their own microgrid destiny and offer new models for the entire utility industry.

The report, Utility Microgrid Strategies Leveraging DER for Grid Benefits, explains why DER technology trends point to the need for new utility business models. The study discusses how utilities that move now can shape future microgrid markets to create new revenue opportunities. Three paths forward for utilities to deploy microgrids are described: a traditional regulated rate-based approach; unregulated business ventures; and hybrid approaches that could include investing in or acquiring microgrid vendors. The report also provides recommendations for utilities relative to these strategies based on existing regulatory structures, geographical and resource considerations, and expected future technology innovations.

 

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