Are Microgrids a Myth?

Nov. 14, 2014
Microgrids play a role in creating more resilient communities and smarter cities. 

Microgrids and nanogrids have been around for decades in the form of backup power systems for critical infrastructure, buildings, off-grid power supplies for military operating bases, homes and farms. What is a microgrid and why are we now refocusing on microgrids?

The Microgrid Exchange Group, for example, offers this definition:
A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode.

With power supply in four to five nines of reliability, do we need such a strong focus on microgrids? Reliability indices do not include large storms, but society and economic operations are devastated by power interruption durations of a half day or full day. The focus should not be to reduce the number and duration of power interruptions under “normal” operations but surely to focus on calamity events such as hurricanes and superstorms. Microgrids, among other solutions and approaches, have a role to play in creating more resilient communities and smarter cities.

Distributed energy resources (DERs) present a natural opportunity for microgrids, especially in mission surety for critical operations such as military bases. With higher penetration levels of distributed photovoltaic (PV) solar generation and electric vehicles (EVs), microgrids are naturally forming on feeders and commercial and residential communities. For forward operating bases, microgrids and DERs are saving lives and easing the supply chain for fuel. If designed well, microgrids can be very economic by reducing energy and maximum demand charges for commercial and industrial campuses as well as residential communities where capacity charges and time-of-use (TOU) tariffs are implemented.

However, microgrids should have a solid business case and not be driven by technology that needs an application alone. It is important that microgrids generate revenue for their owners under normal operating conditions. Grid-connected microgrids should be designed with clear business cases in applications like dispatching and integrating intermittent distributed generation, voltage regulation, frequency regulation and other ancillary services. This will then provide clear business cases that reduce transmission and distribution losses, defer distribution investments and improve capacity on feeders funded out of the capacity charges or TOU tariff incentives.

In most cases, the technology in the form of hardware components and software applications is already available at a reasonable price and used on distribution systems. These technologies are already used to integrate PV power systems and can be used in conjunction with energy storage and demand-response technologies in microgrid applications. It is, however, the local area energy management systems (AEMS) and micro-demand management systems (µDMS) that are not well developed and should get more attention. Smart inverters for integrating PV, storage and EV chargers are a crucial part of the puzzle in deploying successful microgrids. These smart inverters with good AEMS, µDMS and affordable energy storage systems are the key building blocks for microgrids.

There are some recent case studies and installations to track, mostly associated with universities, hospital campuses and military bases. One such example is the FortZED ( microgrid project, where a 20% peak load reduction is the main drive to incentivize a privately owned DER microgrid on the Fort Collins Utilities distribution network. The benefits are clearly measured in terms of deferred capital upgrades to substations, feeders and new peak generation.

The U.S. Department of Defense is aggressively deploying microgrids as part of its overall energy independence and energy security strategy. One example is Colorado Springs Utilities’ 2008 net-zero initiative for the U.S. Air Force Academy that proposed an Energy Strategic Plan that details a net-zero electricity installation by 2015 and carbon-neutral by 2025.

Microgrids are finding challenges in moving ahead in their growth and acceptance. These are mainly linked to the clarity of the business cases and regulatory issues. In most cases, the business case is based on accrued savings with multiple parties and stakeholders. It is not always clear who gets the direct benefit (or else the markets do not exist) to capture the revenue generation, for example, Volt-VAR and other ancillary services.

U.S. utilities are having trouble getting their hands around microgrids. Their revenue models do not support the microgrid business model and are pushing back on the deployment opportunities. Therefore, microgrids, with all of their promises, will surely fade into an interesting experiment if we don’t get a solution to the future utility business model.

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