The Department of Energy describes a microgrid as a local energy grid with control capability, able to disconnect from the traditional grid to operate autonomously in “island mode” if conditions warrant. These small-scale versions of the centralized electrical system are designed to achieve specific load goals such as reliability, carbon emissions reduction, cost savings, or the incorporation of renewable energy sources.
As small, localized power sources independent of the traditional grid, microgrids are important for emergency service and backup power, but also increasingly for cost-effective, energy-efficient use of fuel and for improved reliability and resiliency, with reduced environmental impact. Microgrids are particularly useful for remote communities.
Most are capable of connecting to the grid or working independently, whether for backup power or as a standalone power source. When networked together, microgrids form a kind of modular architecture with multiple semi-autonomous nodes operating in parallel to create a system more secure and efficient than a centralized system with a few large points of failure.
The microgrid market has experienced two eras, says Mark Feasel, vice president, electric utility segment and smart grid at Schneider Electric. The first relied on fossil fuel sources and was little more than a passive backup system, but the latest era incorporates renewable energy sources for full-time power…and is accelerating quickly, he observes.
Research firm GTM lists 1,900 basic and advanced operational and planned microgrids in the US and predicts that the market will continue to grow rapidly.
Performance and Other Priorities
The microgrid concept is an idealistic environment, believes Doug Jones, business unit director of SCADA and Analytical Services, POWER Engineers Inc., a vendor-neutral engineering consulting company focused on the energy industry, power delivery, distribution systems, and substations.
A key advancement is the adoption of IEC 61850 communication protocol. Fundamentally, it’s an ethernet-based communication system that enables micro computer-controlled devices to talk less like a phone call—peer to peer—versus a Skype conference call where they all share information simultaneously, Jones explains.
However, the system retains a “high degree of variability” that limits its usage. “Reliability needs are variable, depending on the application. The military, refineries, and data centers require more reliability; they are less tolerant of issues after commissioning. Emergency power applications shy away from unproven technology.”
Jones firmly believes that the industry will catch up with the developers, particularly as the technology becomes more controllable, more plug-and-play, and adopts the ideologies of the smart grid and the IOT.
Although there are very few utility microgrids, Jones sees them as an important focus that will lead to widespread adoption, particularly after “black sky events” such as hurricanes, when substantial damage has been done to the system and there’s an urgent need to get areas back to functionality.
When it comes to optimizing microgrid performance, Jones says first you must define performance. “What are your goals: ‘green-ness,’ technology, reliability, resiliency?” He defines reliability as the ability of a boxer to stay on his feet, and compares resiliency to a boxer who gets back up after being knocked down. “A neighborhood community wants resiliency; emergency power wants reliability.”
The ideal is to have both, Jones continues, explaining that most systems strive for that, but acknowledging that there are usually trade-offs, and, therefore, the customer must prioritize. “Lack of money leads to compromises, but if you make clear what your mission is—what you can achieve versus what you can afford—you can have an effective system.”
The good news is that costs are coming down on things like battery energy storage and microgrid management systems. However, Jones cautions, the macrogrid drives the economy of scale and reliability. “The ability to connect to the macrogrid is important, but what are you willing to pay for? We have to leverage renewables and battery storage for solar.”
They are the necessary pieces to meet the needs of a system, Jones states. “The microgrid is driving engineers to get back to fundamentals—to understand the needs of the customer and use technology to meet them.”
Technology Getting Smarter
It’s commonly accepted in the industry that microgrids are only at the beginning of their potential, and that they hold great promise for the future. According to Vox, technology is quickly expanding that potential:
- Electricity use is becoming more controllable and adaptable, as every system and appliance learns to communicate over the Internet.
- Small-scale and community-scale electricity generators are becoming cheaper, cleaner, and more diverse. They now include solar panels, small-scale wind, efficient natural gas generators, fuel cells, CHP, and more.
- Energy storage is also becoming more affordable and more diverse, from batteries and fuel cells to thermal storage in hot water or ice. New storage helps to smooth out the variations in solar and wind, allowing more to be absorbed.
- Software, AI, and machine learning are enabling intelligent integration of these diverse resources.
Vox further explains that smart design and software can create microgrids specifically designed to integrate distributed renewable energy, or microgrids designed to provide “six nines” (99.9999%) reliability, or microgrids designed for maximum resilience. There are even “nested” microgrids within microgrids.
As microgrid technology becomes “smarter,” they can begin to communicate with the traditional grid as well as each other and their components. By aggregating small-scale resources such as solar panels, batteries, fuel cells, smart appliances, and HVAC systems, a microgrid can appear as a single unit composed of distributed energy technologies. This can streamline things for grid operators, who will no longer have to manage the overwhelming amount of data collected from generators, buildings, and devices.
While new technology such as control systems are the heart and soul of the microgrid, Jones insists on the importance of battery energy storage and renewables. “The pieces are all there to meet the needs of the system. As they become more flexible and customizable, they will be more accepted.” Flexible, as in plug-and-play and brand agnostic—universal interoperability—with little configuration needed. “We’re not there yet; it comes down to demand.”
Universal interoperability remains a goal, not a reality. Currently, microgrid hardware and software programs are proprietary applications because the designers can demonstrate that they work. Standardization has not come to fruition in this industry, Jones laments. However, he envisions a future similar to what occurred with cell phones when the technology became less proprietary…and everyone got one.
One traditional impediment to the widespread adoption of microgrids was the complexity of management systems, which were initially designed to support complex multi-megawatt “community” power applications, says John Merritt, director of applications engineering at Ideal Power. “Large international companies such as Schneider Electric, ABB, and Siemens offer robust and proven controls solutions, as well as system integration and design services to customize the controller offering for this larger class of microgrids.”
However, such equipment is costly. He dubs it “overkill” for smaller systems in the 50 kW to 250 kW range, which is Ideal Power’s primary market focus. “What’s needed in this emerging market segment are compact yet scalable control solutions that specifically address the integration of solar plus storage, with one or more backup power sources—typically diesel or natural gas gensets.”
The recurring theme in this class of applications is “plug-and-play” simplicity and redundancy. Merritt says such systems can be built with a modular hardware architecture utilizing N + 1 Ideal Power Converters paired with a new generation of modular control systems, such as those supplied by ELM Energy. “ELM’s solutions are based on robust Dell industrial computers, utilizing NI LabView software, which allows for rapid system configuration and commissioning, without expensive site-specific design work or customization.”
Costs are dropping, Feasel agrees, and architecture is opening. “The big difference in the last five years is that everything is connected. There’s no more need to layer and embed. We know the status of the grid: what load to shed in different configurations, what breakers are open… We have situational awareness.”
The hardware and software connect the microgrid to create situational awareness, Feasel explains. The digitization of energy enables an open platform for the IoT that is open and interoperable. It all depends on which resources are chosen and how it is optimized. “We attempt to provide insight to the end-user to optimize as they choose.”
Buildings keep people safe and comfortable. The microgrid indicates what variables are correlated to energy consumption, such as temperature. Digitization allows the user to leverage the temperature and occupancy data to forecast usage. “There can be time-of-use tariffs that change the cost of energy,” explains Feasel. Thus, the microgrid provides the flexibility to store load in the batteries for later use, or to shut off when not needed—demand response. “It changes how you operate the grid. If a storm is coming, you can pre-position a building to respond better by starting the generators or shedding load. You can tailor how the building responds and optimize for resilience, economic benefit, or both.”
Historically, resilience meant redundancy (multiples), diversity (different types of energy), or efficiency (using less energy). Today, it can be achieved with digitization, using data to characterize assets and understand outcomes. More modular, scalable solutions are incorporated.
Dividing energy assets between generators, converters, and controllable breakers leads to a different quality of load, Feasel says. But there is a cost to making energy, so priorities must be established. He lists three layers: predictable (budget) or lowest cost, sustainability, and resilience.
“Different segments of the industry prioritize differently,” continues Feasel. For critical loads in hospital settings, resiliency is key. For schools, cost is typically paramount. The consumer has a different need. “Resiliency comes at a cost of the other two.”
Whatever the priorities, he says it’s critically important that a system can predict outcomes and create algorithms using long-term data to solve discrete problems. “The key to unlock new ways to use assets is to understand limits, which change over time.”
One way to keep up with the changing technology is to opt for software as a service. The software runs in a cloud, Feasel explains. “Analytics to forecast are not cheap; it’s sophisticated software.” Many companies can’t justify the cost individually, but opting for software as a service brings together mini microgrids, allowing multiple companies to “sort of share the investment” and drive down the cost point for the less energy-intensive customer.
Energy as a service and the microgrid as a service is the way of the future, Feasel imagines. “There’s no massive growth yet because there’s a business model issue, but it will happen. Scale benefits everyone.”
Partnerships with capital investors to buy and own the structure and then sell output back to the site is enabling change, as an infrastructure that talks is unlocking new outcomes. “Data is driving this evolution,” states Feasel, but the key is the technical changes and the reduced price of solar and storage.
“Digitization is connecting everything,” continues Feasel. Business models are emerging that make it easier for the customer to digitize, which contributes to making people active in the industry.
Sort Through the Possibilities
Hybrid systems that combine renewable energy with storage and traditional generation are challenging to design and optimize. Yet they are often the best return on investment. “Our model combines engineering feasibility and economics,” says Dr. Peter Lilienthal, Chief Executive Officer for HOMER Energy.
The HOMER software was originally created in 1993 to help integrate renewables into microgrids in remote areas in developing countries. Over the years it has been expanded, so HOMER Pro is now used to look at systems as large as multiple tens of megawatts. This year a new version, HOMER Grid, focuses on grid connected projects that help customers reduce energy costs, demand charges, and emissions, and improve resilience.
As Dr. Lilienthal explains: “Both versions of the HOMER software determine the right mix of assets for any given microgrid project by using information such as an electric load profile, renewable resource and other site specific data, components under consideration, and pricing information on utility rates, equipment, and fuel costs.
“All of this information is used to perform hundreds of simulations that look at how the system would operate for every hour of the year. When the data is available, the HOMER software can even look at every minute of the year. These simulations are used by the optimization algorithm that compares combinations to find the best options. The software’s automated sensitivity analysis can then identify the most robust solutions.”
HOMER Energy lists customers of all sizes from small consulting companies and NGOs to national governments and utilities in places as diverse as Indonesia and Greenland, vendors of inverters, controls, batteries and generators like Caterpillar, project developers, development banks like the World Bank, and hundreds of universities.
Microgrids can be powered by distributed generators, batteries, or renewable energy sources—or a combination of those power sources. As they come to rely on renewables, they will become part of the clean energy transition, but resiliency and reliability still remain challenges. As Vox reports, a single smart microgrid that aggregates diverse, distributed low-carbon resources can provide cheap, clean, reliable power to those within it.
They won’t eliminate the need for the traditional grid, with its power plants, transmission lines, and utility companies. But allowing local control of more power generation, management, and consumption results in less dependence on the grid.
The Future is Instant: Utilizing, Optimizing, Commoditizing
Steven Acevedo has been in the technology solutions business over 30 years
and in distributed power generation for over 10 years. His companies, Regatta Solutions and Agave Systems, exemplify the technological evolution of microgrid companies. Regatta Solutions is a complete microgrid developer with a proprietary software that allows customers to use microgrids to respond to demand peaks in real time, maximizing the value of their onsite power generation. These changes have been driven by developments like access to real-time utility data and software improvements.
Solutions for instant demand response have been well-documented, but Mr. Acevedo explains that most solutions for advanced microgrid management have, until recently, only been available to the largest customers and from the largest providers. He notes, “We have seen limited offerings from the industry on this front, which has been a driving market force for the deployment of new software like our our Agave Evolution platform and other SaaS offerings. Our product, for example, is technology agnostic—allowing for seamless control, management, and integration of cogeneration, battery storage, and solar PV for any sized customer.”
Forecasting changes that will take place over the next 10 years, Mr. Acevedo predicts that as “we will see the cost of electricity continue to increase, we will see more customers implement microgrids to receive the benefits of distributed generation. As distributed generation technologies become much more affordable and acceptable, customers will look to maximize the value of those assets, accelerate new pricing models, i.e. real-time pricing. Eventually, by connecting multiple microgrids together, clients will have the capability for real-time energy trading under an organized community commodity market place.”