The term “microgrid” can sometimes limit its consideration as a value creation initiative worthy of implementation in a mid-market business. That’s partly because today’s microgrid definitions often lack clarity and can portray unnecessary complexity for mid-market business.
The Department of Energy’s definition serves as an example. The agency states that: “A microgrid is a local energy grid with control capability, which means it can disconnect from the traditional grid and operate autonomously.” While this definition is adequate, it falls short of explaining that an energy grid is made up of multiple providers. As such, a microgrid is an independent, local energy grid consisting of two or more disparate distributed generation (DG) technologies (solar, wind, biogas, battery storage, CHP, fuel cell). These technologies are seamlessly controlled through an automated system that operates those various DG technologies with and/or without the utility grid autonomously.
The benefits of deploying microgrids drive many mid-market companies to consider their implementation. A microgrid can provide significant demand charge reduction/mitigation, which is important as demand charges can approach 60% of commercial clients’ bills. Microgrids maximize onsite utilization of renewables as these technologies are consistently impacted by weather patterns and new tariff rates meant to curb renewable financial paybacks. Microgrids provide power usage flexibility, allowing users to participate in demand response programs. Consider the recent action from some California utilities to shut down the grid with little warning and causing resiliency to take on an increased level of importance. Also very often forgotten is that microgrids can provide the benefit of filtering variations in voltage and load to provide equipment protection from voltage spikes and droops.
Understanding your energy usage landscape should be the first step. This includes having an understanding of both electric and gas usage, including thermal energy produced as a byproduct of the gas.
Microgrids are not just about deploying solar PV and battery storage. It is surprising that the value of thermal energy is often overlooked when it can provide a 100% or more increase in total system energy efficiency in a combined heat/cooling power (CHP) application. Another consideration outside of thermal energy is the application and value of CO2 creation from prime movers for greenhouse gas applications. We have seen a significant number of farmers and now cannabis growers look to deploy microgrids along with CO2 production to drive significant project ROI.
Today, manufacturers offer a variety of plug-and-play options for their systems to meet utility interconnect requirements. You no longer need to be concerned about manpower requirements in running your own power plant. Deploying a microgrid to provide island mode capability in the event of a grid problem is key to resiliency. Controls provide the seamless integration of each disparate DG technology from the grid when problems in the utility arise. Normally in grid-connected mode, the DG sources act as variable power sources which are controlled to minimize the power required from the utility grid. In island mode, these DG sources are controlled to supply all the power needed by the local loads while maintaining the voltage and frequency within the acceptable operation limits. Today, automated controls integrate these technologies with minimal disruption of manpower to drive energy cost and high resiliency.
Designing the system for autonomous operation should be a primary objective. The key point here is that today, off-the-shelf microgrid systems are available in the marketplace and are now affordable for the mid-market client. No longer is an army of programmers required at a client site to customize and integrate multiple DG technologies. Controls to dispatch power, manage voltage and frequency protection to meet interconnect requirements of utilities. Controls should integrate OEM systems to drive the seamless operation of resource dispatch, i.e., on a cloudy day your gas turbines are automatically turned up to compensate for the cloud impact on your solar panels.
We have recently seen a number of our clients implement microgrid systems in their environments. One example is a high-end furniture manufacturer in Southern California whose deployment of a microgrid has virtually eliminated the company’s need to buy electricity from the utility. They are net zero.
Another example in Northern California is a midsize brewery that implemented solar, battery storage, and a CHP application, providing them with a close-to-net zero option along with significant resiliency. This is particularly important for them today as their microgrid mitigates the impact of Public Safety Power Shutoff (PSPS) events. PG&E is implementing precautionary measures to help reduce the risk of wildfires. If extreme fire danger conditions threaten a portion of the electric system, it may be necessary for them to turn off electricity in the interest of public safety. This event will impact all electric lines that pass through high fire-threat areas—both distribution and transmission. This is expected to impact over 5 million customers lasting longer than 48 hours. Can your business survive that?
Finally, considerations for continuous optimization of your microgrid for either changing tariffs or impacts such as introducing a new manufacturing line in your business is a must. Remote diagnostics should drive timely preventative maintenance and provide immediate troubleshooting critical for minimizing downtime. Having the ability to integrate real-time utility cost data with microgrid energy production allows operators to quickly assess the cost benefit of operation. Having this real-time performance data through analytics also drives business intelligence that will help ensure the investment continues to create value over time.
In summary, the advantages of implementing a microgrid at a mid-market business are significant. The technology is available and affordable. And when dealing with resiliency issues, it is certainly a must.
Steven Acevedo is CEO and Founder of Agave® Systems.