Community Microgrids

BEST PRACTICES AND THE PROMISING FUTURE OUTLOOK OF LOCALIZED ENERGY

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In the past, the microgrid concept has been deployed largely to sites where a single entity—a military base or industrial plant, for example—deploys the microgrid to provide a range of benefits solely accruing to that one entity. However, the community microgrid model, which spreads the benefits of microgrids to a broader set of end users, is on the rise thanks to improvements in technology for integrating diverse loads and systems as well as continuing decreases in the cost of various microgrid-enabling technologies.

With society continually being challenged by natural disasters, such as intense hurricanes, increasing frequency and geographic locations of tornadoes, large-scale forest fires such as those that ravaged California last year, and others, the need to find innovative solutions to protect communities with localized energy solutions has become more pressing, and many are starting to turn to microgrids as an important part of the promising solution.

Many varieties and examples of community microgrids already exist, and many in the industry have unique, defined outcomes. Given the nascent stage of the market, Ameresco’s team of professionals employ a simple, inclusive definition, which is that a community microgrid is essentially a microgrid that encompasses multiple end users. Many imagine a community microgrid as a microcosm of the larger grid, with diverse residential, commercial, and industrial users that can ultimately be served by a comprehensive suite of distributed energy sources (solar, combined heat and power, energy storage, and others).

However, many of the earliest community microgrids are much simpler, covering a few end users and that start with no more than two distributed energy sources. We often advise our clients to start this way, with what we call the “foundational” microgrid. This approach allows for a more cost-competitive and manageable start by introducing the microgrid as a new solution for a community; but, if designed and implemented correctly, it also provides for continued progress toward a more complex microgrid that can accomplish multiple objectives.

In addition to thinking of microgrids for new construction, we include microgrids in existing installations in developing community microgrid energy solutions. In every instance, designing a microgrid into a large-scale community project—whether brand new construction or consisting of multiple existing buildings, such as on college and university campuses—can be a compelling way to make them more attractive from the standpoints of sustainability, resiliency, and cost-effectiveness.

With microgrids, there is power in numbers, and we are starting to see local ecosystems of complementary sites collaborating on joint microgrids. For example, a group of three healthcare systems in the East Bronx, N.Y., are combining their buying power to enable their plants to take advantage of more efficient combined heat and power, solar photovoltaics (PV), and energy storage that will allow them to operate during grid outages.

We are also seeing examples of large institutions, such as universities, serving as an “anchor” for a microgrid that can be extended into a neighboring town, spreading the benefits of the microgrid to a broader community. Just as we have seen an explosion across the U.S. in recent years of community solar projects, which give smaller energy users access to the benefits of solar by allowing them to pay for a portion of the energy generated by a larger off-site system, we believe the microgrid model will allow localized groupings of energy users the ability to pool resources and share the benefits of community microgrids.

Aerial view of the Philadelphia Navy Yard, located in the southernmost part of Philadelphia.Aerial view of the Philadelphia Navy Yard, located in the southernmost part of Philadelphia.PIDC

Best Practices in Community Microgrids
One of the best examples of an operational community microgrid is at the Philadelphia Navy Yard in Philadelphia, Pa. The site is a redevelopment of a former naval shipyard that now serves as a multi-use campus featuring 7.5 million square feet of buildings that serve more than 150 separate companies, in addition to the Navy, which retained key operations there. The energy that supplies this community still comes primarily from externally wheeled electricity, but its microgrid has several on-site forms of generation.

At the community microgrid’s core is the 8 MW natural gas-fired peaking plant developed by Ameresco and put into service in 2017. This generator’s primary purpose during normal grid-connected conditions is to “peak shave” what would otherwise have been the higher peak demands for this community’s electric demands. By reducing what would have been significantly higher demand charges, and by achieving ancillary market revenues from the region’s independent system operator (ISO) called PJM (which originates from the name Pennsylvania-Jersey-Maryland), that investment more than pays for itself. It has the additional benefit of providing resiliency to some of the business and tenants should the larger utility grid lose service.

Ameresco worked with its client and a team of professionals as part of the team to design and build the microgrid and continues to provide operations and maintenance services for it as well. Over time, the Philadelphia Navy Yard intends to add an additional 10 million square feet of commercial and residential space at full buildout; in the process, the “foundational” microgrid will continue to be augmented with additional resources to meet the site’s objectives around renewable energy and resiliency.

In the case of new construction, Ameresco is also working with a forthcoming project in the Pacific Northwest in which a large institutional owner developing a campus with education and other community buildings is driving a microgrid. One of the distinctive aspects of this project is the fact that the system is intended to enhance the real estate value of the project by improving the resiliency of the campus by integrating distributed renewable energy and including higher concentrations of renewable energy, in combination with energy storage strategies. This is another example of creating a community microgrid to make the campus a more attractive investment. In addition, the project will be designed to tie in with adjacent neighborhoods to extend the benefits to the broader community. Involvement and support from the local utility are helping to make the project a reality.

Dry Dock Park, located in front of Urban Outfitters, headquartered in the Philadelphia Navy Yard.Dry Dock Park, located in front of Urban Outfitters, headquartered in the Philadelphia Navy Yard.PIDC

Breaking through the Barriers
As with most microgrids, the process for developing community microgrids can seem daunting to stakeholders who may have little experience with them. As we have emphasized throughout this article, one common refrain in our work is that parties interested in a microgrid should start with a “foundational microgrid”—a microgrid that addresses, in this situation, a community or consortium’s key priorities or pain points. Regarding the Philadelphia Navy Yard, the case for the microgrid became clear because of the need for reliable and economical power; in the case of the East Bronx medical consortium, the community microgrid offered a ready way to provide backup in the event a generator fails. In both cases, the systems will not cover all end uses and benefits. However, as the initial use cases are proven out, each site may add subsequent expansions to cover a broader portion of their operations. Microgrids are easily scaled once the initial infrastructure is set in place, and by starting with a foundational microgrid, a community can take “bites” over time that match the increasing appetite for microgrids in the broader ecosystem in which they operate.

Another key point to remember that is especially salient for community microgrids is the need to engage stakeholders as early on in the process as possible, be they the traditional electricity sector stakeholders (i.e., the utility) or relatively new voices to the discussion (e.g., community boards, homeowners’ associations, etc.). Despite the complexity inherent in community microgrids, we have seen many successful projects break through due to well-aligned interests among the various stakeholders. As the cost of microgrid-enabling technologies goes down in the future and the business case for microgrids becomes stronger, finding alignment among stakeholders will likely become even easier, though no less important to do in the early stages of project development.

There remains significant work to do on the regulatory side as well. While federal and state regulators and ISOs have made significant inroads toward allowing for customer ownership of distributed assets and creating avenues for customers to monetize those assets on a dynamic basis in ways that benefit themselves as well as the grid overall, there remain many more opportunities for improvement. Programs such as the NY Prize in New York State and the Massachusetts Clean Energy Coalition’s funding programs have helped kickstart community microgrid pilot projects that will yield insights into how those states’ regulatory bodies can help facilitate community microgrids, but more examples along these lines are needed in other states. In Illinois, the utility ComEd will pilot a new microgrid services tariff in 2020 that could simplify many questions of ownership and structure for microgrids by engaging the utility in the process. Such efforts to increase access to microgrids are welcome and will likely encourage broader participation in the community microgrid model as well.

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