Microgrids

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= Microgrids are “a collection of small generators for a collection of users in close proximity [1]


Contents

Definition

1.

"Microgrids are modern, small-scale versions of the centralized electricity system. They achieve specific local goals, such as reliability, carbon emission reduction, diversification of energy sources, and cost reduction, established by the community being served. Like the bulk power grid, smart microgrids generate, distribute, and regulate the flow of electricity to consumers, but do so locally. Smart microgrids are an ideal way to integrate renewable resources on the community level and allow for customer participation in the electricity enterprise." (http://galvinpower.org/microgrids)


2.

"a microgrid is essentially nothing more than an electrical grid that can operate from its own power without a long-distance transmission system or connection to a broader grid. Power on airplanes and ships are common examples of systems that operate as microgrids." (http://nea-polis.net/2013/05/01/the-microgrid-solution/)

Description

John Robb:

"A Microgrid enables the ability to do the following:


  • to disconnect from the national grid when there is a general utility failure. This enables a combination of back-up power systems from third party providers -- everything from flywheels to back-up generators (very much the same approach that data-centers use).
  • to build a local market for power production. Since the Microgrid buys power in volume from the national grid, it will likely get dynamic pricing data (time of day, etc.). This data allows the Microgrid to offer local producers of electricity the ability to sell into the Microgrid at competitive prices (peer to peer production). Of course, if local power production is a priority, then the price comparison can be weighted via subsidies to favor local producers.
  • to add smart features that will only get nominal deployment on the national grid. For example, the ability to add smarts to devices and homes to allow customers to manage their consumption of electricity at a granular level -- from price to device."

(http://globalguerrillas.typepad.com/globalguerrillas/2008/04/resilient-commu.html)


Example

"Mayor Gianni Alemanno and the city of Rome host a joint press conference with Jeremy Rifkin (the principal architect of the European Union’s Third Industrial Revolution long-term economic sustainability plan), on May 31st 2010, to release a master plan that will radically transform Rome into a Third Industrial Revolution economy, making it the first post-carbon city in the world. Rome’s green economic recovery plan, which involves the investment of billions of euros over the next twenty years, is a bold and far-reaching initiative designed to revitalize Rome’s economy by spawning new industries and businesses and creating tens of thousands of new jobs.


The Rome Third Industrial Revolution Master Plan was prepared by the Jeremy Rifkin Group—comprised of 100 of the world’s leading renewable energy companies, construction companies, architectural firms, IT companies, power and utility companies and transport and logistic companies, including Philips, IBM, Schneider Electric, Arup, Q-Cells, KEMA, Adrian Smith + Gordon Gill, etc.—in collaboration with Mayor Alemanno, Professor Livio de Santoli, Energy Coordinator for the Mayor, and more than 40 experts from the City of Rome.

In June 2007, the European Parliament formally endorsed a four-pillar, long-term sustainable economic development plan to transition the EU to a Third Industrial Revolution, with the aim of making Europe the flagship for a green economic recovery for the world. The Third Industrial Revolution plan is now being implemented by various agencies within the European Commission, as well as in the 27 member states.


The announcement of the Third Industrial Revolution Master Plan by Mayor Gianni Alemanno is the first comprehensive economic initiative of its kind and, puts Rome at the forefront of initiatives being pursued across Europe to reach the 20-20-20 by 2020 EU mandate and achieve the long-term goal of realizing the Lisbon Strategy to make the EU the most competitive economy in the world." (http://www.generatinginsights.com/whitepaper/microgrids-in-rome)


Advantages

Jon Creyts and Eric Maurer:


"We see several compelling ways that microgrids provide value over and above the status quo.

Microgrids can aggregate complementary distributed energy resources. Through the matching of supply and demand resources within a given microgrid, it is possible to tailor the performance of that network to provide specific operating or environmental performance characteristics. For instance, individual microgrids can be designed for interruptibility, or efficiency of generating sources and loads, or a specific level of reliability and power quality, or an environmental emissions profile, or even to maximize economic value by selling services to the macrogrid. In this way, microgrids make a fairly commoditized electricity system customizable to the quality needs of an individual customer.

Market-linked microgrids provide customers options that can help drive down costs and risks. The traditional electric customer is often a price-taker at the mercy of the utility’s pricing structure. Customer investment in efficiency and distributed resources like solar PV provide the customer with some power, but the microgrid represents the ability to completely flip the script. The microgrid puts power in the hands of the customer and opens up choices for how to manage energy risks and optimize costs. Places like White Oak, the campus of the U.S. Food and Drug Administration, are already showing what is possible. Today, White Oak optimizes on-site power production based on grid costs and fuel costs of on-site generators. As White Oak expands fuel sources on its campus by adding the ability to use biofuels, it continues to diversify away risks associated with sole dependence on utility power and reduces security risks associated with on-site reliance on one or two fuel types.

Microgrids promote infusion of additional private capital to supplement existing sources. The global microgrid sector is expected to grow from $10 billion in 2013 to $40 billion by the end of the decade. Much of the investment in microgrids will come from customers, since the microgrid market in the U.S., which represents 64 percent of the global market according to Navigant, is customer-driven. As electric utilities face the burden of raising huge sums to replace aging infrastructure, comply with environmental and renewables standards, and deploy smart grid technologies -- estimated to add to $2 trillion by 2030 -- growing customer investment in microgrids can ease the pressure on utilities and rates while simultaneously modernizing the grid.

Microgrids improve the efficiency of the electric system. A microgrid relies on generating equipment that is located close to the demands it must serve. The more a microgrid relies on its generating equipment to meet demand, the fewer units of energy are shipped from central power stations to customers. This reduces the 7 percent to 10 percent rate of loss that is typical in the transmission and distribution system, potentially saving energy costs by reducing total generation requirements." (http://www.greentechmedia.com/articles/read/microgrids-and-muncipalization-can-you-micro-municipalize-a-utility)

Discussion

Principles to help microgrids flourish

Jon Creyts and Eric Maurer:

"Guiding principles can help minimize unnecessary friction in the alignment process between stakeholders on all sides of the issue.

1. Define microgrids and clarify how existing policies apply to them. Job number one for regulators is to determine a clear definition (or definitions, plural, if a one-size-fits-all approach proves insufficient) for a microgrid. Should a microgrid be categorized as a distributed energy resource, an independent power producer, or something completely different? How big or small can a microgrid get before it ceases to be a microgrid? Only after such questions are answered can the regulator, utility, customer, and private developers make sense of how existing rules and regulations inhibit or incent microgrids in places where sound business cases exist. In addition to clarifying how existing rules apply, the regulator must clearly articulate the type of treatment legacy utility assets will receive.

2. Adopt and enforce a grid-wide interoperability standard. Safe and beneficial linking of microgrids to macrogrids requires adoption of standard protocols that ensure physical integrity of the system and allow for joint optimization of the independent and combined system’s economic, environmental, or operational performance. IEEE 1547.4 is one promising option for standardization, though there may be additional requirements to be codified in this or other protocols over time.

3. Strive to reasonably value microgrid costs and benefits, and price accordingly. The foundation for microgrid business models is premised in part on the costs and benefits this technology offers to the grid. These include services like black-start capability, frequency regulation, and an ability to shift from energy sink to energy source at a moment’s notice. But these services should be weighed against any additional infrastructure or operational costs associated with integrating many semi-autonomous microgrids into the macrogrid. An initial effort at evaluating the size of these costs and benefits and finding ways to monetize them through existing or new pricing approaches is critical to encouraging microgrid development in situations that make the most sense for the grid, while also providing fair compensation for customers investing their own capital in microgrids.

4. Remove the delivery utility’s disincentive and consider performance-based incentives to stimulate development. As another technology that stands to reduce demand serviced by the distribution utility, there is a potential disincentive for the utility to pursue or support investment in microgrids. However, microgrids present real opportunities to deliver system benefits to customers in the form of cost savings and improved reliability and power quality. Where evaluation and planning reveal these opportunities, the utility should be permitted to pursue and invest in them. Beyond freeing the utility up to invest in microgrids, establishing and strengthening performance-based incentives for cost, reliability, and power quality can provide the carrot that some utilities may need to explore microgrid opportunities. And just as the utility is incentivized to make targeted microgrid investments through performance-based incentives, more highly differentiated pricing can signal to customers and developers where microgrid investments will minimize distribution system costs.

5. Allow broad-based microgrid participation in wholesale markets. In some cases it will make the most sense for microgrids to participate and provide services in the wholesale markets. To facilitate customer participation, clear operational and market-based standards need to exist without limiting customer access to develop a microgrid. In markets like California, the path to participation for a microgrid connected at the transmission level is clear enough, but the situation grows more complex and nuanced when a microgrid is connected to the distribution system and wants to participate in wholesale markets. In this instance, the customer must navigate between the ISO and the distribution utility. Simplifying and reducing barriers to wholesale market participation for microgrids, both big and small, that are connected at the distribution level increases competition in the markets, improves the economic case for microgrids, and provides the grid operator with new resources to balance the system. In Denmark, on the island of Bornholm, the municipal utility is testing a market that encourages participation from many small customers. In this market, prices change every five minutes, there is no limit on the size of demand or supply resources that can participate, and participants do not need to bid into markets to participate, vastly simplifying the task for small residential and commercial customers.

6. Incorporate microgrids into broader grid-planning processes. Both distribution and transmission system planning represent important opportunities for evaluating microgrid options and incorporating them into system design. These resource-planning processes can provide the foundation for targeted deployment of microgrids in ways that minimize system costs, manage load shapes, and provide valuable ancillary services to the grid. Transmission planning processes typically include non-transmission alternatives (NTAs), a category in which microgrids should be included. Although the consideration of NTAs is far from perfect, it represents a clear entry point for the consideration of microgrids. Incorporating microgrids as potential assets for optimization in other integrated grid planning exercises (either traditional Integrated Resource Plans done by electric utilities in 34 states, or alongside the emerging discipline of integrated distribution planning) presents an opportunity to evaluate and implement least-cost distribution alternatives, such as energy efficiency, distributed energy resources, and microgrids." (http://www.greentechmedia.com/articles/read/microgrids-and-muncipalization-can-you-micro-municipalize-a-utility)


John Robb on Microgrids and Resilience

"Smart microgrids are now going mainstream with multiple software start-ups and big efforts underway at Siemens and Cisco. Given this pace of expansion, I suspect that this bottoms up approach will vastly outstrip and eventually curtail any efforts to build smarts into the larger utility grids (which is estimated to cost $165 b in the US alone, money that doesn't exist). Also, with this level of interest, open source efforts are sure to follow.


So what does this meant to those of building resilient communities? Smart microgrids are a platform that can be built upon. For example:

  • It supports the development of a vibrant local market or ecosystem of power producers at the small business or household level.
  • It enables communities to build in back-up systems that can keep them operational even when the rest of grid goes dark/down.
  • It provides a way for innovations to reach end users immediately and new synergistic opportunities when combined with other local systems."

(http://globalguerrillas.typepad.com/globalguerrillas/2010/04/update-microgrids.html)


Current Generation of Microgrid technology

From the City of the Future blog:

"According to Shahidehpour, what makes the new generation of microgrid applications worth paying attention to is that that the elements of a modern microgrid have themselves gotten smart, to the point where they can easily shift loads based on different needs and desired outcomes. “The customer decides when he wants to use power, how much he wants to use.” In this way, a smart microgrid “empowers smart users.”

Shahidehpour knows what he’s talking about: as the Director of the Robert W. Galvin Center for Electricity Initiative at the Illinois Institute of Technology (IIT), he lead the installation of a campus-wide microgrid project that for the university that reduced campus baseload energy consumption by 20 percent and peak load consumption by more than 50 percent. The project incorporates on-site solar and wind generation, backup generators and an advanced system controller that communicates with building controllers, meters and smart switches and uses real-time price signals and weather reports to automatically manage demand. The IIT project is the flagship “Perfect Power System” of the Initiative, a project that envisions a transformation of the national grid by prototyping smart grid approaches though a series of microgrid projects.

Pareto Energy takes a similar approach, by designing, building and operating peer-to-peer microgrid networks. Panelist Matthew Fairy, Pareto’s director of sales, described a vision in which the national grid is gradually replaced over time by clusters of interconnected microgrids. This is the only way, he said, that we will be able to move to a smarter grid system. “The move to the smart grid is impossible to achieve in one big operational mass,” he explained, “Breaking it into bite-sized pieces — this is the future of the microgrid market.” Fairy described the shift to microgrids as analogous to the move from land lines to cellular phones — a shift that will “make the end product much more versatile and user friendly.”

Josh Milberg, a smart grid expert with Willdan energy consultants, explained that the biggest advantage of a microgrids is the ability of a large facility to optimize energy use “based on what is most important to you as a customer. You have the opportunity to optimize for reliability, for cost, for sustainability, or some combination. That is the really exciting opportunity. You have the opportunity to making decision for your own facility rather than being at the mercy of the larger grid operator, who is really making decisions to make sure that the entire grid is as stable as possible.”

Applications for smart grids are of course not limited to the industrialized world. According to the Earth Institute’s Vijay Modi, it’s worth remembering that under normal circumstances some 200 million people in India have no access to electric power at all. Combined with some 500 million people in Africa and another 200 million in other places, this means that as much as one sixth of the worlds population still does not have access to electricity.

Like Fairy and Shahidehpour, Modi and his team believe that the application of smart microgrid technology might be part of the solution, but from the opposite direction. Rather than finding ways to scale down break up giant grids into smaller pieces, he is looking for opportunities for small scale, local investment to create microgrids with local power generation and storage for communities in the developing world that aren’t yet served by utilities. He believes such systems, built in bite-sized pieces, could eventually be connected to the larger grid." (http://nea-polis.net/2013/05/01/the-microgrid-solution/)


Difficulties in Implementation

"what is preventing faster adoption? Modi suggested that the problem was that until now, migrogrid projects have been one-offs — each requiring custom engineering and individual permitting. If, however, there were a way to simultaneously permit microgrid systems for 100 blocks of similar buildings in New York, he said, it could “break the bottleneck.”

However, Modi pointed out that from the utility’s perspective, any time a customer reduces consumption or ads local generation — even if it’s form a solar panel on the roof — the utility loses revenue, while not really lowering its fixed costs, which in New York account for 3/4 of expenditures. David Roberts of Grist made a similar point recently, pointing to the utilities own research suggesting that “solar power and other distributed renewable energy technologies could lay waste to U.S. power utilities and burn the utility business model.”

Fixed costs notwithstanding, Shahidehpour says, the increase in reliability and efficiency offered by widespread deployments of microgrids can only benefit utilities, which in many places spend millions of dollars each year to respond to a few hours of peak demand. And, Fairy added, there is no reason utilities couldn’t own and operate microgrids themselves; it’s just a different business model.

Of course, those who are in favor of microgrid adoption have every reason to try to placate utilities, without whose cooperation they are unlikely to get much done. But as Roberts of Grist put it, “these utilities are not Google or Facebook. They are not accustomed to a state of constant market turmoil and reinvention … A friggin’ century, more or less without innovation, and now they’re supposed to scramble and be all hip and new-age?” ((http://nea-polis.net/2013/05/01/the-microgrid-solution/))

More Information

See the articles on Micropower, Distributed Power Generation and the P2P Energy Grid