• Ali Ahmed

Microgrids, Macro Opportunities

Updated: Jun 7, 2019



A tipping point has been achieved in the development and implementation of microgrids in the US. The increasing reliance on high quality electricity while existing electric distribution systems are in drastic need of expensive upgrades and maintenance is creating a market opportunity. Simultaneously, the increase in functionality and reduction in cost for microgrid controls and small scale power generation is enabling positive returns on investment. These conditions are making it an ideal time to consider microgrid solutions for your next project.

Microgrid Defined

Explaining what is, and what is not, a microgrid isn't always easy. The name itself seems to imply size as a distinction, but microgrids are not defined by size and can range from a house to city, kilowatts to megawatts. We use these two simple criteria to determine if a power system is a microgrid:

  1. Can the system to operate isolated from the utility grid ('island mode')?

  2. Is there bi-directional communication between generation sources and loads?

Although emergency power systems meet the first criteria, the communication between loads and generators, achieved through a microgrid control system, makes a microgrid unique. This communication allows a microgrid to predict system loading and make decisions beyond simply matching generator output to demand.

The Value of a Microgrid

Traditionally, localized power systems have been viewed in one of two ways:

  • Emergency power to maintain critical systems during a utility outage

  • Cogeneration or on-site renewable energy to reduce energy cost

These two different views have created two different underlying value propositions and funding mechanisms. Emergency systems are 'must haves' regardless of cost, while cost reducing power systems are meticulously analyzed for financial payback. A microgrid provides a hybrid of these two solutions and delivers value through:

  • Lower cost energy, electricity and potentially thermal energy

  • Highly resilient electrical power delivery

  • Active power quality management

  • Flexibility in power sourcing

Valuing a microgrid requires comparison of power generation options to determine if the incremental costs are worth the combination of elements that a microgrid can provide. This valuation isn't always easy since monetizing resiliency and flexibility depends on the business activity, the stability of the utility grid, and many other factors.

Timing Is Everything

Even with all these benefits, microgrids are not applicable to every situation where resiliency is needed. Additional costs to deploy a microgrid occur throughout the system including not just the microgrid controls, but design of the electrical distribution system to be bi-directional, the addition of batteries and/or other power quality related equipment, and the generation sources. These additional costs often preclude deployment of a microgrid in an existing electrical system since the changes would include highly invasive replacement of equipment such as transformers or switchgear. However, in new construction or expansion, microgrids can be very cost effective, particularly when taking into account the avoided costs of traditional back-up equipment like UPS systems and diesel generators (including their tanks and their on-going maintenance and testing costs).

The best recommendation is to include a microgrid option any time you are considering a addition or change of a power system for on-site generation or resiliency. An example of an early stage analysis is a feasibility study that was performed by Green Strategies with Cleveland State University for a microgrid in Cleveland, Ohio. This analysis is public and can be downloaded here.

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