According to the Department of Energy, peak demand for electricity has outpaced transmission growth by nearly 25 percent every year since 1982. Power outages in the U.S. have steadily increased in the last decade, costing an estimated $150 billion annually in lost productivity. One ideal solution to respond to these mounting challenges would be a nationwide smart grid - a modern grid that utilizes renewable energy - but it would cost more than $300 billion and take many years to install. As federal funds for grid improvements continue to deplete and aging infrastructures lend themselves to more power inconsistencies, the world needs to approach power production from a new point of view. Microgrids are emerging as a cost-effective solution to the worldwide power crisis, with experts expecting it to be a $20 billion market by 2020, according to Navigant Research. This article will explore some of the trends driving microgrids adoption, as well as who uses them, their components, and the future of the industry.
What is a microgrid?
Simply put, a microgrid is a set of systems with the ability to generate power near or at the source of consumption. It can completely disconnect from the main utility grid (a process known as islanding') in the event of an emergency, and produce enough energy to power its critical loads. Microgrids can also work connected to the main utility grid, serving as a mutually beneficial resource to the grid and its users. A microgrid can be small enough for a single residential home or large enough to power critical loads for an entire military base, university campus, or municipality.
For microgrids to produce and store power properly, an intelligent infrastructure needs to be in place, which consists of an advanced energy management system, generators - traditional and renewable, storage systems, and most importantly, a reliable, intelligent controller. The controller is responsible for examining the data collected from the various components in the microgrid network and orchestrating various distributed energy resources and other components into one actionable system.
A reliable, efficient microgrid also leverages data to implement predictive control systems - these systems determine when to generate energy, when to store and dispatch it, and how to effectively and efficiently manage it.
What do microgrids provide?
Above all else, microgrids provide a safe, reliable, energy efficient power source, offering greater reliability to organizations than the traditional grid can provide in today's rapidly changing energy landscape. They can sense a pending outage before it impacts the microgrid and reduce or eliminate the outage locally. From a security standpoint, microgrids protect businesses and municipalities from potential threats that could otherwise bring electricity to a halt - from weather emergencies and human error to malicious intent from outside forces.
Much of the electrical grid infrastructure in the U.S. was built before the 1980s, often near sources of fuel, wind, or water power and far from the communities they serve. The aging infrastructure of the grid and long distance to the end user causes the country's power efficiency delivery to fall below 50 percent - meaning more than half of the power utilities produce goes to waste as lost heat. Alternatively, microgrids often run at 80 percent efficiency and hold steady at 66 percent efficiency. This difference alone is a compelling reason to consider a microgrid deployment.
Most importantly, microgrids can provide a sustainable energy resource to organizations and individuals by effectively generating, often via renewable sources, storing and using its own energy while also having the ability to sell excess power back to the main grid, reducing the amount of power the grid needs to produce and deliver during times of high demand. Because of the proximity microgrids have to the end user, these systems provide power at a lower generator fossil fuel burn rate, reducing the amount of CO2 released into the atmosphere for power generation.
What's driving microgrid adoption?
Climate change, increasing energy costs and record-breaking electricity demand are other key drivers moving organizations and government entities to look to energy options outside of the traditional grid. Additionally, widespread sustainability efforts are further driving interest in microgrid deployments as microgrids can harness renewable energy resources including solar, hydro and wind power, reducing the need to rely on carbon-producing resources. Microgrids can also use excess heat from power generation, known as combined heat and power or CHP, for other applications to offset the grid load, further reducing energy waste.
Financial incentives from federal and state governments are making this the best time to invest in microgrid technologies - the U.S. Department of Energy announced $7 million in funding to advance the design of community-scale microgrids. In addition, several states including New York and Connecticut have microgrid-related incentives. In addition, California plans to provide $45 million in incentives over the next five years to reduce its current load on the grid.
Also driving microgrid adoption is the greater need for security as more energy systems come online and are exposed to potential threats. In fact, the Department of Defense currently accounts for 36 percent of all operational microgrids in the U.S. and continues to install microgrids to enhance security measures. If an attack were to affect the central power grid, military and government bases would still be able to produce their own power and continue to operate.
Beyond military installations, colleges like the University of Connecticut are installing microgrids to not only produce their own energy, but also as a way of teaching students about energy sustainability and other microgrid concepts. Microgrid deployments in the higher education market serve as a real-world tool to teach students how to become energy independent, reduce overall energy costs and reduce their carbon footprint.
Microgrid adoption is being driven by environments where a constant power supply is critical - such as hospitals, municipalities, schools, manufacturing centers and more. These facilities need to stay running at all times and can't afford to risk power loss due to a major weather event or peak demand for power. During periods of grid disruption, microgrids have the ability to restore power to a facility and even control how available energy should be utilized. For example, in the event of a power disruption at a hospital, the microgrid can provide medical equipment with electricity over vending machines - and even control which rooms receive more electricity than others.
While the challenges influencing the need for microgrids are not new, recent industry shifts have made microgrids more accessible. The price of renewable energy technologies has dramatically decreased in recent years - the cost of solar installations is down 75 percent since the end of 2009 according to IRENA, while wind energy is expected save consumers $280 billion by 2050, according to the EIA.
Does this mean the end for utilities?
Absolutely not. While utilities initially viewed microgrids as a threat, many are now starting to develop microgrids within their infrastructure. Microgrids not only offer a new revenue stream to utilities, but act as a resource to reduce load during peak demand - offering customers an uninterrupted, more reliable power source and avoiding power purchases during peaks. Through innovative software capabilities, utilities are able to collaborate with independent microgrids to deliver high quality power to end users.
Communities around the country are already seeing benefits of utility-led microgrid installations. For example, California's San Diego Gas & Electric recently developed a solar-based microgrid that can provide power to an entire community in the event of a power outage. It empowers the utility to maintain control over the power structure while also ensuring their customers in rural areas maintain access to electricity, even during times of disruption. Texas-based Oncor is also using microgrids to improve its stability as an electricity provider and recently unveiled a project that connects four independent microgrids to act as one. The technology provided by Schneider Electric and S&C Electric Company marks a transition in how utilities are using innovative technologies to expand their capabilities and improve power reliability.
What does the future hold?
The future for microgrids is bright - one of the biggest trends impacting how microgrids will evolve is the ability to store energy. While about one third of microgrids now include electrical energy storage, solution providers have a long way to go to make this technology universal for the widest impact.
Technology innovations will create an environment where microgrids will be able to sync with each other more effectively. Software will develop to a point where small microgrids will be able to communicate with each other and balance energy requirements when needed. When microgrids work together, they'll be able to provide more reliable energy and provide power more universally to urban, suburban, and rural areas.
The need for microgrids is apparent - what's left now is for regulators, consumers, utilities and private companies to work together to determine opportunities to build a network of reliable, efficient and clean energy. Continued investment and adoption of microgrid technologies - from storage to solar and controls - will lead to new ways of thinking about how we consume and produce power, and will create more reliable energy supplies for generations to come.
About the Author
John Dirkman P.E., Sr. Product Manager, Smart Grid Global for Schneider Electric has over 20 years of experience and leads product and program management for advanced integrated Smart Grid systems.
