Applying Best Practices in Microgrid Implementation to Empower the Private Sector
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- Aug 27, 2019 5:30 pm GMT
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To date, many of the early adopters for the more complex microgrid deployments have occurred in the public sector, involving the federal government and public universities. These public-facing stakeholders often have more complex energy needs, are long-term, sustainability-oriented decision-makers, and, most importantly, they put high priorities on the value of resiliency, making them strong candidates for microgrids. Now, we are starting to see stronger signs that the private sector is understanding the value of resiliency and being able to deploy local renewable power solutions by adopting the microgrid platform at the core of their energy strategies. As this trend continues and these opportunities evolve, terrific opportunity will continue to grow within the private sector, but this opportunity will be maximized in ways that only existing power industry utilities, professional service firms and contractors can achieve.
A number of avenues are evolving by which deployment of microgrids for the private sector are beginning to make more sense, and that could make microgrid deployment work faster and better in the private sector than the public sector. For example, articulating the value of a microgrid is often easier in the private sector because resiliency can be quantified financially. A microgrid can benefit a private company both by reducing operating costs, if structured in a way that reduces its energy spend, and by helping the company to avoid huge losses of revenue or productivity during a grid outage, which is becoming a bigger factor as climate change challenges continue to worsen. The latter case often represents a greater financial benefit, and companies that have experienced a significant loss of revenue due to a major outage often have a clear sense of the value of resiliency to their organization (as Delta learned when it lost $150 million in an outage at the Atlanta airport in 2016). By contrast, institutional organizations often articulate the value of resiliency in less easily quantified terms, such as the value of reducing missed days of school in the case of a university.
The key to increasing the private sector’s adoption of microgrids will start with those energy service firms who can migrate the “lessons learned” from public sector experiences and use them in deploying private sector solutions.
Within the public sector, some of the most advanced microgrids have been deployed at military bases. Although the mission behind military bases is different from a private business or manufacturing facility, military bases provide an ideal test bed for solving complex integration challenges given their large size and diverse energy demands. Having developed several advanced microgrids for military bases, we at Ameresco see a number of lessons from the federal sector that should inform microgrid development in the private sector.
For example, Ameresco’s microgrid at the Portsmouth Naval Shipyard in Kittery, ME helped the federal government reduce costs and avoid disruptions due to local grid challenges while reducing emissions. The facility, which deploys highly critical military purposes, operates much like a large industrial plant, with intensive, round-the-clock energy demand to power heavy duty machinery for repairing submarines. Our team installed two 5.2 MW gas turbines paired with heat recovery to provide electricity and hot water, plus a new microgrid control system with Fast Load Shed (FLS) capability to assure the onsite generation assets can serve the most critical loads during grid outages. Because the facility is at the end of a transmission line, the local grid often suffers from blackouts; whereas, with the new microgrid, the Portsmouth Naval Shipyard can switch to on-site power seamlessly and avoid disruptions to its most mission-critical operations. The solutions we used at this site can be readily deployed for many large private sector industrial, manufacturing and health care facilities with antiquated power distribution or generation systems, in particular, experiencing high incidences of grid outages.
Portsmouth Naval Shipyard, Kittery, ME
The list of microgrid beneficiaries does not end here. Due to their existing infrastructure, existing expertise, and regional familiarity, electric utilities in particular find themselves in a unique position to offer their expertise design, develop and implement these innovative new energy distribution models1. By pairing with experienced energy services firms already engaged in providing alternative energy solutions to customers, utilities and professionals within the existing power industry have the opportunity to create new revenue pathways by expanding their customer services by utilizing DERs such as microgrids.
One of the other key differences paving the way for private sector implementation comes down to the fact that most corporate entities are streamlined for decisions to be made faster, in contrast to the complex vetting process inherent in the public sector. Once the business case for a microgrid is made by a key decision maker that is willing to champion the cause (e.g., the CEO, CFO or a Board member), the contracting process tends to move much more efficiently within a confined approval process.
Despite these advantages in the private sector, many companies are only now starting to catch up with the public sector, and we see several reasons why. Perhaps the most important one is that cleaner distributed generation has only recently become a higher priority, and cost-competitive with power from the big grid, across broad geographies. Companies today are finding that low natural gas prices make a compelling case for on-site natural gas generation or combined heat-and-power (CHP), and rapidly declining costs for solar and energy storage are making the solar-plus-storage solution an attractive option for serving a facility’s base load.
Although microgrids like Portsmouth Naval Shipyard’s encompass a wide range of solutions, we encourage companies interested in microgrids to start simple. Assess a single challenge you know exists with your energy infrastructure and acquire a system that directly addresses it; developers like Ameresco are well suited to help navigate the multiple options. Over time, additional assets can be added that will provide additional benefits, as microgrids can be readily scaled up, with some foresight. By starting with a manageable problem and solution, companies can test the waters before deploying more advanced options.
After all, New York City was not built in a day.
1 Energy Central - DER Integration Offers Utilities Opportunities to Partner With Customers