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Storms Spur Microgrids

Microgrids still account for a micro level of investment in electricity infrastructure worldwide; at the same time, they have become one of the fastest growing segments of the industry.  A number of forces are driving this spurt, including concern about the vulnerability of the grid to cyber attack, but the main force behind the impressive increase in the number of microgrids is the aftermath of increasingly common extreme weather events.  And this is a worldwide trend. 

The industry publication Microgrid Knowledge reported that global annual revenue from microgrids rose 29% between 2015 and 2016, and Navigant Research predicts that the global microgrid market will reach $30.9 billion in annual revenue by 2027; that compares to an estimated value of $3.76 billion in 2016.  While precise figures are difficult to come by and vary among industry and scholarly sources, virtually every estimate assumes rapid growth.  Navigant’s Microgrid Deployment Tracker, which is updated semiannually, is a typical example.  At the end of the fourth quarter of 2018, Navigant  identified 2,258 projects, including 241 new entries, with a combined total of 19,575 MW of planned and installed power capacity.  At the end of the second quarter of 2019, just six months later, Navigant identified 4,475 projects, representing 26,769 MW of planned and installed power capacity; these include 575 new entries that added 2,915.3 MW.  That’s a growth rate of more than one hundred percent over six months.  While North America led the world in terms of total microgrid capacity at the end of 2018, Asia Pacific emerged as the global leader by the end of the second quarter of 2019.

The coastal city of Milford, Connecticut, is an example of a municipality moved by its experience of extreme weather to establish a microgrid.  The city was devastated in 2012 by hurricane Sandy, when it lost power for seven days.  When, five years later, the city was battered by hurricanes Harvey and Irma within days of each other, Milford, with a population of 52,000, decided it had to take action.  It set a realistic goal of developing a microgrid that would help offset the damage of future extreme weather events. 

The city chose five critical sites to connect to the microgrid that would generate power to help sustain city government and emergency services during a general outage and provide shelter and food for its most vulnerable citizens.  The sites include a middle school, the town senior center, a housing complex for elderly citizens, the Parsons Government Center and the town’s City Hall.  The school, senior center and government center can function as shelters; the school can operate as a temporary medical center and its cafeteria can serve as a food pantry.  City Hall would become the center for coordinating and dispatching fire, police and ambulance services.  Because power infrastructure is above ground in Milford, typical of the situation in most smaller municipalities, the city will link the five sites to the microgrid with underground cables.

Milford engaged Schneider Electric to design its microgrid.  The power will come from a 400kV gas combined heat and power unit and a 100kW battery storage system; the system is solar-ready, so that solar PV panels can be added in the future.  The projected cost for the microgrid is $4.7 million; the Connecticut Department of Energy and Environmental Protection made a $2.9 million grant for the costs of designing, engineering and connecting the buildings.  The city will cover the costs of the generator and battery storage system through a $1.8 million tax-exempt lease purchase arrangement.

While resilience in the face of extreme weather is its chief purpose, the microgrid offers additional advantages to the city.  The microgrid, which is entirely gas powered, is greener than power from the main grid, which relies on a combination of coal and gas.  Its combined heat and power system is also more efficient.  Furthermore, power generated by the microgrid will be less expensive than power from the main grid.  Schneider Electric estimates the cost of the microgrid’s power at 13 cents per kilowatt hour versus 16 cents for the main grid, a savings of about 20 percent.  If the city adds solar, the savings would be even higher.  And the microgrid can actually generate revenue for the city, when it provides more power than is needed, through the state’s virtual net-metering program for government and agricultural facilities.  Through this program, excess power would be credited to government buildings in the city that are not physically connected to the microgrid.

There are other financing models that are being using to develop and deploy microgrids.  Montgomery County, Maryland, for instance, deployed two microgrids in October, 2018, one for its public safety headquarters in Gaithersburg and another at a correctional facility in Boyds.  Both used a financing model that Schneider Electric, which partnered with Duke Energy Renewables for the projects, calls energy-as-a-service, which eliminated any capital costs for the county.  Energy-as-a-service is an evolving concept that takes various forms.  In the case of the Maryland microgrids, Duke and Schneider will own and operate the microgrids; the county will pay only for the output from the microgrid, which will be at a locked-in rate.  Schneider Electric and Duke Energy Renewables, sweetened the deal by providing needed upgrades to the county’s electrical infrastructure, the cost of which will be covered by projected energy savings the microgrid will generate.

Microgrids adhere to no particular design or financing structure.  One thing seems certain, however.  The demand for microgrids will continue to expand exponentially as increasingly frequent and severe weather events threaten the safety of communities around the nation and around the world.

Richard Schlesinger's picture

Thank Richard for the Post!

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Discussions

Matt Chester's picture
Matt Chester on Jul 17, 2019 10:37 pm GMT

Thanks for sharing Richard-- this is a great overview of how microgrids are gaining traction for their tendency towards resilience and reliability. The grid structure we've had for the past 100 years made sense when it was evolving, but a 21st century energy industry needs a 21st century grid. Particularly in countries as large of the United States, it makes even less sense to solely rely on a centralized grid without adding in microgrid abilities where necessary

Alan Ross's picture
Alan Ross on Jul 18, 2019 7:01 pm GMT

Very good post Richard. We need to see more innovation like this in the face of future challenges. 

Jon Fairchild's picture
Jon Fairchild on Jul 22, 2019 1:47 pm GMT

The title undersells this article - this an excellent concise summary of microgrid growth statistics and value add. Thanks Richard!

Matt Chester's picture
Matt Chester on Jul 22, 2019 6:14 pm GMT

Agreed-- worthy of a bookmark so it can be located quickly later when an explainer is needed!

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