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What impact are non-utility microgrids having on Grid Modernization efforts for utilities?

Ron Chebra's picture
Executive Director Chebra Consulting Group

Ron Chebra is the Executive Director of Chebra Consulting Group, LLC. He is working with a number of leading solutions providers and utilities examining DER its impact on utility grid...

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  • Nov 6, 2018

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I also think that DER and microgrids can, in some manner, help bridge our aging infrastructure andd aging workforce challenges.  See my recent blog on this:

Also if you are interested download a free report from a recent DER/microgrid conference in Washington DC.


Kurt Myers, Idaho National Laboratory's Renewable Energy Business Development lead shares the following response: Non-utility microgrids send a signal that there is demand for these systems, which can enhance resiliency by providing backup power to critical loads during an emergency. While such systems can represent competition for utilities, they can also present new business and capabilities enhancement opportunities for utilities to consider as part of their own grid modernization efforts.

Stable microgrids, if in reasonable numbers, could be useful especially at peaks to smooth out the loads on the one hand and could smooth out excessive fluctuactions of loads while allowing other generator times to remain in steady state.

Hi Ron:

Good to hear from you again. I have written several posts on Microgrids and related technologies. The link to my site on Energy Central is below.

There are several large microgids in the SF Bay Area. The public sector seems to be taking the lead right now, but the new Apple Campus has a major microgrid, and I believe there are a few other large ones created by private companies. Our company (Microgrid Labs), have participated in the deployment of two at large Northern California military bases, and there is one at the Alameda County Jail (Santa Rita). Related entity are community choice aggregators, and there are various hybrid structures that are (and will be) allowed by CPUC rules.




Stable microgrids, if in reasonable numbers, could be useful especially at peaks to smooth out the loads on the one hand and could smooth out excessive fluctuactions of loads while allowing other generator times to remain in steady state.

I agree with some of the prior posts that the impact is more to grid operations and planning than modernization.  On the west coast, high reliability has made it hard to create the business case for microgrids.  Should microgrid economics improve from decreasing costs or decreases in reliability (wildfire dynamics?) utility business cases for some grid modernization efforts could be impacted.

Microgrids can enhance the capabilities of distributed energy resources (DERs) to provide flexible energy services to meet customer needs and provide grid services.  Microgrids are one of the most effective methods to help integrate DER on the grid.  Made of DERs, storage, and demand response capabilities, microgrids can be used to shift commercial load to help address net load ramps (in the morning and afternoon when solar energy is not available) in a distribution network.  A microgrid with a properly configured controller can provide higher reliability, lower electricity bills, and cleaner air.  A microgrid with a properly configured controller can provide higher reliability, lower electricity bills, and cleaner air.

Having highlighted some of the benefits of microgrids, from an utility operations perspective, microgrids can present challenges.  These can include gross and net load short-term forecasting (utilities need accurate short-term forecasts to operate their systems reliably); lack of visibility, situational awareness, and control (utilities need better visibility into their own distribution systems, including tools to predict DER behavior, view real-time DER response, and forecast DERs’ impacts on the grid); and DER effects on distribution system phase balancing and voltage regulation (higher penetrations of DERs can alter power flow on the distribution system and create phase imbalances and voltage regulation problems).

The reality is we have hundreds of effective micro-grids - called campuses - where the utility's responsibility ends at the low side of the transformer and so long as the campus does not export, they are just treated as a load. 

In most states, only the utility is allowed to cross property lines to provide service, so an industrial plant, a campus, a mall that are on one plat can be treated as a load - sometimes positive, some times negative, and sometimes not there.

From a capital point of view, every load that leaves the grid, reduces the total revenue available to make capital improvements. 

Matt answered the question well.  I agree with what he said.  But, I'd like to add to it.

First, I would say that Grid Modernization to utilities is really about what the utility itself is doing to create wires and non-wires alternatives to increase safety and reliability, increase situational awareness, predict and react to grid issues, increase grid resilience, and integrate DERs into its operations.  What others do with microgrids or Community Choice programs doesn't have much effect on the utility's grid modernization efforts.

However, it DOES have an effect on the utility's grid operations and potentially its top and bottom lines.  The utility essentially has to treat third party microgrids as a black box.  There are interconnect agreements that ensure that the microgrid behaves the way that the utility expects it to.  The microgrid itself (if grid-connected) cannot received approval for the interconnect unless it agrees to how it will behave when the utility gives it a command.

Second, there may be additional grid services that the microgrid can provide, which creates a potential benefit to the utility financially or in meeting its obligations as the responsible party for safety and reliability.  In that case, the utility would obviously welcome the third party microgrid as a partner, and would look on it positively.

There are just too many what-ifs to give an absolute answer.  But, utilities take their responsibilities for safety and reliability very seriously.  If a third party microgrid helps them in their mission and creates value for the utility and its customers, then they will look on it very favorably.  It also certainly affect long-term planning and how utilities determine what grid modernization they should put in thier rate cases - and could definitely provide cost deferments when someone else pays for it.

Interesting question.

Might not be exactly the answer you're looking for, but when I wrote a piece about microgrids last year, the most immediate impact I found was that microgrids-- both utility and non-utility-- would be gamechangers in rural, remote and/or island communities without a deeply entrenched grid system. Especially after the hurricanes that struck Puerto Rico and left the island without power for weeks and even months in some places, the realization was that installed microgrids, if connected to localized renewable energy generation, would be incredibly useful for such emergencies. The ability to create power locally, send it out to the grid during normal operation, but disconnect and remain powered in a localized way during wider blackouts is a key to island grid resilience.


How does that affect Grid Modernization for utilities in non-island non-remote areas? Well that's a great question. Because places like Puerto Rico or remote areas not already connected to a grid such as in Africa or Southeast Asia do not have a well established grid system, microgrids can serve to leapfrog the traditional grid technologies (much like they've done in telecommunications via cell phones without ever going through a landline phase). My hope is that these areas can be proof of concept of how it would work and would spur more deployment worldwide. Even in the areas where microgrids serve little chance of completely replacing the existing grid, there could be much lessons learned from for modernizaton from the process of implementing microgrids across a large region. 

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