The Next Generation: How Microgrids Are Changing the Business Landscape

September 13, 2016 By Ken Silverstein

siemens microgrid Energy ManageCollege campuses are the epitome of free thinking and where innovation often gets its roots. Burning greener fuel and improving energy management are two sprouting concepts there — ideas that are being facilitated by micro-grids.

The goal is to increase reliability. It’s also to decrease costs and emissions. If a major weather event sweeps through and knocks off power, for instance, a back up system that generates power can kick on and then send the electrons through the localized microgrid. Critical systems will thus stay on.

The major markets? It’s not just those enterprises that want insurance in case of an outage. It’s also those that want to “island” or to be solely self-reliant such as military installations. Many are like hospitals and college campuses, which just want emergency power if the utility-provided electricity cuts off.

“We are seeing interest from all these markets and there is not one driver making microgrids popular,” says Clark Wiedetz, Microgrid Director for Siemens Energy Management, at a Siemens conference in Boston last week. “This is an emerging business with a lot of opportunity,” he adds, referring to those who design and build such localized grids.

Siemens is working with Algonquin College in Canada. It is a back-up system if the main power source goes down — an investment that Wiedetz says is saving the college between $200,000 and $300,000 a year. The savings comes from reducing downtime and optimizing generation sources.

The users of micro-grids all share the same goals — to make the best use of distributed resources and to reduce their overall energy demand. Or, a utility could benefit, if it has distribution networks known for poor service reliability resulting from routine harsh weather, remote locations and limited feeder capacity.

“We can match generation to forecasted load,” adds Sally Jacquemin, also with Siemens, which serves 1,600 utilities.

Among the most proactive utilities: Calpine Corp., Duke Energy, NRG Energy and San Diego Gas & Electric. Many such companies want to develop unregulated power generation and to own and operate microgrids, which can be a lucrative business for them.

And the cost can vary depending on the need, which involves connecting all the disparate assets and buildings before aligning those properties with the software to go into an information systems package. A return on investment takes less than a year, depending on the application, and is realized because the total downtime associated with the system is superior to what it had been prior to installation.

As with any distributed resource, the microgrid operator is able to place back any excess power it has onto the grid, where it can then be redistributed and sold elsewhere — whether that be to unregulated power markets or to their customer base; utilities are able to avoid buying power on expensive spot markets, if the electricity would serve their regulated domains. Otherwise, they can control and leverage distributed generation to participate in wholesale energy markets.

Meantime, they are also better able to integrate renewable energy into an existing microgrid and distribution system because of the advanced software that is used. That enhances reliability and customer satisfaction.

An overriding need, says Wiedetz, is that the parties want to integrate more renewable power into their energy mix, either because they are mandated by state law to do so or because their customer base expects this of them. And at the same time, they are able produce more reliable power at cheaper prices.

To that end, Siemens is partnering with a Native American reservation, Humboldt University and PG&E Corp. to build a community microgrid in Northern California that runs on solar panels, biomass and diesel generators, in combination with battery storage. The microgrid will service a 100-acre territory.

“Educating the market is the most important thing,” he adds. “Advanced controls are part of the microgrid, which provide renewable integration and the desire to ‘island.’ These are all important aspect of a system that give end use clients a number of capabilities.”

One comment on “The Next Generation: How Microgrids Are Changing the Business Landscape

  1. Since the article says that the Return on Investment takes less than a year in some cases, I am assuming that these are Power Purchase Agreements. That seems to be the way to go because it frees the Customer from investing huge amounts of money upfront and is a win-win for the customer as well as the investor.

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