Navigant Research Blog

Defining the New Smart Grid: From Nanogrids to Virtual Power Plants

— July 7, 2014

Nanogrids and microgrids are building blocks that, like Legos, can be stacked into modular structures: in this case, distribution networks that tailor energy services to the precise needs of end-users.  This customization of energy services is clearly the wave of the future; but determining where to draw the line between these two business models can be challenging.

In many ways, nanogrids are just small microgrids that typically serve a single load or building.  They thereby represent a less complex way to manage on-site distributed energy resources (DER).  Ideally, microgrids would be able to serve entire communities, but utility regulations often stand in the way.  These same regulations make nanogrids larger business opportunity today than microgrids, despite their smaller size.

The series of storms and extreme weather that have attacked East Coast grids in recent years has sparked interest in community resiliency initiatives.  New York’s Reform the Energy Vision (REV) initiative is designed to explore how multi-stakeholder community microgrids might provide emergency power to end-users ranging from a private gas station to a municipal fire station (and perhaps a community center emergency shelter).  Connecticut has been struggling with this issue of how best to include both public and private sector end-users, bumping up against the long-standing prohibition of transferring power among non-utilities over public rights-of-way.  To date, only one of the 9 projects approved for funding under Connecticut’s DEEP program is actually up and running, at Wesleyan University.

The Virtual Option

The third smart grid business model that can help build resiliency into power grids is described in Navigant Research’s report, Virtual Power Plants.  A virtual power plant (VPP) is a platform that shares many attributes with the microgrid (and the nanogrid).  In North America, the most common resources integrated into VPPs are demand response systems.  Though VPPs cannot guard against power outages at the customer site, they can play a key role in lowering overall demand on the larger utility grid, thereby stretching scarce resources, directing them to mission critical loads.

The lexicon of organizing structures required to handle the increasing complexity of energy supply and demand is growing.  In order to make sense of this brave, new world in energy, Navigant Research has come up with the following chart highlighting key attributes of three different business models.

 Comparing Nanogrids, Microgrids, and VPPS

(Source: Navigant Research)

Regulators clearly need to revisit regulations standing in the way of community microgrids.  It appears that New York is pioneering this debate, allowing it to surpass California’s position as the leading microgrid market in the country in terms of sheer numbers of projects in the works.  Moving downstream again, it is also important to remember that nanogrids help create smart buildings that, in turn, can also be integrated into VPPs.  These combinations are vital to efforts to harness greater value from DER, thereby increasing energy security.

In the end, it’s not nanogrids, or microgrids, or VPPs, but the deployment of all three in flexible and dynamic configurations that is revolutionizing what was once the staid world of top-down, command-and-control monopoly utilities.

 

California Wrestles with Emerging Energy Business Models

— June 18, 2014

When it comes to energy policy, California is schizophrenic (or perhaps dyslexic).

On the one hand, recent energy storage mandates in the form of last year’s AB 2514 have created opportunities to test out how advanced batteries can help mitigate the frequency and voltage issues associated with high penetrations of variable renewable energy.  Utilities such as San Diego Gas & Electric (SDG&E) have suggested that these mandates plant the seeds for new microgrids, building upon the utility’s success with the Borrego Springs project, which SDG&E recently announced will be expanded.

On the other hand, this year’s AB 2145, derided by critics as the “Monopoly Protection Act,” would introduce a major kink in efforts for the San Francisco Bay Area to give local governments the authority to purchase bulk renewable energy to reduce carbon emissions.  The target of the legislation is a policy vehicle – known as community choice aggregation (CCA) – that was pioneered in states such as Ohio and Massachusetts but has fanned the flames of the controversy in California.

Come Together

Fueled by the poor track record of early retail deregulation pilot programs, CCA allows local governments to aggregate their constituents into a community bulk power purchase program in order to achieve higher economies of scale.  Residents can opt out, but the experience in Marin County reveals that 80% of the customer base chose the CCA preferred green energy program (resulting in a net reduction of greenhouse gas emissions of 19%).  Adjacent Sonoma County began serving customers under its CCA program in May, and San Francisco has been considering a similar CCA program for several years.

Fast forward to the present.  AB 2145, sponsored by a former utility executive, has cleared the Assembly and is up for its first vote in the Senate on June 23.  Ironically, Republicans are generally opposed to the measure (even though the status quo implies greater government intervention to reduce carbon emissions), while key support to this measure is being provided by Democrats (who are aligning with utility union workers).  Although Pacific Gas & Electric’s efforts to derail Marin County’s CCA via a statewide ballot measure failed in 2010, the utility is a key force behind the latest measure.  The opponents include local governments as well as Silicon Valley.

Interestingly enough, another bill designed to more directly pave the way for microgrids in California by modifying the so-called “over the fence” rule was killed.  A recent California Public Utilities Commission white paper identified this regulatory policy as one of the key impediments frustrating California’s efforts to become the world’s leading market for microgrids.

 

Virtual Power Plants Harness the Power of the Energy Cloud

— May 29, 2014

Among the elements of the emerging energy cloud – i.e., the assembly of dynamic networks that can enhance the efficient allocation of distributed energy resources (DER) benefits across a broad customer base – virtual power plants (VPPs) are among the most powerful and flexible.  Enabling power providers to take advantage of economies of scale through aggregation and optimization, VPPs maximize the value of electrons flowing across the system.  Schneider Electric, which is among the long list of companies exploring the VPP opportunity, , likes to use the analogy of Amazon when discussing VPPs: while the store may be virtual, the assets delivered, whether books or CDs or electricity, are real.

The primary goal of a VPP is to achieve the greatest possible profit for asset owners while at the same time maintaining the proper balance of the electricity grid.

Navigant Research’s new analysis, which tracks spending on software networking products and services for VPPs, forecasts that the market will grow from just over $1 billion in annual revenue in 2014 to more than $5.3 billion by 2023.

Total VPP Vendor Annual Revenues, Base Scenario, World Markets: 2014-2023

 

(Source: Navigant Research)

Unifying the Cloud

Vendors such as Ventyx, a subsidiary of ABB, now offer asset performance software for managing assets, operations as well as smart grid analytics as a cloud-based software-as-a-service (SaaS) – the ultimate virtualization of our energy services.  Today, virtually every major regional power grid in the United States relies on Ventyx’s software analytics to manage complexity at the transmission level.  Yet the company is moving away from customized software solutions to a more standardized, unified smart grid architecture that reaches down to the retail customer level.

In May, Ventyx announced that it will roll out some of its product offerings via Microsoft’s Azure cloud platform.  Asset Health, the predictive analytics component of Ventyx Asset Performance Management, is already available as SaaS on the Ventyx website.  It’s offered under a single quarterly subscription fee, delivered via Azure and accessed from the customer premises using the Internet.  Its cloud-based demand response management system service, developed in collaboration with Deutsche Telekom, has also been commercialized at the T-City project in Friedrichshafen, Germany.  Additional Ventyx Asset Performance Management applications will be available in the cloud over the coming months.

This move is significant for the growth of VPPs because it will enable electric utilities and power generation companies to invest in smart grid functionality without costly investments in IT infrastructure, workforce, and ongoing maintenance.  According to Ventyx, the cloud model is also highly configurable, highly secure, and highly scalable.

Navigant Research’s webinar, “The Energy Cloud,” will explore VPPs and other elements of this emerging distributed architecture, on June 3rd at 2 p.m. ET.  Click here to register.

Taylor Embury contributed to this blog.

 

British Columbia Wrestles with Energy Future

— May 23, 2014

Today, British Columbia has one of the cleanest (and lowest cost) power generation systems in the world, with over 90% of its electricity generated from hydroelectric dams.  BC Hydro, the provincial government utility, projects an image of a benevolent partner for both industry and First Nation (the Canadian term equivalent to Native American in the United States) communities.  For example, the utility’s obligation to serve extends out even to those communities not connected to its power grid.  To its credit, BC Hydro claims that it hopes to meet 78% of new demand with energy efficiency and other forms of demand-side management.

At the same time, the lack of regulatory scrutiny of its activities has led critics to charge that its decision-making lacks transparency and, worse, requires a radical overhaul in light of new technologies and market realities favoring small over large resources.  These issues have become magnified due to the controversy surrounding the liquefied natural gas (LNG) developments proposed to be powered up by a hydroelectric facility at a new dam on the Peace River, known as Site C, and could have lasting repercussions in British Columbia, not just for regional economic development, but for independent power producers looking to develop non-hydro renewable resources, such as wind farms, over the next decade.  I got a full view of the controversy and the issues surrounding it at the recent BC Power Summit in Vancouver.

What Does “Clean” Mean?

The BC government wants to create the “cleanest” LNG industry in the world, a response to critics who contend new plans to explore fracking and other forms of shale natural gas exploration are a boondoggle in the making.  While the prime motivation for developing Site C is to export LNG to markets in Asia Pacific, LNG could also power up gas-fired generation capacity within the province itself.  Unlike most markets in the United States, where natural gas displaces coal and lowers overall prices, LNG could not only raise prices for BC consumers, but also increase greenhouse gas emissions.

Yet, the largest controversy revolves around how best to provide power for the massive LNG infrastructure contemplated for drilling and terminal operations.  The leading proposal is to construct a large hydroelectric dam in the vicinity, which would exceed 1,000 MW in capacity.  In the process, the Peace River valley would be flooded, and that, according to First Nation indigenous peoples, would violate past treaties with the Canadian federal and provincial governments.  Furthermore, the hydroelectric development would have major impacts on grizzly bears and a host of other wildlife species.

An Alternative to Diesel

Renewable lobbies such as Clean Energy Canada have put together portfolios of wind, solar, and natural gas that could provide an equivalent amount of electricity as Site C hydro, with only a 2% cost increase over the preferred hydroelectric option.  But it appears the writing is on the wall and British Columbia will probably move forward with what will likely be its last major hydro project.

Many of the 30 or so remote First Nation communities in BC still rely upon diesel as their primary source of power generation as they are not interconnected to the BC Hydro power grid.  Perhaps the oddest twist to this story is that there are proposals circulating to ship LNG to these First Nation communities – which might actually shrink their carbon footprints, in light of the need to also truck diesel fuel over long distances.  Companies such as Koho Power Corporation are working to transform these communities into microgrids, incorporating distributed renewables.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Energy Storage, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Grid Practice, Smart Transportation Practice, Utility Innovations

By Author


{"userID":"","pageName":"Peter Asmus","path":"\/author\/peter-asmuspikeresearch-com","date":"7\/30\/2014"}