Cleantech Market Intelligence
California Microgrids: RESCOs to the Rescue?
Of all states, only California had put extensive thought into the development of a microgrid definition and committed significant funds to support pilot projects setting the stage for greater reliance upon distributed renewables at the community level. The California Energy Commission’s program known as “Public Interest Energy Research,” or PIER, helped fund R&D activities in Ohio, working in conjunction with American Electric Power and the University of Wisconsin-Madison to pioneer a new microgrid controls technology at the Dolan Technology Test Center. Funding technology development in other states is quite rare for state agencies, but the PIER program planted the seeds for a microgrid revolution.
The concept of RESCOs – Renewable Energy Secure Communities – is a unique California phenomenon also sponsored by PIER. So far, PIER has plowed $12 million into its Renewable Energy Secure Communities (RESCO) program. Though only a handful of the RESCO projects are bona fide microgrids, most of these R&D and pilot projects are laying down the foundation for future microgrids or “virtual power plants.”
In 2008, for example, PIER awarded a demonstration grant to San Diego Gas and Electric Company (SDG&E) to pursue its Borrego Springs Microgrid Project (and then the Department of Energy followed suit with additional R&D grant funding). At a total cost of approximately $15 million, this demonstration is intended to explore microgrid islanding of an entire substation area. The goals of the project are to reduce feeder peak load by 15% through the integration and control of multiple distributed generation and electrical energy storage devices, while improving substation area reliability in a cost-effective manner. Horizon Energy is the system integrator and expects the microgrid to grow to approximately 10 MW in size.
Other microgrids that have received PIER funding include the 3.2 MW Santa Rita Jail project in Alameda County, perhaps the greenest jail in the world, and a microgrid at the University of California-Irvine, whose ultimate scale has yet to be determined. Perhaps the most noteworthy microgrid, however, is the 42 MW University of California-San Diego microgrid, which is scheduled to go “live” later this year.
Last week, a RESCO symposium held at the University of California-Davis provided any opportunity to track progress on these state-funded projects designed to increase reliance upon distributed renewable energy generation throughout California. Among some of the key observations rendered during this two day symposium were these:
- Southern California Edison’s (SCE) director of engineering advancement voiced concern over the fact that the utility expects to lose 50% of its transmission and distribution workforce in the coming year. He also expressed worry about the organization’s ability to transfer knowledge and the corresponding challenges to meeting the aggressive renewable energy targets now in place throughout the West. SCE is currently focusing on the “system of systems” required to link home energy networks with plug-in electric hybrids at the distribution level of service.
- Sacramento Municipal Utility District’s (SMUD) Jim Parks, program manager for smart grid services, pointed out that the public power entity was engaged in over 25 smart grid projects, accessing $127 million in federal funding for smart meter deployments. He noted that the array of vendors in this space “just adds confusion” for many utilities and that many of their products were not exactly “shovel ready.” Among the future changes to SMUD’s demand response efforts are concentrated in its air conditioning (AC) load management system, which can turn off 100,000 air conditioning units, but given the soaring temperatures in Sacramento during summer, customers often complain. “With a smart grid, we can turn down AC units, so they would not be turned completely off,” making these demand response programs more popular with its customer-owners.
- San Diego Gas & Electric’s (SDG&E) William V. Torre, chief engineer, noted that the utility is releasing an RFP for “community energy storage” to be integrated into SDG&E’s Borrego Springs microgrid, including the potential development of lithium-ion battery storage banks.
Perhaps the most thought provoking presentation came from Byron Washom, director of strategic energy initiatives for the UC-San Diego microgrid, a campus that has four times the energy density as a typical commercial/industrial complex. The campus can provide 85% of its own energy needs and the remaining 15% of power provided by SDG&E still allows the facility to rank as the utility’s fourth largest customer. The microgrid is therefore planned to operate in “island” mode for 85% of the time.
One reason there is so much interest among California universities in microgrids is “there are no needs for building permits,” since these universities are self-regulating. Microgrids still need federal air quality permits, but due to reliance upon non-polluting fuel cells and solar PVs as new additional supplies, these permits are not usually necessary since these sources displace traditional fossil fuel power generation.
“The $2 million grant we received from the RESCO program was the catalyst for this project,” said Washom. The funding helps allow EDSA Power Analytics to help refine software previously used in airports and offshore oil platforms to serve as the master controller of a highly complex large microgrid.
Washom described the EDSA controller as, “the maestro of the orchestra,” using the analogy of an orchestra for a microgrid. The EDSA system interacts with the California Independent System Operator to integrate demand response signals with local solar PV generation “to re-enter new sheet music for the maestro” on an hourly basis.
The other key funding for the project at the state level came from the California Public Utilities Commission with $600,000 flowing to Viridity Energy to help develop the business case for the microgrid based on evaluating tariff structures to maximize the value of solar PV generation within the context of microgrid operations.
PIER is expected to release a second RESCO solicitation in the summer or fall of 2011. The initial estimate is that only $3.5 million will be available, with a cap of $1 million per project. The level of funding will not decrease, but could be increased.
The federal government’s American Recovery and Reinvestment Act (ARRA) funds supported 15 different projects in California, totaling $426 million. The PIER program, in comparison, added $13.2 million, with the private sector pumping another $806 million, to bring the total investment into the state’s smart grid at $1.25 billion. Of the PIER $86 million annual budget, approximately $8 to $10 million is devoted to smart projects. As Pedro Gomez, program manager of the CEC’s energy technology integration program noted, “At that rate of investment, it would take literally decades for California to meet its goals on efficiency, reliability and clean power.” That’s why RESCOs, microgrids, and virtual power plants need to seek outside sources of government and private sector funding.