Navigant Research Blog

How Many Ways Can We Control a Microgrid?

— April 17, 2018

How to control a microgrid? Let me count the ways. In the Navigant Research Leaderboard: Microgrid Controls report, all energy storage and smart inverter companies were excluded. This was done to have an apples-to-apples comparison since controls encompass many different technologies. Among the available solutions, microgrids are controlled with digital relays, smart switches, traditional automation products, and increasingly, new sophisticated software algorithms.

This blog traces the evolution of one battery vendor—EnSync Energy—and acknowledges how key microgrid control innovation has flowed from the energy storage community. The story illustrates how battery vendors have evolved over time, turning many early assumptions about microgrids upside down. Whereas in the past microgrids were designed to minimize or eliminate the need for battery storage due to cost, today the vast majority of microgrids include some form of energy storage, especially systems that incorporate renewables.

The roots of what is now EnSync focused first and foremost on a unique flow battery chemistry, with its control architecture as a secondary feature. “The original company had significant intellectual property in power controls. That was one of the key reasons I joined the company,” said Dan Nordloh, executive vice president. “I believed there was peril ahead in remaining a flow battery supplier,” he noted, referencing the recent bankruptcy of ViZn Energy in validation of his concerns.

In contrast, EnSync is no longer focused on flow batteries and has an agnostic approach to battery type. It now boasts over 22 current projects in Hawaii alone, and these represent $35 million in electricity sales over the term of the power purchase agreements (PPAs). The company is deploying a modular, scaleable, off-grid system in East Africa that will likely link up with a larger village nearby. EnSync has also added to its list of partnerships by entering into a strategic relationship with Schneider Electric.

Is Plug and Play the Way to Go?

The key to EnSync’s success? “We decided to move away from single application cul-de-sac designs and instead shift[ed] to a more modular, rack-mounted plug-and-play approach, which future-proofs microgrids. Adding a new resource? Just slide a new drawer in,” said Nordloh. Picking up on a trend also evident among energy storage vendors such as Greensmith, companies that started out with a focus on battery optimization have expanded their reach to generation and loads. In short, they now offer microgrid controllers.

“I like using the analogy of Lego blocks. Remember, a small microgrid is just as complex as a large microgrid. But with our direct current (DC) bus as a backbone, it is easier to add to the microgrid over time, reducing the need to re-engineer the microgrid every time you want to expand the distributed energy resources (DER) mix. And with their integrated cloud-based DER Flex controls package, microgrids can be changed to enable export of grid services with a simple software adjustment,” continued Nordloh. He pointed to the Palama Holdings meat processing plant on Oahu that is installing a microgrid under a self-financed PPA. At present, the microgrid reduces costs by enabling demand charge abatement strategies. Yet state regulators are considering creating markets for grid services. This microgrid could provide demand response and frequency regulation through EnSync’s DER Flex controller with a simple software switch.

An advantage of EnSync’s DC-centric approach is that users do not need to control variable solar PV. Instead, voltage algorithms keep the microgrid in balance. This approach is the corollary to the droop in frequency of the alternating current controls approach known as CERTS. Both control schemes shy away from the common master/slave control protocol, moving the market closer to plug and play.


Tracking Blackouts: Validation That C&I Microgrids Are the Next Big Thing?

— April 10, 2018

A number of reports tracking power outages in the US have been released this year. These reports underscore why this country continues to be the global leader on grid-tied microgrid capacity, according to Navigant Research’s Microgrid Deployment Tracker. These statistics also show why commercial and industrial (C&I) customers have emerged as the fastest growing microgrid market segment globally.

Eaton Blackout Tracker Results

Eaton, a leading microgrid solutions provider, releases its annual Blackout Tracker every year. The data for 2017 revealed a few surprises. The US sustained 3,526 blackouts in 2017 that interrupted grid delivery of power services to an aggregate population of 36.7 million. The average power outage averaged 81 minutes of down time. While the total number of overall outages in 2017 was 9% less than in 2016, the number of people affected by these blackouts more than doubled. This seeming dichotomy can be explained by the longer term and wider geography of major blackouts occurring last year due to extreme weather hitting Florida, Texas, and Puerto Rico (along with wildfires hitting California).

As noted in a previous blog, the state that features the most power outages is California. No doubt, part of this is due to sheer size. Nonetheless, the state has had the dubious distinction of taking top honors for blackouts for the ninth year in a row. Top identifiable causes were weather and falling trees followed by failing equipment and human error. All 50 states were affected by power outages, with the average cost at $100,000 per hour. One of the most expensive costs incurred by a single C&I customer was Delta Airlines, which lost $50 million due to an outage at the Atlanta, Georgia airport.

Ranking All 50 US States by Number of Blackouts: 2017

(Source: Eaton Blackout Tracker)

S&C Electric Results

S&C Electric, a leading company active in utility distribution microgrids, released its own analysis focusing explicitly on C&I customer blackouts in the US. Some 251 companies representing operations including manufacturing, data centers, and healthcare, among others, responded to this survey conducted in 4Q 2017. Here are some of the highlights rendered from this research:

  • 41% of respondents claimed the average power outage was up to one hour of time, while 26% said one hour or more.
  • In terms of frequency, just under half (49%) said they experienced one or more power outages every year; 21% said once a month or more (see the figure below).
  • In the past 12 months, 84% of respondents recalled some form of power outage.
  • Longest duration power outages were reported in the manufacturing sector with 58% reporting outages of an hour or greater.
  • Productivity loss was the main impact upon C&I customers experiencing power outages (76%).
  • On a regional basis, the longest power outages occur in the South, with 62% of respondents being affected by a power outage lasting more than one hour.

US C&I Outage Frequency by Region, 2017

(Source: S&C Electric)

What Does This Mean?

What basic insights can one glean from this analysis? While initially laggards, C&I microgrids are now picking up momentum and will continue to grow at a fast pace not only in the US, but globally. The S&C Electric report supports this view as 71% of respondents say they own or plan to develop alternative energy sources to supplementing their utility power supplies. From a microgrid market perspective, even more important is that 70% see power reliability as an existing cause for concern, and 40% would pay a premium to improve it.


Microgrid Controllers Emerge at Key Industry Crossroads

— April 10, 2018

To many, the mystery behind the curtain of what is and what is not a good microgrid controller may feel a little like the Wizard of Oz. Often referred to as the “black box” or the “secret sauce” of what makes a microgrid work (or not), the number of companies with automation and control products keeps increasing (though casualties also litter the vendor landscape). But determining how these controllers compare, and what exact hardware and software components make them tick, remains opaque. Is it smart inverters, digital relays, or SCADA systems—or the even more nebulous world of software?

Navigant Research has just published its latest Leaderboard report on microgrid controllers. Among the vendors that ranked in the top five was Siemens, the German industrial giant. A Microgrid Knowledge survey has also shown that, among 21 candidates, Siemens was the most recognized company associated with microgrids.

A Confluence of Energy Storage

The company recently made two important moves designed to increase its microgrid market share. It has formed a new partnership with AES to offer energy storage solutions, creating a new global company called Fluence. Though this partnership is more focused on larger-scale energy storage projects, virtually every microgrid coming online today has some form of energy storage. In fact, Navigant Research expects that the revenue opportunity of energy storage in microgrids will feature a compound annual growth rate of 37.4% over the next decade, reaching an annual implementation spend of $4.5 billion by 2026. Fluence boasts some impressive credentials: 56 energy storage projects either operating or awarded in 15 countries with a total capacity of 485 MW. How this new strategic partnership will influence the microgrid market remains to be seen.

Better To Be Simple

Siemens has also released a new, lower cost microgrid controller product—SICAM Microgrid Controller—which is, in essence, a microgrid in a box for grid-tied applications. The company sees value in offering a simpler control offering for microgrids that are smaller in scale and less focused on sophisticated market exchanges, moving closer to a plug-and-play solution. I have long argued that the microgrid market may grow faster if there is a shift away from complex engineering projects in the 50 MW, 100 MW, or 200 MW range, focusing instead on 1 MW and below projects and allowing cloud-based software systems to aggregate these microgrids into a virtual power plant. Companies such as Spirae have articulated this approach, stripping out excessive engineering costs that can often kill a project’s viability.

The Bronzeville Project

In late March, Siemens announced a new project that shows that—despite its new plug-and-play, lower cost microgrid controller offering—the company also sees a market in its more sophisticated software solutions. After lengthy regulatory and legislative delays, the Bronzeville microgrid on the south side of Chicago is to be rate based by Commonwealth Edison. This project will rely on Siemens’ microgrid solution, its Microgrid Management System software, which will be used to optimize a cluster of two microgrids. The purpose of the project is to use advanced algorithms to implement controls for a microgrid serving over 1,000 customers, including critical facilities such as the Chicago Police Department headquarters, while interacting with the long-standing microgrid at the Illinois Institute of Technology.

A new energy storage powerhouse partnership, a new lower cost control option, and a project demonstrating the ability of its software to manage multiple microgrids show that Siemens is reinventing itself, as are its utility partners.


What Will the Microgrid of the Future Look Like?

— March 6, 2018

Microgrids have been around for a long time. In the past, the majority were powered up by diesel fuel and often were not connected to a traditional utility power grid. But what will the microgrid of the future look like?

As reported in the last update to the Microgrid Deployment Tracker published in 4Q 2017, the remote microgrid market share for total identified cumulative capacity declined from 45% to 39% in the 2Q 2017 update. This trend is more of a reflection of the grid-tied market picking up momentum than a lack of interest in remote off-grid applications. For comparison purposes, the next largest microgrid market segment in the update is the commercial and industrial segment, which has witnessed a recent surge and which Navigant Research estimates will be the fastest-growing market segment over the next decade.

Primary DER in Microgrids Are Going to Change

Rather than focusing on market segments, what about the types of distributed energy resources (DER) being deployed within microgrids? It should come as no surprise that diesel and natural gas generation still lead the resource mix. Looking into the future, a far different picture emerges.

In the Microgrid Enabling Technologies report published this January, combined heat and power was the leading DER choice in terms of capacity for microgrids on a global basis in 2017, with 655 MW deployed, followed by solar PV (392 MW) and then diesel (385 MW). By 2026, however, the DER landscape shifts, with solar PV jumping to a commanding lead with 3,786 MW annually, followed by energy storage with 3,292 MW. Energy storage boasts the most aggressive compound annual growth rate (CAGR) with 37.4%; solar PV follows at a CAGR of 28.7%.

Investment Spending Predicted to Rise

Implementation spending tracks this capacity growth. All eight DER were profiled in the recent report (which also includes biomass, diesel, hydro, and wind power). This market forecast represented just over $4 billion in investment in 2017. That annual spending increases to nearly $23.6 billion by 2026, a 21.7% CAGR. Solar PV ranks as the top DER investment target for microgrids, with annual spending reaching virtually half of all DER investment by 2026 at $6.7 billion. Energy storage spending follows at $4.5 billion annually in 2026.

Collaboration Expected as Power Sources Diversify

In short, solar PV and energy storage will be the most popular MET options for future microgrids. Yet, the more interesting question revolves around the potential role of fossil generators. One clue comes from companies such as Fairbanks Morse, which now offers a power reliability as a service platform. Rather than view solar and storage as a threat, it is investigating how to collaborate with the industry’s overall shift to the Energy Cloud.

Fairbanks Morse is not the only company exploring how the energy as a service model applies to microgrids. Perhaps the biggest single headline for microgrids in 2018 is the partnership between Schneider Electric, Dynamic Energy Networks, and the Carlyle Group, looking to deploy $500 million in microgrids under a microgrids as a service business model.

Microgrid Evolution Is Just Getting Started

Of course, the energy service approach to microgrids is still in incubation. The key to making this approach work are controllers, the magic sauce, if you will. As DER portfolios become commoditized, the innovation shifts to automation, controls, and software. Who are the leaders in this space? Look for my forthcoming report ranking control providers later this month.

Getting back to my opening question, the microgrid of the future will be more sustainable, ultra-resilient, plug-and-play, financed under an energy as a service business model with private capital, and will include both solar and energy storage.


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