Navigant Research Blog

Pool of Innovators in Microgrid Space Is Diverse, Often Incomparable

— October 5, 2015

Navigant Research’s recently published Navigant Research Leaderboard Report: Microgrid Controls is our first ranking of companies active in the microgrid market. The hardest part of this examination of innovators in this space was leaving so many market movers out, due to the focus on microgrid controls offered up by either developers or system integrators.

What if we were to turn the general assumption for the Navigant Leaderboard format on its head? In other words, why not create an apples-to-oranges listing? I am going to go out on a limb and highlight three companies not included in the Navigant Leaderboard report, but that deserve special mention due to their near-term impacts on the overall global microgrid market, regardless of what their role is. I have previously highlighted two companies, a utility (Commonwealth Edison) and an energy storage and smart grid innovator (S&C Electric) that were not included in the Leaderboard. Both were disqualified for inclusion because the ranking excluded utilities and vendors that primarily focus on energy storage integration.

Here are three other companies not included in the Leaderboard that I would like to highlight, for reasons explained below:

  • Energizing Company: Based in the Los Angeles area, Energizing Company is poised to announce one of the largest grid-connected microgrids in the world. The company sees its role as akin to a movie producer. (Well, what do you expect from a company based near Hollywood?) It doesn’t offer a controls platform and, though a private developer, sees utilities as its primary clients. It seeks to sponsor microgrids utilizing public-private partnerships. The company has fully embraced the concept of utility distribution microgrids with a plan for a microgrid to encompass an entire municipal utility’s service territory, optimized with smart grid technologies. It helps that the community this microgrid will serve is allegedly one of the smartest communities in the world (and I am not talking about IQ, but embedded infrastructure intelligence).
  • PowerStream: Ontario’s second-largest municipal utility, PowerStream, was the first utility in North America to announce a microgrid offering under a business model it refers to as DBOOME—design, build, operate, maintain, and energize. Perhaps the company’s most forward-looking project straddles what Navigant Research would identify as either a series of nanogrids or decentralized virtual power plants. Working with Sunverge—another company Navigant Research views as a microgrid leader—PowerStream will aggregate solar PV and lithium ion battery systems installed in residences in order to provide bidirectional value for customer and utility alike. The utility requires each customer to pony up some of their own money in return for long-term savings and exchanges of bidirectional energy services that serve both residence and utility grid.
  • Win Inertia: Among energy storage vendors active in the marketplace, Win Inertia is one of the most creative. Based in Spain, the company’s project portfolio highlights fascinating applications for hybrid battery solutions, including both alternating current and direct current (AC and DC) systems for electric vehicle (EV) charging, railways, harbors, buildings, islands or renewable integration for, of course, microgrids. Win Inertia has enjoyed 100% revenue growth since its inception and boasts a portfolio of over 15 microgrid-related projects either in operation or under development.

At last count, Navigant Research has profiled more than 50 active companies in the microgrid market, with none of them capturing more than 10% of the total market revenue. This is the status of the market today: there is no clear leader. The three companies profiled on this blog highlight the fact that innovation is coming from a variety of market players, each focused on a different part of the value chain.

Will one company emerge as the clear market leader? Only time will tell.


ComEd and S&C Electric Push Utility Distribution Microgrids in Chicago

— August 17, 2015

The market for microgrids is evolving, with many utilities shifting their stance from curious bystanders to active participants. Utilities ranging from Duke Energy to San Diego Gas & Electric are building microgrids, with many others scratching their collective heads as they try to figure out what their role might be.

If we take a bird’s eye view, the East Coast seems to be the hot bed for regulatory reforms to enable microgrids in a deregulated policy environment—the New York Prize funding for 83 projects being the prime example. California is more focused on long-term planning for a rich variety of distributed energy resources (DER). The country’s heartland is taking yet a different approach, with microgrids that have much more in common with a utility smart grid innovation.

Microgrids in the Chicago Area

The key differentiator in the Chicago area is the large-scale microgrid on the utility side of the meter. These microgrids can take advantage of the expertise of S&C Electric’s portfolio of products. For example, the company’s offerings center on smart switch and smart inverter products to optimize energy storage. Working in conjunction with one another, these hardware devices reduce permanent outages resulting when lateral fuses operate in response to momentary faults—including brief interruptions on feeder lines when substation breakers trip. Other S&C microgrid offerings include an automatic restoration system that can restore power within seconds. This approach—unlike the more typical behind-the-meter microgrids—is designed to manage DER on behalf of the utility first (rather than the customer-focused approach of the majority of microgrids deployed to date).

While S&C Electric serves as an example of vendor innovation, ComEd is exploring the microgrid market with proposals for the rate-basing of utility distribution microgrids. Along with being awarded a grant from the U.S. Department of Energy (DOE) to develop a microgrid controller capable of managing multiple microgrids, ComEd is plowing new ground on the regulatory front. Unlike New York or California, the fate of ComEd’s broader microgrid program designed to steer $300 million in rate-based funding toward six microgrid projects is dependent upon state lawmakers. The proposed legislation—HB 3328/SB 1879—encompasses much more than just microgrids. If approved, however, it would set a major precedent in supporting the concept of rate-basing microgrids to support critical infrastructure. Due to the unique configuration of these proposed systems, the proposed legislation appears to be a major step forward for utility distribution microgrids.

Navigant Research has published its first Leaderboard Report on microgrids. The company ranking is focused on project developers and/or systems integrators that also offer their own controls platform for optimizing a microgrid. As a result, many key innovators in the space were left out—among them, utilities such as ComEd and S&C Electric. Yet, both of these firms are moving the market forward in ways not imagined just a short time ago.


Data Centers Drive Market for DC Distribution Networks

— July 15, 2015

The market for direct current (DC) distribution networks is not a single, cohesive market. Rather, it encompasses several disparate opportunities—telecommunications towers, data centers, grid-tied commercial buildings, and off-grid military networks—that revolve around different market assumptions, dynamics, and drivers.

Given the expense of current existing redundant alternating current (AC) uninterruptible power supply (UPS) systems, DC data centers would appear to be a no-brainer from an engineering point of view. Despite this, energy remains a small portion of the overall operations budget of data centers. As a result, the value proposition to conservative operations managers may still be a hard sell in the near term. However, DC microgrids can actually offer higher reliability than status quo AC solutions, so validating early adopter DC microgrids is a critical step forward for this market opportunity. The ABB 1 MW DC data center located in Zurich, Switzerland, is just one example of how this application is gaining momentum.

Distributing DC enables replacement of AC-DC converters within individual devices with a smaller number of larger, more efficient converters. LED lighting installations that run on 24V DC lines, for example, require up to 15% less energy than the same lights running on fixture-level rectifiers. Nevertheless, losses in the linings limit 24V DC distributions to just 10 meters, so manufacturers are developing 380V DC wiring to extend comparable benefits to entire data centers and other commercial buildings. Asia Pacific is expected to lead this market in both the near and long-term, with China alone having already deployed hundreds of DC data centers.

DC Data Center Network Implementation Revenue by Region,
Base Scenario, World Markets: 2015-2024

DC Data Network Implementation Revenue

(Source: Navigant Research)

The core challenge facing DC distribution networks lies with the need for standards and open grid architectures that can help integrate the increasing diversity of resources being plugged into retail power grids. Even DC advocates maintain that distribution networks operating at the municipal level may always remain AC systems. The efficiency gains accrued by sticking with DC instead of converting to AC (and then back to DC) are not as great at this higher voltage level. This may remain the sweet spot for AC technology, serving the vital role of interconnecting large wholesale transfers from high-voltage DC (HVDC). In fact, DC microgrids and nanogrids could, ironically enough, extend the life of the incumbent AC distribution system by taking loads off that system in an intelligent and dynamic way.

The focus of the industry, working through the efforts of the EMerge Alliance, is currently medium-voltage DC distribution networks. These systems are mostly concentrated on the data center market segment, but can also apply to commercial buildings—especially those of considerable scale, such as big box retailers (Costco, Walmart, etc.). At present, the majority of progress in developing DC-based technologies has occurred at either the high-voltage (more than 1,000V) or low-voltage (less than 100V) level of electricity service. Since microgrids and building-scale nanogrids typically operate at medium-voltage (roughly 380V to 400V), much work needs to be done to bridge this voltage innovation gap, and this goal is the focus of companies such as ABB, Bosch, Emerson Network Power, and others.

As noted in a previous blog, Bosch is encountering a few regulatory issues when it comes to deploying DC microgrids, primarily an artifact of assumptions that distributed renewables and energy storage are interconnected to the alternating current utility grid. But surprisingly, DC fits in well with AC infrastructure, and is especially accommodating for integrating cutting-edge distributed energy resources.


The Future of U.S. Solar Energy Companies – Part 2

— July 6, 2015

Note:  This blog is the second in a four-part series examining the evolution of U.S. solar companies.

Continuing on my previous blog, outlining some of the most important trends that have shaped the U.S. solar PV landscape and offering a glimpse into the post-30% Investment Tax Credit (ITC) future, this blog looks at how U.S. companies have made inroads overseas, with a particular focus on emerging markets, microgrids, and hybrid energy solutions.

Emerging Markets: Utility Scale

Developing countries are becoming a growing opportunity for U.S. solar companies looking to leverage their expertise in regions and applications with very high electricity costs or weak grid systems. In many ways, developing countries are the next frontier, but they offer unique challenges along the way. Markets such as South Africa, India, Chile, and China have rapidly been turning into high-growth markets that could drive sales in the latter half of this decade in utility-scale installations down through remote microgrids.

Notably, SunEdison has been operating in India for a number of years, but in 2015, the company has made numerous high-profile announcements, including reportedly signing agreements for up to 15 GW of solar and wind projects in the country. The company also announced a $4 billion deal to manufacture solar panels in India. Another company in this field, First Solar, has also made significant announcements for the Indian market, including a target of 5 GW by 2020. In addition, this company has installed the largest solar PV plant in South America in Chile at 141 MW.

At the utility scale, the leading country in Africa for renewable energy deployment is South Africa, where the government’s integrated resource plan may result in nearly 10 GW of solar PV installed by 2030.  With nearly 1.5 GW of solar PV and 2 GW of wind currently installed or in development, following four well-administered auctions, the country is making strong progress. SunPower has completed 33 MW of projects in South Africa in addition to being appointed as the preferred energy performance contractor (EPC) and operations and maintenance (O&M) contractor for an 86 MW project by the MULILO-TOTAL consortium. SunPower also announced at the end of 2014 that it is moving forward with at 160 MW module manufacturing plant in Cape Town, South Africa to meet growing demand.

Emerging Markets: Microgrids/Hybrid Energy Solutions

Remote microgrids and hybrid solar-diesel or wind-diesel systems are already common, with more than 600 identified  in Navigant Research’s Microgrid Deployment Tracker. To put that number in perspective, SunEdison has set a target of developing 5,000 microgrids in India by 2020, with many including storage. Since 2014, First Solar has been pursuing build, operate, and own (BOO) fuel-replacement projects, which include the prospect of displacing diesel in mining and other heavy industrial operations.  First Solar can provide a levelized cost of energy at between $0.07-$0.15/kWh, making it comparable, or cheaper, than conventional power plants—but also far less expensive than diesel, which generates electricity upwards of $.70/kWh.

In 2015, First Solar and CAT announced a strategic partnership to develop an integrated PV solar solution for microgrid applications. Under the agreement, First Solar will design and manufacture a pre-engineered turnkey package for use in remote microgrid applications, such as small communities and mine sites. The package will feature CAT-branded solar panels manufactured by First Solar and will include balance of system components. CAT will exclusively sell and support the integrated solution through its worldwide dealer network, along with its current offerings of generator sets and energy storage. Many other companies are expected to soon be offering similar solutions.

In the next installment of this four-part blog series, I’ll cover energy storage and the role of utilities in distributed solar.


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