Navigant Research Blog

Novel Microgrid Architectures Face Regulatory Hurdles – Even in New York and California

— June 4, 2015

If I had to pick two states that are leading the charge on reinventing electric utilities, they would be New York and California. Yet, even in these state laboratories of regulatory reform, novel forms of distribution networks (often referred to as microgrids) that rely upon the inherent advantages of direct current (DC) are facing obstacles.

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. This, among other issues, is the focus of the first major conference sponsored by the Institute of Electrical and Electronics Engineers (IEEE) on DC distribution networks. The conference will take place in Atlanta, Georgia, from June 7 through June 10.

In New York, Pareto Energy of Washington, D.C. obtained preliminary engineering approval from Consolidated Edison (and a $2 million grant from the New York State Energy Research and Development Authority [NYSERDA]) to install its patented GridLink microgrid controller at the 12.8 MW combined heat and power (CHP) plant that serves Kings Plaza Shopping Center on the Brooklyn waterfront.  GridLink converts power from each generation source (including grid power) from alternating current (AC) to DC, collects all the power on a common DC bus, converts that DC power back to AC, and distributes power to any load (including those on the utility grid).  All the while, each power source is electrically isolated. In short, GridLink creates a non-synchronous plug-and-play microgrid.

Although Kings Plaza has never been connected to Consolidated Edison’s grid, it provides electric and thermal energy to the center at costs less than half of equivalent utility services. Under the plan, 8 MW of low-cost power from Kings Plaza’s CHP unit will be exported to the utility grid, which may be utilized to serve nearby low-income communities during a major power outage. Despite these potential benefits, some regulatory snags have delayed the project. Pareto has also filed a petition with the New York Public Service Commission, claiming discrimination against its lower cost option to traditional power delivery infrastructure to meet contingency requirements for reliability within the Consolidated Edison service territory.

The View from the Other Coast

In California, the issues are different, but they also involve DC. One case involves Bosch, which was awarded a California Energy Commission grant of $2.8 million grant to develop a high-penetration solar PV DC microgrid at an American Honda Motor Co. parts distribution center in Southern California. The project is designed to validate the efficiency performance benefits of a patented system allowing it to directly connect DC power flowing from solar PV to LED lighting and DC ventilation systems located within the building, as well as a DC energy storage device. The benefits of DC attached to this project include lower installation and operating costs. In addition, this project is pioneering the application of a DC distribution network within existing building codes in order to boost reliability.

While Bosch observes it has not run into any problems with building codes or other such potential obstacles to its DC building grid business model, it has identified an interesting dilemma. Since state subsidies for both solar PV and energy storage are linked to the size of the inverter interconnecting with the AC grid, it appears DC technologies are being discriminated against, despite the fact they are more efficient and reliable.

In both cases, the status quo is being challenged by new technology revolving around a nonsynchronous microgrid incorporating the advantages of DC.  This is the subject of my next report, Direct Current Distribution Networks, expected to publish later this month.

 

Cutting-Edge Microgrid Projects Still Popping up in the United States

— May 26, 2015

The current edition of Navigant Research’s Microgrid Deployment Tracker gives credence to the idea that the Asia Pacific region may emerge as the market leader over the long term, with data collected from projects and project portfolios representing 47% of total global capacity as compared to North America’s 44% total global capacity market share. At present, however, North America remains king when it comes to actual operating projects. If looking at microgrids currently online, North America still leads by holding a nearly identical market share (66%) compared with data presented in the 2Q 2014 Tracker update (65%).

I want to highlight two project entries that show how the United States, due in part to new programs promoting community resilience, is pushing the envelope on both technology and business models.

Blazing the Trail

The first project, located on the East Coast, is a transportation microgrid known as NJ TransitGrid and located in the New Jersey Transit system’s service area. Beyond being America’s third-largest transportation system and serving nearly 900,000 passengers daily, the stretch of rail covered by the project is both an important access point to Manhattan and New York and is one of the most at risk for flooding. Existing railroad right-of-ways could be used to connect distributed generation (DG) from small wind, solar PV, and fuel cells to elevated power substations and energy storage. All of these components will be managed by smart grid technologies to integrate renewables and island the entire system during harsh storms such as Hurricane Sandy. It is anticipated that the system’s total generation capacity will eventually reach 104 MW, making it one of the largest microgrids in the world. New Jersey state officials expect the project to have sufficient capacity to power up rail stations between the cities of Newark and Hoboken, which are approximately 10 miles apart.

The second project is on the West Coast and is known as the Salem Smart Power Center. This project is an example of a partnership approach to development with an investor-owned utility (Portland General Electric) looking to vendors such as Eaton to help integrate battery energy storage solutions to help address the impacts of customer-owned solar PV on the utility’s distribution grid. The project, which incorporates 5 MW of conventional DG, solar PV, and a 5 MW battery, also sought to increase reliability for a mix of business (data center), institutional (National Guard), and residential customers. The resulting energy storage system from Eaton provides seamless support for loads in the event of an upstream outage. The intelligent energy storage system works with standby generators to create a high-reliability zone consisting of a feeder supplying community customers. The energy storage system supports the microgrid for several minutes while generators are started, creating a backup power supply, with tests showing the capability of carrying the entire load during transition to island mode.

Unlike the majority of microgrids deployed to date in the United States, which tend to focus on campus operations, the Power Center is instead seeking to bolster the utility’s reliability. As such, it is classified as a utility distribution microgrid (UDM). One noteworthy factoid derived from the newly published Microgrid Deployment Tracker is that such UDMs now represent 16% of total microgrid operating, planned, and proposed capacity, a segment category ranking only behind remote systems, which are largely deployed in the developing world and unique markets such as Alaska.

 

Microgrids Expand Across India

— May 13, 2015

Navigant Research’s data on the microgrid market has historically pointed to North America being the mother lode. The host of state programs supporting community resilience microgrids would seem to confirm this conclusion. But there is a counter argument that the developing world is the best microgrid market, and that’s why SunEdison’s move into northern India is so significant.

I think the Asia Pacific region’s microgrid market is likely to ultimately surpass North America, but not until 2030 or so. Recent data provided by Aalborg University in Denmark shows that China alone is planning on installing 4.3 GW of new microgrid capacity over the next 5 years, which bolsters this opinion. But China’s market is problematic due to the prevalence of nationalized grid companies and other unique vendor challenges.

To the Subcontinent

And then there is India. As one telecom infrastructure provider pointed out, there are more planned telecommunications tower deployments in India as there are in all African nations combined! (These telecom towers often serve as anchor loads for microgrids.) Couple that with a government policy of deregulating all microgrids 1 MW and less, and the stage is set for rapid innovation at the lower end of the microgrid market spectrum.

Back to SunEdison … Working with on-the-ground innovators, such as OMC Power, the company hopes to bring online 5,000 microgrids, ranging from 10 kW to 1 MW, by 2020, providing power to 20 million people. While it’s fascinating that SunEdison is moving into this market, given its success with the power purchase agreement model in mature economies such as the United States, largely through solar PV leasing arrangements, even more interesting is its choice of partners: OMC Power.

Having begun in 2011 by focusing on the concept of bringing power to rural developing nation markets, such as India, employing e-power device business models, OMC Power is now changing its tune.  In the past, the company focused on daily home delivery of solar-charged portable energy products (e.g., LED lanterns); its customers paid the equivalent or less as they had paid for diesel or kerosene. The company financed, built, owned, and operated hybrid off-grid micro-power plants that tap solar, wind, or biofuels to provide alternating current (AC) power to telecom sites and portable direct current (DC) power to local villages.

Finding Scale

According to chief marketing officer Par Almqvist, the company’s new direction is a natural evolution. “Once most communities get power, they want more of it,” Almqvist said in a phone interview.  In order to get to the right price point, it has become apparent to us we need to centralize power production. One must find an efficiency of scale.”

Almqvist still sees a role for e-power products and nanogrids, and in some cases, such options are the only viable path for electrification. Yet to reach scale, other business models must also be deployed. “We have proven that the perception that the bottom of the pyramid is a risky clientele is not necessarily accurate. What we’ve discovered is that, especially in rural northern India, people will pay for what is an essential service, especially when they can save money.”

The benefits go beyond economics. The mix of solar PV and deep cycle batteries will also allow telecomm operators to reduce diesel generation to less than an hour a day. This kind of result prompted the Rockefeller Foundation to announce another program that OMC Power is a part of–this one designed to bring power to 1,000 villages.

 

In Europe, Microgrid Ecosystem Emerges

— May 13, 2015

The microgrid market in the United States has reached a crescendo, with vendors (i.e., SolarCity) and utilities (i.e., Oncor) announcing new products and projects on a regular basis. Here in Europe (where I am, just outside Paris and getting a pulse on the European markets for distributed energy), it is all quiet on the western front.

Well, not exactly. If we focus on Germany, a nation that is ground zero for problems related to high penetrations of distributed renewables, two different companies offer a snapshot of how microgrids are gaining ground here, albeit in a more calm and steady pace of development.

The first is Younicos of Berlin, a company I chose as one of the top five to watch in 2013. The company has since secured a partnership with Samsung SDI with performance guarantees on lithium ion battery technologies. More recently, it secured financing for the development of its flagship remote island microgrid on the Portuguese island of Graciosa.

Diesel Reduction

Younicos will partner with Swiss battery manufacturer Leclanche on the project, which will add the following resources to the existing diesel generator sets:

  • A 4.5 MW wind farm utilizing General Electric wind turbines
  • 1 MW of solar PV
  • 2.7 MWh of lithium ion batteries

Of even greater importance to this project than the new partnership with Leclanche is the $3.5 million in convertible debt financing provided by ReCharge ApS, one of the Swiss battery vendor’s largest shareholders. The project, which has been delayed, in part due to the Euro crisis, should be online later this year. What’s most significant about this remote microgrid is that it will be able to operate in diesel-off mode for at least half of the time, realizing an annual renewable contribution of approximately 65%.

Along with the remote microgrid market, Younicos is also plowing forward with a number of grid-tied battery parks that not only provide frequency regulation services, but also are pioneering the development of new revenue streams that can flow from battery storage and grid-tied microgrids alike. The latest such deployment is in Dresden.  Due in large part to its purchase of Xtreme Power, Younicos has an operational portfolio of approximately 100 MW; the company claims its project pipeline totals over 2 GW of potential energy storage and microgrid projects.

Keep it Simple

The key to the innovation Younicos is bringing to the microgrid/energy storage market is its power electronics. Another pioneer in that regard is Easy Smart Grid of Karlsruhe, Germany. Rather than focus on complex communications and smart meters, this company is focused on simple inverter-based solutions that follow innovations by Robert Lasseter of the University of Wisconsin, prime architect of the so-called CERTS software, which can run a microgrid autonomously based on droop frequency. Droop frequency is a technique long used in power generation but that is now being used to control microgrids without the need for sensing or smart meters.  Thomas Walter, the brains behind Easy Smart Grid, takes this idea one step further. His controls technology, which can be applied to both grid-tied and remote systems, links small changes in frequency to pricing of power, enabling economic optimization without complex metering or other customized engineering solutions favored by larger technology companies. For example, if the frequency drops, that means demands on the system are up, and therefore the price of power is higher. This control concept also has immediate implications for the concept of virtual power plants and the emergence of the energy cloud.

Winner of the third best European start-up award for Smart Energy last year, Walters’ company is currently seeking investors, and it has also been in discussions with Younicos about piggy-backing on projects such as Graciosa, where its technology could offer a way to manage resources on an economic basis from the demand side without overly complex versions of a smart grid.

 

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