Glaring evidence of the electrical grid’s vulnerability to severe storms on the East Coast has increased interest in microgrids, which can provide continuous power in the event of a utility service blackout.  As documented in Pike Research’s recent report, Military Microgrids, the U.S. military, the largest consumer of energy in the world, is one of the strongest proponents of this technology.

The U.S. Department of Defense (DOD) microgrid that carries the greatest implications for the larger commercial market is located at Twentynine Palms, the large U.S. Marine Corps base, near Joshua Tree National Park in Southern California.  Some 10,000 Marines train here at a site that stretches over 932 square miles, an area larger than the state of Connecticut.  With a capacity of approximately 13 megawatts (MW), and a generation portfolio featuring solar photovoltaics (PV), combined heat and power (CHP), and a new advanced metal halide energy storage system, this stationary base microgrid is clearly the showcase for General Electric’s microgrid solution for DOD.

The most cutting edge microgrid testing program at Twentynine Palms, known as “ExFOB,” (Experimental Forward Operating Bases), is aimed at overseas installations.  While the focus of large companies such as GE to date has been on domestic base military microgrids, the most radical innovations could occur overseas, where DOD operates approximately 600 FOBs, the majority of which are not connected with reliable power grids.

The 3^rd Battalion, 5^th Marine Regiment was chosen as the unit that would conduct the demonstration and testing of new renewable and efficiency technologies at ExFOB.  The deserts of Southern California feature an environment in the United States that resembles that of Afghanistan, where the battalion would eventually deploy in August of 2011.  The following three technologies were integrated into microgrid tests:

Solar Power Shade: The Military Solar Power Shade Shelter provides up to 1 kW of continuous solar power to low-power draw items.  It also provides shade from the sun, reducing solar heat loads from 80% to 90%.

Ground Renewable Expeditionary Energy System (GREENS): These solar PV-based systems are capable of continuous power, or 1 kW of peak power, designed to be scalable and adaptable for missions that do not require a full base-scale power source or energy storage.

Light-Emitting Diodes (LEDs): Lighting kits provide continuous tent lighting over a 20-day period in temperatures from 85 to 112 degrees Fahrenheit.  This saves a significant amount of energy and works well with renewable energy sources.  The durable lighting system can be set up by two Marines in less than 5 minutes.

A handful of these hybrid solar PV/battery/diesel generator systems were first deployed in July 2011.  They have proven so valuable that two small patrols in Afghanistan have been operating completely on renewable energy.  Another small base has reduced fuel use by 90%.  So far, over 400 portable Solar Portable Alternative Communication Energy Systems (SPACES) have already been deployed in Afghanistan, following testing and validation at ExFOB.

The DOD has played a consistent role in commercializing new technologies that provide tremendous social benefits in the civilian realm.  The microgrid may be another instance where the DOD plays an incubator and market maker role.  The developing world could apply a new model of grid infrastructure, as microgrids deployed initially by DOD are then adopted for non-military village power or industrial mine remote microgrid applications.  The opportunity to help develop these microgrids has attracted a number of powerful technology companies beyond GE, including Lockheed Martin, Honeywell, Boeing, and Eaton.

Wind energy in China has been expanding at an incredible rate, and the Chinese government hopes to speed up this deployment in the future.  Currently, China has approximately 62.4 gigawatts (GW) of wind energy installed, mostly in the remote northern and western regions of the country.  Transmission infrastructure, however, has not kept pace; up to 20% of the power generated is wasted because the wind farms are not connected to the grid.

Microgrids could be the solution, or at least an interim step, to integrating this burgeoning generation capacity.  By definition, microgrids incorporate distributed generation resources and have the ability to isolate, or “island,” themselves from the greater electric grid.  Deploying microgrids near the sites of non-grid connected wind power would have three main benefits:

First, microgrids utilizing the wind generation would provide the surrounding communities with a more reliable source of electricity.

Second, since microgrids have their own generation resources, they draw less power from the electric grid than regular loads.  This means that capital investments in transmission infrastructure would be reduced, since less power would need to flow into the microgrid, and already strained utility budgets would be eased.  For example, a significant amount of wind capacity exists in Inner Mongolia, but the region has a relatively small load compared to the more urbanized parts of China.  The regional utility, Inner Mongolia Grid, lacks the funds to build sufficient transmission capacity to the rest of the country.  Using that power to create local microgrids would benefit both the region and the power producers.

The third benefit is more subtle.  Microgrids enabled with storage components (e.g., batteries, flywheels, and so on) can be used to smooth out the intermittent nature of wind power.  When wind power is greater than load in the microgrid, the electricity can be delivered to the national grid.  With storage components installed, electricity could be delivered in a smoother and more predictable pattern.  Not only would this cause less strain on the physical grid, but the stored power could also be used for peak shifting and load-leveling applications, if the storage capacity is large enough.

Along with the entire Asia Pacific region, China currently has a relatively small share of microgrid installations, only about 118 megawatts (MW), according to Pike Research’s Microgrid Deployment Tracker 4Q 2012.  Microgrid deployments are accelerating in Asia, though, and significant increases in wind power should reinforce that trend.

Microgrid Capacity by Region, World Markets: 4Q 2012

Hurricane Sandy underscores a compelling reality: today’s power grid is wholly inadequate for today’s hyper-digitalized economy.  With more than 8 million people without power for a matter of days, not hours, momentum is growing for technology solutions, as described on this blog by my colleague Bob Gohn.

Recent evidence corroborates the notion that more severe weather is now business-as-usual.   According to the Center for Research on the Epidemiology of Disasters, 100 million to 200 million people were affected by weather-related disasters between 1980 and 2009, with economic losses ranging from $50 billion to $100 billion annually.  The March, 2011  earthquake and tsunami in Japan was just one obvious example during 2011.  (The Sendai 1 MW microgrid at Tohoku Fukushi University operated for 2 days in island mode while the surrounding region was without power.)  Such natural disasters underscore the need for resilient infrastructure for vital electricity services.

The U.S. power grid was graded a lowly D+ by the American Council of Civil Engineers in 2009.   Lawrence Berkeley National Laboratory (LBNL) statistics show that 80% to 90% of all grid failures begin at the distribution level of electricity service.  The average outage duration in the United States is 120 minutes and climbing annually, while the rest of the industrialized world is less than 10 minutes and getting better.

It has become quite clear that the modern, digital economy requires a more advanced, robust, and responsive power grid framework than what we have today.  While many features of the smart grid can help manage outages and allow power to be restored much quicker than in the past, the most provocative technology that has evolved to mitigate the whims of Mother Nature is the microgrid.  Otherwise, potential on-site distributed energy resources (DER) solutions – rooftop solar photovoltaic systems, combined heat and power plants, batteries and other storage devices (including electric vehicles) – became stranded assets, going offline as the larger network of nuclear, coal, and natural gas plants also shuts down in the midst of a storm.  Incorporating distributed resources within an islanding microgrid can provide emergency energy services even as the larger grid awaits repairs and restoration.

The increasing frequency of severe weather is prompting utilities to reconsider their historic opposition to customer-owned microgrids that can disconnect from the larger grid and island, allowing critical mission functions to stay up and running.

Microgrid Capacity by Region, 4Q 2012

(Source: Pike Research)

Pike Research has now completed the Q4 update to its Microgrid Deployment Tracker.  All told, Pike Research has identified a total of 3.2 GW of total microgrid capacity throughout the world, up from 2.6 GW in the previous update in 2Q 2012.  As a region, North America is still the world’s leading market for microgrids, with overall planned, proposed, under-development, and operating capacity totaling 2,088 MW.  The microgrid solution to power outages extends to other regions of the world, including India and other regions where power grids are extremely weak, whether the weather is good or bad.

Microgrids are really just miniature versions of the larger utility grid, except for one defining feature: when necessary, they can disconnect from the macrogrid and can continue to operate in what is known as “island mode.”  Because of this distinguishing feature, microgrids can offer a higher degree of reliability for facilities such as military bases, hospitals and data centers, which all have “mission critical” functions that need to continue to operate no matter what.

Along with enhancing reliability, microgrids serve another useful function: they can help the larger grid stay in balance.  As the world moves toward an energy system that looks more and more like the Internet, with two-way power flows thanks to growing reliance upon on-site sources of distributed generation (DG), this increasingly dynamic complexity requires new technology.  But some forms of DG – especially variable renewable resources such as solar or wind — create a greater need for smart grid solutions, such as microgrids.  For example, recent trends in declining prices for solar photovoltaic (PV) systems certainly increase the need for aggregation and optimization technologies.  Why? Distributed solar PV systems can create frequency, voltage, and other power-quality challenges to overall grid operations.

But how much solar PV will actually be deployed within microgrids over the next 6 years all around the world? This is one of the questions addressed in my latest report, Microgrid Enabling Technologies.

Anchor Resource

In order for a microgrid to continue operating in island mode, it has to include some form of on-site power generation.  Without DG, a microgrid could not exist, so these DG assets are the foundation of any such localized smart grid network.

The ideal anchor resource for any microgrid is actually combined heat and power (CHP); a total of 518 megawatts (MW) of CHP capacity that will be deployed in microgrids this year.  This technology leads all forms of microgrid DG deployments today and will continue to hold the edge by 2018 (with 1,897 MW, representing more than $7 billion in annual revenues)  Given that it is a base load electricity resource that also provides thermal energy, today’s microgrid CHP capacity is the largest of any DG option besides diesel generators.

The bulk of CHP installations are with grid-tied systems within institutional campus environments.  The current low cost of natural gas in North America translates into the ability for microgrids to provide lower cost energy services than the incumbent utility grid.  For example, the University of California San Diego microgrid is saving over $4 million annually thanks, in large part, to on-site combustion of natural gas.

Still, Pike Research believes that declining solar PV costs will be one of the largest drivers for microgrids worldwide, and in terms of numbers of new installations, solar PV will be the market leader.  (CHP will lead in terms of total capacity due to the relative scale of CHP systems compared to solar PV.)  With the price of solar PV reaching grid parity in key markets by 2014 and 2015, the variability of this DG resource will necessitate a greater reliance upon energy storage (as well as the networking function of microgrids).  All told, this microgrid solar PV market adds up to almost $2 billion globally by 2018.

Total Microgrid Distributed Generation Vendor Revenue, Average Scenario,
World Markets: 2012-2018

(Source: Pike Research)

If one also includes distributed wind and fuel cells in the overall microgrid DG mix, this segment of microgrid enabling technologies is, by far, the largest target of new investment: 3,978 MW of new generation capacity valued at more than $12.7 billion (see the chart above).