Navigant Research Blog

Mobile Phones Fuel DC Networks in Developing World

— July 18, 2013

One of the first deployments of direct current (DC) – a form of electricity that was dominant worldwide more than a century ago – was on a U.S. Navy warship named the USS Trenton, commissioned in 1887.  The 2 kW ship used electricity for lighting instead of the common practice of oil lamps.  This may have been the first electric ship in the world, though that is a topic of considerable debate.

One could also consider this antique DC ship a microgrid, since it was not interconnected to any grid.  A similar argument is used today by Boeing, which refers to satellites powered by solar photovoltaic (PV) panels as remote DC microgrids (and whose expertise is now being applied for terrestrial microgrid applications).

Like the majority of machines that run on electricity today, most ships run on alternating current (AC), the format of choice throughout the industrialized world.  Nevertheless, the U.S. Navy is currently constructing a 78 MW DC ship under its DDG 1000 program.  In addition, large technology players like ABB have been selling high-voltage DC transmission systems for about 5 decades; the company now also offers a variety of DC-based products relevant to more distributed systems, such as data center microgrids.   (ABB has also put forward an innovative design for next-generation DC ships that can create efficiency savings of 20% and space and weight savings of 30%.)

ABCs of DC

Whether powering up a ship, data centers, or a cell phone tower, DC power is enjoying a comeback.

The business model that could help accelerate adoption of DC distribution networks such as microgrids is known as the A-B-C Model, which targets developing countries that make up approximately 80% of the world’s population, but consume only 30% of global commercially traded power.  This approach, which is being promoted by The World Bank, United Nations, Rockefeller Foundation, and others, takes advantage of the following starting facts: 550 million people out of the estimated 1.4 billion people without power own a cell phone.

The “A” stands for anchor, and in most cases today, that anchor load for remote microgrids running on DC power is green telecom towers.  “B” stands for businesses, which are the first customers served by the DC remote microgrid as the network expands.  The “C” stands for community, and refers to the DC distribution network microgrid extending out to residents as the final phase of this remote microgrid expansion model.

This A-B-C Model is being implemented today through a variety of pilot projects.  These systems would subsequently pave the way for state-of-the-art DC microgrids in the developing world that could be networked together to optimize regional energy provision, since most off-grid cell phone towers run on DC power.  These distribution networks are the largest market opportunity today, as evidenced by a recent report entitled Direct Current Distribution Networks by Navigant Research.

DC Telecom/Village Power System Revenue by Region, Conservative Scenario,
World Markets: 2013-2025


(Source: Navigant Research)

If we focus on the conservative scenario, total global capacity for DC distribution networks is expected to reach 2,308 MW by 2025, translating into worldwide vendor revenue approaching $25 million annually.   The vast majority of this capacity, surprisingly, will come from DC systems only 1 kW to 2 kW in size in the developing world.  In fact, almost 92% of total DC distribution network capacity will come from the green telecom/village power segment largely concentrated in regions such as India and Africa.

Ubiquitous mobile phones are helping to build this growing movement to shift from the current AC-dominated utility grid infrastructure back to the DC-based microgrids that were widespread at the birth of today’s electric utilities.


Microgrid Merger Highlights New Business Models

— May 28, 2013

The market for microgrids is attracting increasing attention from a variety of institutions, ranging from state governments such as New York, which is requiring an islanding functionality for new combined heat and power (CHP) facilities funded by the New York State Energy Research & Development Authority, to the World Bank, which is seeking clarity on new business models that wrap remote microgrids around cell phone towers popping up in Africa, India, and the rest of the developing world.

One of the least noticed, but significant, developments in the microgrid arena for North America, the global hot spot for grid-tied microgrids, is the recent merger between Horizon Energy Group and Green Energy Corporation.  While large players such as General Electric, ABB, Siemens, and Lockheed Martin – just to name a few – tend to grab the headlines, I find the smaller players in the space the most interesting.  Why?  Unburdened by selling legacy systems, they can come to the microgrids controls challenge with a fresh approach.

Shipyard Grid

Both Horizon Energy (including its sister company Horizon Microgrid Solutions) and Green Energy Corporation have been working out a software-as-a-service concept for microgrids, so the merger makes sense.  Furthermore, both companies are committed to an open source controls platform.  Perhaps the most unique differentiator for the new combined company is its application of the power purchase agreement (PPA) model that has fueled the recent boom in solar photovoltaic (PV) systems to microgrids.

The vast majority of microgrids tracked in Navigant Research’s Microgrid Deployment Tracker are either funded by government agencies or academic institutions as R&D projects, or by the asset owners themselves.  The newly expanded Green Energy Corporation will instead serve as an integrator/developer, absorbing any performance risk for the microgrid while taking care of the financing.  The combined company claims in excess of 15 projects on the drawing board, with one 11-megawatt (MW) project in Connecticut under current development that incorporates diesel, CHP, solar PV, small wind, and advanced energy storage, and which will save significant money over the long run.

Savings for Connecticut Shipyard Microgrid

(Source: Horizon Energy)

I had lunch with Steve Pullins, a microgrids guru and the former president of Horizon Energy Group, at an Infocast microgrid conference occurring in Arlington, Virginia on April 29th.  Unlike some firms quickly expanding their portfolios of microgrids by focusing on high value aggregations of existing fossil assets, such as Blue Pillar, his efforts with Horizon have focused on retrofits that green up operations and also rely upon sales of ancillary services to utilities as part of the business model.  Pullins claims the sweet spot for grid-tied microgrids is 2 MW to 40 MW.  Anything smaller, and microgrids don’t really pencil out – unless they focus on renewables.

While it may seem counter intuitive, Pullins claims the lack of maintenance and ongoing fuel risk exposure with diesel generators or natural gas-fired capacity adds uncertainty and cost over the 20- to 25-year life of the microgrid PPA.  With solar or wind and storage, the operating costs are minimized for projects as small as 500 kW.



Why California Will Lead the World on Microgrids

— March 25, 2013

Connecticut boasts the nation’s first law promoting the creation of microgrids.  But that small state is focused on microgrids that would run on fossil fuels, providing fuel cell companies with new markets for their products.  In California, the primary drivers for microgrids are aggressive plans for renewable energy deployment, both at the wholesale level and at the distribution level.  As a result, two of the state’s investor-owned utilities (Southern California Edison and San Diego Gas & Electric) view microgrids as a potential remedy for a future power grid that could be much less robust than today’s – one that is highly susceptible to swings in solar and wind power production and corresponding voltage spikes and sags.

The Microgrid World Forum, which took place in Irvine, California, provided further evidence that the Golden State may soon emerge as the hottest market for this technology platform in the United States and perhaps the world.  Bob Foster, chair of the California Independent System Operator (CAISO), which manages the state’s high-voltage power grid, noted that “microgrids are the answer” to the following challenges facing the world’s 9th largest economy:

  • A state Renewable Portfolio Standard (RPS) that requires 33% of the state’s total electricity comes from large-scale renewable resources by 2020
  • Regulations forcing the retirement of “once through cooling” fossil plants that pepper California’s 840-mile-long coast and that could help integrate variable renewables
  • The nation’s highest per capita deployment of distributed solar photovoltaic (PV) systems (in San Diego)

California is also expected to lead the United States in deployments of electric vehicles (EVs), with as many as 200,000 on the road by 2020 – each representing the equivalent load of one and half homes.

Consumer Benefits

As a new report entitled Market Data: Microgrids from Navigant Research points out, North America is expected to lead the global market for microgrids over the next 7 years.  Already, California hosts many leading microgrids in the region, including the ones at the University of California-San Diego and the University of California-Irvine.

Total Microgrid Revenue by Region, Average Scenario, World Markets: 2013-2020       


(Source: Navigant Research)

A former executive at Southern California Edison (SCE), Foster stated that, “Consumers must benefit financially from reducing their energy costs.  We want to meter everything, that’s the goal, and have state ratepayers pay as they consume.  If they don’t go down that path, utilities as we know them are dinosaurs.”  Unfortunately, microgrids face challenges in California that include strong resistance to dynamic pricing from the California Public Utilities Commission (CPUC), just one testament to an opaque state regulatory process.  California has four major state entities governing energy, and they often conflict over the best way to achieve aggressive policy goals.

Foster acknowledged that it may take another decade for the regulations to align for microgrids.   “Today’s California wind fleet often generates at peak capacity at 1 a.m. in the morning,” he pointed out.  “These facilities and sometimes get paid not to generate!”  Nevertheless, by 2020, he forecasts that the state’s EV fleet will be soaking up this clean capacity, and early investments in renewable and transmission capacity will start to pay off.  In the end, Foster concluded, what California’s microgrids need  is an innovative financial model for microgrids – “something similar to what the solar lease model did for solar PV.”


In Wake of Sandy, Connecticut Expands Microgrid Program

— March 12, 2013

In late October of last year, as Tropical Cyclone Sandy tore through the northeastern United States, more than 8.5 million people lost power at some point during the storm.  Microgrids kept the lights on in parts of New York, New Jersey, and other locations in New England.

The Connecticut Microgrid Grant and Loan Pilot Program was first proposed in July 2012 and administered by the Department of Energy and Environmental Protection (DEEP) Bureau of Energy and Technology.  While the program was initially suggested as a response to Tropical Storm Irene, the project gained momentum after Sandy, and will culminate with state funding for a number of microgrids.  Connecticut Governor Dannel Malloy’s recent budget proposal increased funding for the program by $30 million, in addition to the $15 million already slated.

The first selection round was completed in late February, and of the initial 36 proposals, 27 have been vetted as technically feasible; 8 of those 27 were approved pending the correction of design issues.  These projects include police stations, hospitals, and other critical loads that need to be protected from power failures during emergencies.  Wanting to learn as much as possible about the potential risks and benefits of various microgrid configurations, DEEP encouraged novel technologies and imposed no size constraints on the microgrid projects.

Fossil Fuel Limits

In an interview, Veronica Szczerkowski of DEEP said that the program includes a number of requirements and nuances that set a higher standard for compatibility with utility operations from previous deployments of privately owned microgrids.  First, state funding is limited to the design, engineering, and utility interconnection costs of each project, and will not fund customer-owned generation or energy storage assets, the latter of which come with the largest price tags among microgrid enabling technologies.  Since there may be split ownership of grid infrastructure with this new fleet of microgrids, state funds will flow to microgrid asset owners and developers as well as to utilities.  Second, utilities will be required to own and maintain all non-private distribution grid assets interconnecting with customer-owned microgrids.

Perhaps the most novel aspect to the DEEP microgrid program is that all microgrids supported by state funding must have sufficient fuel onsite to run the microgrid for 2 weeks and have access to fuel for a total of 4 weeks.  This prerequisite constrains microgrids based on fossil fuels.  One of the projects that moved into the second round is a hospital with 5 MW of diesel generators.  A rough calculation means that the hospital would have to have more than 85,000 gallons of diesel onsite to run at an average of 3/4 load for the required 2 weeks.  While from an energy surety standpoint, such a condition makes sense, especially for critical loads, even if such storage requirements are unwieldy.

Given these fuel requirements, the DEEP microgrid program encourages various clean technologies.  In addition to solar and wind energy sources, fuel cell deployment is also emphasized since Connecticut is home to a number of fuel cell manufacturers, including FuelCell Energy, Proton Power, and the recently acquired company UTC Power (which will be sold under the ClearEdge name).  In fact, 10 of the 27 projects include fuel cells in their proposals, accounting for about 28% of the total capacity.

Even though there are a number of unknowns in the Connecticut program, one thing is clear: the project will be a testing ground for how to implement microgrids on a wide scale, and the outcomes will undoubtedly inform future publicly funded programs.

Peter Asmus contributed reporting to this blog.


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