Navigant Research Blog

In China’s Hinterland, Microgrids Emerge

— September 23, 2013

My research has made it clear that the United States is the best current market for microgrids, in large part due to the declining reliability of the incumbent utility grid, made more evident by Tropical Cyclone Sandy and other recent extreme weather events.  However, the Mid-West Energy Research Consortium (M-WERC) recently asked me to identify the world’s top non-U.S. markets for microgrids.  The results of that analysis revealed that remote off-grid systems will lead the market over the next 7 years – a conclusion also demonstrated in our newly released report, Remote Microgrids.

On the surface, the fact that 95% of the population of China is connected to a power grid might indicate that opportunities for remote microgrids are limited.  Yet, the sheer size of the country translates into one of the world’s best markets: 30 million people living in 20,000 villages and 7 million families on small farms have yet to be connected to a power grid.

While the development of grid-tied microgrids is limited to the two nationalized grid companies, third-party projects are allowed for off-grid applications.   Many of the areas not connected to one of the two main grid companies burn diesel for electricity, which is expensive and, therefore, power may be available for only a couple of hours per day.  Additionally, China has hundreds of inhabited islands, so the market for off-grid systems is substantial.

Tops Outside the United States

China has been investigating microgrids for the last 3 or 4 years, and the 12th Five-Year Plan for energy production, produced by the Energy Bureau, sets a target of 30 microgrid installations of 1 MW or larger by 2015.  In the analysis we conducted for M-WERC, China is expected to be ranked as the top non-U.S. microgrid market by 2020.  Even more interesting is that three of the top five markets (China, Australia, and India) will be led by remote off-grid systems.

Annual Total Microgrid Capacity by Top Five Export Markets, Conservative Scenario, World Markets: 2013-2020   

Microgrids Country Chart

(Source: Navigant Research)

One of the sleeper markets for microgrids not currently in the top 10 is South Africa, which is largely served by the nationalized utility Eskom.  Eskom provides the country with 95% of its power and supplies 45% of the entire African continent’s power.   At present, an unspecified number of remote microgrids that incorporate solar PV, wind, diesel, and energy storage have been installed.  Ranging in size from 6 kW to 200 kW, these systems serve farms and entire off-grid communities.   A typical community of 100 homes would need a remote microgrid of 100 kW to meet its most basic needs for lighting, entertainment, and refrigeration.

The best near-term market segment for microgrids in South Africa, though, is not communities but the numerous remote platinum, gold, and coal mines that dot the country.  A smart mining movement is taking hold in South Africa, with projects in the design stage ranging in size from 30 MW to 50 MW; this is also among the market segments examined in our new Remote Microgrids report.


California Bills Shape New Energy World

— September 16, 2013

Cross_Gatel_webCalifornia governor Jerry Brown is likely to sign two key pieces of legislation this fall that will have a strong impact on two technologies influencing energy markets globally.

The first bill is AB 327, which addresses the topic of net metering for rooftop solar photovoltaic (PV) systems and residential rate reform.  Net metering allows owners of small solar PV systems to use the grid as a giant battery, shifting any excess generation to the grid for use by other utility customers, and then taking back energy from the grid when the sun isn’t shining.  I tackled this topic in January as the legislative cycle began, highlighting utility complaints that, as more and more customers generate their own power using net metering, the costs of maintaining the power grid that benefits us all are spread across a smaller and smaller set of customers without solar PV.

Here are the primary aspects of AB 327 that could create a seemingly unlimited market for not only solar PV, but all forms of renewable energy:

  • Removes the scheduled suspension on net metering that was to go into effect at the end of this year
  • Eliminates uncertainty over how the current net metering cap is calculated, and provides a framework for permanently removing the net metering cap altogether
  • Removes the current 33% ceiling on the state’s Renewable Portfolio Standard, which, in essence, means there is also no cap on California’s wholesale renewable energy supplies

Pacific Gas & Electric, with a nation-leading 90,000 customers taking advantage of net metering, supported AB 327, as did the solar lobby and ratepayer advocates, but only after a series of last minute amendments brokered, in part, by the governor’s office.  What makes this legislative consensus even more amazing is that California has among the most liberal net metering laws in the country.  The battle over net metering is still brewing across the United States, but this California deal may take some of the some of the acrimony out of the debate, and point a path forward for compromise.

The other bill worth noting heading for Gov. Brown’s signature this month is SB 4, which addresses natural gas fracking, which has helped provide a huge supply of low-priced natural gas but, according to critics, also poses environmental risks.  Just as utilities have attacked net metering, the American Petroleum Institute has sought to undermine RPS laws, arguing that they increase costs to consumers and favor renewable sources over natural gas.  Natural gas prices have doubled in California in the last year, which, coupled with tighter limits on emissions of carbon due to the state’s climate change law, led to a 70% increase in wholesale energy prices in California.  Only time will tell how the combination of new fracking regulations and removal of any prescribed limit on retail and wholesale renewables will impact California’s energy market.  My prediction?  Growth in microgrids and other smart grid solutions will continue, as clearly the current status quo will no longer do.


Under Dark Skies, New Jersey Eyes Transit Microgrid

— September 11, 2013

During Tropical Cyclone Sandy in October 2012, over 2.6 million electricity customers in New Jersey lost power and thousands continued to struggle without it for weeks.  The estimated costs from property damage were around $65 billion, second only to Hurricane Katrina in U.S. history.  The aftermath of the storm underscored the need for more reliable grid infrastructure technologies in vulnerable coastal communities.  Today, the U.S. Department of Energy and the state of New Jersey are partnering to deploy a microgrid in the repair of New Jersey Transit’s (NJT) northeastern corridor, to be called the NJ TransitGrid.

NJT is the third largest transportation system in America, with a daily ridership of nearly 900,000, and is one of the most important access points to New York City.  During Sandy, the NJT rail operations center was flooded by 8-feet of water, and more than 300 rail vehicles were damaged.  The loss of NJT during Sandy was devastating to relief and evacuation efforts; total estimated costs to NJT were $400 million, and as of June 2013, 119 rail vehicles are still awaiting repair.  The future NJ TransitGrid will ensure that trains keep running when the grid goes down by adding grid-independent generation capacity in excess of 50 MW.

Disaster Prone

Microgrids use local and distributed energy generation and storage assets to enable communities, campuses, and organizations to operate independently of the power grid..  The NJ TransitGrid is the first system of its kind deployed in a major civilian transit system.  The microgrid technologies and management systems to be used in New Jersey have been undergoing development and demonstrations by the military at major installations in Hawaii and Colorado.  It’s no coincidence that these technologies are gaining interest in communities vulnerable to natural disasters.

At this point, though, the NJ TransitGrid is just a concept with a $1 million budget from the federal government to plan over the next 5 to 6 months exactly how the system will work and what assets it will employ.  Department of Defense microgrid programs have used a variety of traditional energy generation assets like diesel generation sets, solar PV, and wind, along with some cutting-edge energy storage technologies like vehicle to grid (V2G)-enabled plug-in electric vehicles (PEVs).

The fact that the NJ TransitGrid will be deployed on a transit system presents opportunities to use the vehicles for energy storage and/or generation with advanced batteries.  Portions of NJT’s 2,000-plus buses can be converted to V2G-enabled PEVs, providing reserve power or balancing grid frequency when not in use, and batteries installed on the NJT’s light rail lines  can capture energy from braking trains.  These technologies are just emerging in demonstration projects and are, therefore, costly to implement.  However, increased adoption by the military and the major rail lines should drive those costs down, making microgrids attractive for communities vulnerable to natural disasters across the globe.


Zombie Dread Fuels Microgrid Market

— August 2, 2013

Extraordinary weather events, such as hurricanes Sandy and Irene, have led the state of Connecticut to plow a total of $18 million into microgrids strategically located across the state, with nine projects now under construction.  An additional $30 million for additional microgrids was recently approved by state lawmakers.  Other East Coast states, including New York, are considering similar moves as a response to extreme weather events apparently linked to global climate change.

Microgrid fever is also spreading to the Midwest, where it was announced in late July that nine states will collaborate under the umbrella of the Mid-West Energy Research Consortium (M-WERC) to pursue economic development and new jobs initiatives linked to microgrid components and systems, with an eye toward opportunities in key export markets.

Many baby boomers recall the advent of bomb shelters in the 1950s.  I recall as a kid going down into one such chamber on the outskirts of Milwaukee, marveling at all the rows and rows of canned goods, not to mention my first glimpse of a Playboy calendar.  With the thawing of the Cold War, the bomb shelter fad faded away, though I still wonder what happened to all those well-stocked underground bunkers.

Undead Attack

The September 11th attacks failed to re-ignite interest in these old-school answers to disaster threats, though it certainly played a role in prompting the U.S. Department of Defense (DOD) to re-evaluate its power supply security, and to begin developing various types of microgrids for domestic military bases as well as for remote outposts overseas in hostile regions, such as Afghanistan.

The appeal of these resilient islands of reliable power is also attracting a constituency not normally interested in the power grid infrastructure: survivalists.  A whimsical story posted by the Rocky Mountain Institute linked microgrids to the growing fear of zombie invasion, fueled by Hollywood’s recent obsession with the living dead in movies, such as World War Z.  (14% of the U.S. public believes a zombie apocalypse could happen in the next several years, according to a YouGov survey.)

Fear of the undead is being matched by real projects, such as one project in Kansas developed by a Colorado company called Sustainable Power Systems. Known as the Kansas Survival Condo, this system was constructed in an abandoned Atlas-F missile silo that reaches 200 feet below the earth’s surface.  But unlike the primitive bomb shelters constructed by your parents in the 1950s, this structure relies upon state-of-the-art microgrid technology.  The 500 kW power supply system, which is normally interconnected with the utility grid but can operate islanded in the event of grid outage, incorporates a mix of diesel generation (200 kW), wind power (100 kW), and advanced lead acid batteries (200 kW) to power up unusual loads that include a spa, pool, movie theater, and aquaculture food system.

Will the design and development of this kind of super-deluxe hidey hole, complete with a self-sustaining microgrid, become a viable business? That remains to be seen.  Whether you’re worried about zombies, the terrorist threat, or global climate change, though, the appeal of self-sufficient power infrastructure is on the rise, and survivalists will not be the only new constituency recognizing the possibilities now available with off-grid technology.


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