Navigant Research Blog

On Alcatraz, Microgrids Escape Previous Limitations

— July 17, 2012

Recently I had the chance to tour the Island of Alcatraz, once the site of one of America’s most famous prisons.  The prison was closed in 1963 due to the high cost of maintenance in such a remote location, but it remains a top tourist destination.

My justification for this junket was an invitation from Princeton Power Systems, a smart inverter company based in Princeton, New Jersey, whose technology forms the backbone of a microgrid installed on Alcatraz with the help of federal government stimulus and which began operation earlier this year.

An inverter converts direct current (DC) from generation sources to alternating current (AC), at the voltage and frequency required by utility distribution companies (i.e., 60 hertz).  Recent advances in inverters for solar photovoltaics (PV) and small wind turbines are setting the stage for a viable microgrid market to evolve.  New inverters allow for safe islanding – i.e., the creation of small distribution systems cut off from the larger power grid.  When connected to the larger grid, inverters enable distributed renewable resources, such as solar PV, to continue to operate when the larger grid goes down, thus avoiding the feeder fault concerns associated with synchronous generators, which may take 2, 5, or even 10 seconds to respond to a grid outage.  (Pike Research’s new report, Inverters for Renewable Energy Applications, forecasts that the total inverter market will surpass $4 billion in global revenues by 2018.)

In the case of Alcatraz, access to Pacific Gas & Electric’s electric grid was severed several years ago when a ship’s anchor accidentally cut the transmission line from mainland San Francisco.  As a result, diesel generators were installed to provide on-site power.  However, as the price of diesel began to climb, and the cost of solar PV fell, developing a state-of-the-art microgrid appeared attractive.

On the day I visited, unfortunately, none of the nearly 1,000 highly efficient SunPower solar panels were working because a switch had failed.  So the entire island was still running on diesel generation, with back-up being provided by banks of lead acid batteries.  Of course, that’s the beauty of a microgrid: a diversity of resources can run together or serve as back-up to each other.

Topology of the 350 Kilowatt Alcatraz Remote Microgrid

(Source: Princeton Power Systems)


I learned a lot about the nitty-gritty issues of trying to build a microgrid on a windswept island.  For one, construction of the microgrid was delayed several times due to regulations protecting bird breeding activities, which limited the use of light and sound during a three-week period.  Along with these environmental factors come the quirks associated with preserving historical artifacts, which include rusting (and useless) water and fuel pipes as well as a hole in the roof.

The most persistent issue facing the microgrid, though, revolves around the birds.  Though naturalists initially worried that the solar PV panels that cover the roof would scare away birds, gulls have actually found them quite appealing.  In fact, they sometimes nest under the panels.  Unfortunately, they tend to leave behind their waste, which degrades performance and requires an ongoing, and messy, maintenance task.  Kept clean, the solar PV panels can meet the entire island’s power supply, even during San Francisco’s famous fog, which reduces potential output by more than half.

Beyond the Alcatraz project, Princeton Power Systems has three other microgrids up and running in San Diego, Texas and Missouri. The company offers 10 kilowatt and 100 kilowatt versions of its “DR Inverter,” which accepts four connections to and from power loads (two AC and two DC).  The inverter is designed to sell stored solar energy into the burgeoning U.S. market for demand response revenue streams being authorized by grid operators in response to the Federal Energy Regulatory Commission’s Order 745.  Funded in part by the Department of Energy, PPS’s technology aims to make solar PV more competitive by capturing new revenue streams.  The firm was in San Francisco at the Intersolar North America conference to showcase this new commercial product.


Microgrid Matchup: The Military and The Utilities

— June 14, 2012

One of the compelling storylines in the cleantech industry is the emergence of the U.S. military as one of the leading proponents of increased reliance upon renewable energy and microgrids.  In contrast, utilities are often painted as being obstructionists toward the same two technology categories.

Not surprisingly, a closer examination reveals not a black-and-white contrast, but several intriguing shades of gray.

The U.S. Department of Defense (DOD) is indeed committed to bringing online 3,000 megawatts (MW) of renewable energy capacity by 2025.  This new generation will largely take the form of distributed energy, such as solar photovoltaics (PV).  And that means that much of this new capacity will be aggregated and optimized through microgrids.

However, the difficulty of doing business with the Pentagon cannot be overstated.  The inability of the Department to pay a premium for anything, along with the need to rely almost totally on private outside sources of funding because the federal government is essentially broke, introduces complexity and delay in the procurement process.  Furthermore, when it comes to microgrids – networks that can provide reliable power even during combat – the DOD still seems quite attached to its diesel generators.  For example, in its so-called SPIDERS program, initial demonstrations will shift the entire load of the microgrid to diesel generators and then bring online the remaining generation and/or storage assets gradually.  This approach to microgrid islanding is not exactly what the smart grid was supposed to be all about.  (I learned this at the recent Defense Renewable Energy & Military Microgrids conference, in Washington, D.C.)

The Supreme Threat

What about utilities? While most of the new renewable generation capacity being installed within their service territories is being developed by third parties, some utilities, such as those in California, are installing relatively large amounts of solar PV that they themselves will own or incorporate into their rate base.  California’s three investor-owned utilities alone are scheduled to add roughly a third of what the Pentagon has committed to in terms of renewable capacity over just the next four years.

The majority of utilities, particularly those that are privately owned, view microgrids as the supreme threat to their existence.  Yet when it comes to different forms of public power, these utilities are playing a leading role with both grid-tied and remote microgrids.  While I can’t reveal the Pike Research forecasts for these different segments just yet (look for a new report on this topic in the next several weeks), it’s safe to say that utilities have already brought online far more microgrids today than the military has.  Along with forecasts of three different categories of utility microgrids, the analysis in our upcoming report will also quantify the economic benefits grid-tied microgrids bring to the overall power delivery system.

What’s most remarkable about both the DOD and utility microgrid sectors is that at present there is no comprehensive policy framework promoting any microgrid application whatsoever.  For a variety of reasons, however, North America (and especially the United States) still represents the best overall market for all microgrid segments in terms of aggregate capacity.  Connecticut appeared to be the first state moving forward with a policy program to promote microgrids, in response to Hurricane Irene in August and then a rare blizzard in October 2011.  Both events led to massive power outages.  However, the focus of this effort – which identified over 300 viable microgrid sites – was on the more traditional customer-driven microgrid model of development, and it collapsed this past May due to special interest infighting.


Microgrids: The Golden Ticket for Advanced Batteries?

— June 10, 2012

Discussions about markets for advanced batteries – everything from electric toothbrushes to grid storage, and the various consumer-facing products in between – are some of the most interesting conversations we have at Pike Research.  End markets may exist somewhere, but the pathways these technologies will take remain unclear. Will they be lithium ion? Flow batteries?  We’re not sure. So, as we do with many cleantech technologies, we look to the U.S. military for guidance.

Microgrids have been floated as one pathway advanced batteries might take to achieve electricity grid integration.  In Texas, the Army’s Ft.  Bliss installation is now home to a 100 kW (20 kWh) lead acid battery system that is seamlessly integrated with the base’s microgrid.  The installation, and particularly the inclusion of the battery system, is as much about security for the U.S. military as it is about generating a return on investment.  The advantage of batteries is that they can address multiple applications – supply security, frequency regulation, and renewables integration.  While microgrids offer unique control over systems or islanding capabilities, batteries enhance these features and provide avenues to other revenue streams.

Utility procurement of advanced batteries may be a few years off while companies pursue a “wait-and-see” approach, but microgrids – either on islands, off-grid, or for niche applications – could provide a near-term testing ground.  Microgrids may ultimately be where advanced batteries meet the smart grid.  For example, the Jeju Island smart grid project in South Korea will integrate community and residential energy storage as part of a microgrid on the northeastern part of the island.

Pike Research’s upcoming report on advanced batteries for utility-scale applications broadens the discussion on the microgrid opportunity for advanced batteries.  We anticipate the discussion growing over the next year.


Evolving Microgrids: What About Utilities?

— June 5, 2012

Pike Research has issued separate reports on three leading microgrid segments: campus environment; military and remote/off-grid systems.  A forthcoming report on “utility distribution microgrids” (UDMs) continues this trend of deeper analysis of specific microgrid segments, but also takes a broader look at how advances in distribution and substation automation are laying a foundation for utilities to play a much more fundamental role in future microgrid deployments.  UDMs are not exactly analogous to “community/utility microgrids,” yet there is significant overlap and synergy between these two segment designations.  Though already somewhat dated due to a surge of recent development activity, the following chart from Pike Research’s comprehensive look at all five microgrid segments published in early 2012 presents a good snapshot of where the overall market is going.

Interviews with leading companies involved with microgrids suggest that most utilities are still scratching their heads, trying to make sense of a very different world, with the microgrid perhaps a symbol of radical changes that could, if utilities fail to adapt, lead to their demise.

As vendors such as S&C Electric point out, the decline in prices for distributed renewables – especially solar photovoltaics – and for advanced energy storage is spurring greater interest in microgrids. Other major companies, such as Intel, a member of the EMerge Alliance, are also interested in the concept, though the semiconductor giant’s strategy likely stems from its growing interest in direct current (DC) applications.  Those applications are potentially relevant to both large commercial complexes, such as data centers, and to power generation in the developing world, where alternating current (AC) power grids are often missing.

Among the U.S. utilities that have seen the light in terms of microgrids are San Diego Gas & Electric, (SDG&E) American Electric Power (AEP), Sacramento Municipal Utility District, DTE Energy, and Consolidated Edison.  The prime obstacle to UDMs in the U.S. has nothing to do with technology.  In regulated markets such as the U.S., investor-owned utilities (IOUs) typically have to go before public utility commissions to justify costs they pass on to ratepayers.  These rate cases are typically three-year funding cycles.  To date, few – if any — companies have demonstrated the costs and benefits of UDMs. As a result, the business case for UDMs is not yet fleshed out.

Among the other barriers to near-term deployment of UDMs are utilities’ cultural bias against intentional islanding, their fear of loss of native customer loads, and the lack of clear controls technology emerging from a crowded field of competitors.  Utilities such as SDG&E and AEP will be armed with data that will reveal whether or not a value proposition can be made for UDMs.  Since microgrids come in so many sizes with so many different generation sources operating in so many different geographies, cost/benefit calculations will be extremely site-specific.


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