Recently, I attended my second energy storage event of the year: Storage Week 2011 in San Diego, CA. The energy storage community is fairly small, particularly when compared to sister industries such as wind or solar. This makes it easier to keep up with individual technologists, project developers, and other analysts in the space. While the Electricity Storage Association (ESA) conference in San Jose focused on technology, research, and lessons learned, Storage Week was more focused on markets for energy storage, how to roll out technology, and market structures.

As a market analyst who loves to geek out on technology, I enjoyed both conferences. However, I am always keen to ask the question, “Yes, but how does it work in the field/in the market/in the real world?” That is a question that was answered time and time again by the participants at Storage Week. Often, the answer was, “We’re not quite sure, but we have an idea” or alternatively, “We’re not quite sure, but here’s what we’re trying.”

In my next series of blog posts, I’d like to share a few ideas and developments in the market that I find compelling. The first of these is Growing Energy Labs, Inc. (GELI – pronounced “jelly”).

GELI’s name is inspired by trees. Trees grow just enough leaves to collect the sunlight they require at a given time. Trees are highly adaptive, complex systems with ingenious design. In contrast, the grid is complex but not quick to evolve, and the electricity grid’s fundamental design has not changed in a hundred years.

At its most basic, energy storage is a means to make the grid, a complex and, in some cases, moribund system, more efficient. Aligning supply and demand, responding within milliseconds to irregularities in power quality instead of several minutes, deferring costly investment in infrastructure until the need is absolute, this is what energy storage is offering.

The challenge for energy storage (or any grid-tied technology) is that the system itself will not change, but we are basically trying to redesign the grid as if we could start from scratch, knowing all that we know now. What would the grid look like if we designed it today? It would include storage. It would include renewables, microgrids, and smart grids. It would include smart buildings and would manage demand just as well as supply.

So, I have two questions: How do we redesign a system with so many restrictions? And what would this leaner, faster, stronger system look like? GELI is working on answers to both of these questions.

Building on the lessons learned from IT and computing, GELI is taking an innovative approach to answering these questions. GELI’s projects go by names such as Energy Network Interface, Energy Computer, Energy Composer, and Energy Router. The similarities to network computing are no coincidence; GELI’s vision is to network the grid and its working on both the hardware and the software necessary to accomplish its vision. Although energy storage is a fairly small community, storage is not the only solution to the challenges facing the grid. Coordinating the varied solutions for the grid will require information, communication, and integration. This framing makes optimizing the grid sound less like a system problem and more like an IT problem. We know how to deal with those, right?

As Democrats and Republicans in Washington, D.C. look for federal budget cuts to avoid a government shutdown crisis, the nation’s military appears to be one of the few targets where there is hope for any consensus. Unfortunately, this budget cutting effort could impact cutting edge sustainable energy programs that support microgrids – small islands of self-sufficient power – which can not only save lives in Afghanistan and Iraq, but shrink fuel consumption. If the past is any guide, the U.S. Department of Defense’s (DOD) push on innovation with microgrids could have major ramifications for the broader economy, replicating past successes with cutting edge technologies such as the Internet, GPS systems, computers, and airplanes.

The concept of “net zero energy” will drive adoption of microgrids, since it is virtually the only technology that can get the military where it needs to go. The Navy (including the Marines) has the most aggressive goals, with 50% of installations reaching this “net zero energy” goal by 2020. Another primary driver of the DOD market is the mandate to increase reliance upon renewable energy (25% of supply by 2025) a goal widely shared across the entire DOD portfolio of facilities per the 2007 National Defense Authorization Act. Given the lack of funding for capital expenses, military agencies will be leaning heavily on the private sector to help meet these aggressive deployment targets.

Of all government institutions, why is the DOD going green?

For one, the DOD is the single largest consumer of petroleum in the world. U.S. military operations are also the largest consumer of all forms of energy globally. If it were a state, the DOD would rank 32nd in the United States in terms of energy consumption, a level of energy use akin to the entire state of Oregon.

The genesis of the DOD’s interest in improving energy security stems from its heavy reliance upon all forms of fossil fuels, often imported from regions of the world hostile to U.S. interests. Consider this: U.S. military operations in Afghanistan pay the equivalent of $400 per gallon of gasoline when security, transportation, and mortality costs are tallied up. (And U.S. residents are up in arms about $4 per gallon gasoline!) With a deep dependency on oil that totals approximately 125 million barrels annually, the DOD is taking major steps to shrink its appetite for fossil fuels in order to save lives and preserve its critical mission functions during times of war and other heightened states of emergency.

Here at home, the current radial transmission grid system dominated by centralized power plants primarily fueled by coal, nuclear, and natural gas, entails a variety of security risks. The primary concern of any military operation is disruptions of service from utility transmission and distribution lines. The lack of control and ownership of these lines – and the uneven quality of power service regionally throughout the United States – has prompted the DOD to reexamine this existing electricity service delivery model.

This analysis has led the DOD to the inevitable conclusion that the best way to bolster its ability to secure power may well be through microgrid technology it can own and control. Furthermore, in order to meet mandates to boost reliance upon renewable energy developed on-site (whether the generation be solar PV or waste-to-energy combustion) a microgrid can tie these disparate and distributed resources together and allow them to be managed locally.

The principal value proposition for a microgrid for military operations is security, cyber, and physical, since the term “emergency” is a 24/7 matter. Deploying mobile applications during combat missions can literally mean that microgrids are a matter of life and death when it comes to minimizing reliance on liquid fossil fuels. Still other military microgrids never interact with larger grids, and are focused on reducing diesel fuel consumption and optimizing the relationships between otherwise disparate generation or customer loads at Forward Operating Bases (FOBs).

The current uncertainty over future DOD budgets is prompting some other creative strategies to generate new revenue streams that could ultimately underwrite microgrid deployments. Unlike capital-intensive generation resources, demand response (DR) programs, which automate reductions in energy use in response to price signals, have a relatively quick payback. A recent Federal Energy Regulatory Commission (FERC) ruling mandates that grid operators compensate DR energy providers at a rate equivalent to payment streams that flow to generators. By no later than the summer of 2012, these revenue streams should be available virtually in every part of the United States. Revenues from DR programs may help fund capital improvements such as distributed renewable energy resources and, ultimately, the microgrid island overlay, since through an enhanced use lease, these revenues can be collected and spent according to a base commander’s prerogatives.

Viridity Energy is entering the military market betting on this new business model which is particularly prudent given the political dynamics of Washington, D.C. The company recently signed an agreement in 2011 with the Defense Logistics Agency to pursue load curtailment programs at DOD and federal bases throughout the United States, beginning with Fort Meade in Maryland. This DOD base is located within the PJM grid, the most advanced DR market in the United States. The recent FERC ruling on behalf of DR providers will double potential revenues from DR for Fort Meade, a fortuitous turn of events for Viridity Energy.

No matter what happens in the coming weeks as President Obama and leaders in the House and Senate try to come to some sort of budget deal, companies such as Viridity Energy are hedging their bets. The company’s new pitch to the military microgrid sector goes something like this: Instead of focusing on islanding microgrids at the start, instead start generating revenues from DR aggregations, and add the microgrid overlay last. Now, that’s smart.

No doubt, a few eyebrows were raised when Gamesa, one of the world’s largest manufacturers of utility-scale wind turbines, recently invested in a company that builds micro-solar photovoltaic (PV) systems and mobile microgrids that are being deployed in Afghanistan by the U.S. military. This is rightly so, since it shows that Gamesa is looking at the small picture and seeking to broaden its horizons within the clean energy technology continuum.

Gamesa’s investments in SkyBuilt Power, which has also attracted support from the Central Intelligence Agency’s (CIA) venture capital fund, In-Q-Tel, appear to be an extremely canny move, given that this company has taken the concept of micro power to whole new levels. In fact, products include solar blankets that can literally fit into a suitcase and could be carried on an airplane!

For its part, Gamesa is determined to ensure its long-term growth both in the wind turbine supply business, where it just now launching even larger wind turbines for the burgeoning offshore market in Europe’s North Sea, but also in a broad array of other renewable and sustainable technologies. To channel this new strategy, Gamesa has established Gamesa Venture Capital, a corporate venture capital fund, through which it will invest up to 50 million euros in the next five years to buy stakes, initially minority holdings, in startup or growth companies engaged in the development of technologies promising the highest potential for future growth. In return, Gamesa will offer the companies its market position, manufacturing, finance, and local supply chain to achieve greater market competitiveness. Perhaps after five years or so, Gamesa will consider taking the companies over as new business lines or as sources of enhanced value via spin-off sales.

Gamesa has targeted six key technologies for venture capital investments: ocean energy technologies such as tidal currents, next generation solar energy devices such as concentrated solar PV, energy storage to firm up variable renewables at the bulk and distributed level of service, green mobility options such as electric vehicles, energy efficiency, and off-grid micro-power. The first two investments related to the last category are a 28.7% equity stake in SkyBuilt Power and a 25% equity stake in WorldWater & Solar Technologies, both firms with solar PV products positioned for developing nations.

SkyBuilt Power is particularly interesting because of its sales channels with the U.S. military, a market that Gamesa is still trying to figure out. But with goals of obtaining 25% of total power supplies from renewables by 2025, the U.S. Department of Defense is obviously a good business target. Along with potential new business in the mobile military microgrid sector, which is also being looked at closely by military agencies in the United Kingdom, Canada, Australia and France, Gamesa believes micro-solar technologies have other intriguing applications.

“SkyBuilt Power could open the door to business with remote telecommunications sites initially interested in on-site solar PV, but perhaps also purchasing wind and storage technologies as a second stage,” acknowledged David Mesorero, director of Gamesa Venture Capital. “With the decline of feed-in tariff rates in Europe, I think Gamesa is seeking out new markets and game-changing technologies. We at SkyBuilt Power look at Steve Jobs and what he did to the laptop computer as a model. Our goal is to package instant solar and wind products that are dumber and dumber, plug-and-play systems ideal both for combat missions or village power in the developing world,” added David Muchow, President of SkyBuilt Power.

SkyBuilt Power’s portfolio is robust and in constant search of “transformational” elements. Among its current products are the following:

• SkyStation: Containerized system offering solar, wind, batteries, or other generators to be used for tactical operations centers, clinics, disaster relief, telecom power, and rapidly deployable micro-grid power
• SkyTrailer: Provides a mobile renewable power on trailers and can be set up in as little as 45 minutes
• SkySkid: Provides lightweight power on skids for remote communications and other uses
• SkyCase: A portable power station that fits into a case with high-efficiency solar blankets three times more efficient than any other product on the market
• SkyWater: Combines highly efficient water treatment technology with the mobile or fixed power solar systems
• SkyStructures: Insulated, fire resistant, panels that are rapidly deployable structures that feature renewable energy power systems designed to cut power use in the field



SkyBuilt is both a product purveyor and a system integrator, which makes it unique. The company’s impressive track record is to date been based on its portfolio of extremely modular solar PV products. While its portable solar PV products have obvious appeal for Forward Operating Base (FOB) mobile microgrids, the company is shifting market focus to stationary base microgrids, sensing a shift in priorities at the DOD with recently announced pullouts from Afghanistan. The investment by Gamesa will also allow the company to develop larger-scale projects.

As an integrator, the company’s forte is the ability to develop hybrid solutions, getting diverse technologies to work in concert as a system, the very essence of the microgrid vision. From small microgrid-in-a-suitcase for platoons, to larger scale solutions more relevant to a stationary base, SkyBuilt Power is building upon its work with Lockheed Martin and others to become a more expansive power service provider. Gamesa’s investments are critical to making this transition happen.

Recent advances in the complexity of microgrids currently being installed are stimulating a rush to increase the versatility and function of a technology platform originally conceived around the notion of hyper-reliability. This is why the Department of Defense (DOD) is so enamored by the prospects of microgrids, since they can protect mission critical functions during times of emergencies, including war, by creating islands of energy self-sufficiency.

In many ways, the ultimate application for DOD is forward-operating mobile microgrids that can be deployed during combat missions, especially those powered by modular solar photovoltaic (PV) units that could be carried in backpacks. Even with mobile microgrids burning fossil fuels, fuel consumption could be cut in half by simply networking diesel gen-sets together instead of relying upon each generator to operate as stand-alone systems. Prototypes of such microgrids, being tested out in actual combat missions in Afghanistan, are currently validating such applications, which epitomize the simplicity of microgrid technology, albeit serving a very important service for troops in combat.

In a recent Pike Research forecast, it becomes clear that while renewable energy will be a major emphasis at DOD over the next two years, federal investments in microgrids outpace both smart meters and conservation.

On the other end of the spectrum are highly complex and revenue maximizing microgrids such as the one at University of California-San Diego, a 42 MW state-of-the-art facility that is actually up and running today. This microgrid features two of the most sophisticated microgrid offerings on the market today. The first comes from Power Analytics and represents a models-based management continually updated according to external fuel factors (such as levels of sunlight) and internal factors (shifts in demand). Layered on top of this sophisticated scheduling platform is Viridity Energy’s software, designed to extract the greatest value for the microgrid owner according to real-time market conditions. At present, the Viridity Energy wholesale market optimization features have yet to go live, but they will shortly. (The California Independent System Operator (CAISO) does not yet offer a “plug and play” transmission market.)

Just within the last year or two, an important insight has emerged among microgrid advocates. Lessons learned from both military and campus-based microgrids has underscored the importance of integrating load shedding systems – such as demand response — with critical control of the generation assets. By incorporating dynamic and interrelated supply side generation with dynamic load shedding schemes, a more stable, robust, and efficient balance may be maintained to optimize energy surety and overall microgrid and macro-grid system stability.

The Federal Energy Regulatory Commission’s (FERC) recent ruling mandating a demand response (DR) market by authorizing Independent System Operators (ISO) to compensate these distributed resources on par with generators is a game changer and will only accelerate the growing marriage of supply and demand resources within and outside of microgrids. This ruling could transform microgrids from threats to local distribution utilities into valuable resources for the larger grid. The FERC ruling’s primary impact is on energy service provision and less so on capacity and ancillary service offerings. Each ISO/RTO must file its demand response compensation tariffs later this month, but for all practical purposes, it will not be until next summer that this new revenue stream will be available to demand response providers. Just how significant is this new FERC initiative? According to Viridity Energy, payments would double in the PJM demand response market, which is already the most advanced market for demand response aggregation services.

Yet another twist to the microgrid vision revolves around forecasting. When a microgrid system level control is then coupled with more externally-focused information sources (weather patterns, commodity/energy prices, et cetera) available from enterprise level supervisory control systems (such as that provided by Power Analytics and Viridity Energy), the purported and well-hyped future functionality of microgrid systems is actually already here today.

The functionality, economics, and modularity of implementing such systems is possible because companies with decades of experience with similar competencies have re-purposed their field-proven tools to the unique needs of microgrid technologies as well as ownership models. A prime example is another firm that has been flying under the radar: Encorp LLC, which released its own “Microgrid System Controller,” this past April.

The company claims its new technology is the first microgrid system controller to connect onsite synchronous generators (typically diesel generators) with inverter-based solar PV, small wind, and advanced energy storage systems, and then monitor and control the resulting microgrid. Word has it that Encorp may not always win the initial contract, but is frequently called in after the fact to rescue projects that are not performing up to expectations. In essence, the Encorp system controller handles the nuts and bolts of the technology integration, interconnecting the combined generation portfolio of the microgrid to the larger utility grid or operating these devices while in island mode. Few other companies seem to be able to network legacy diesel gen-sets with more modern inverter-based generation and storage options as seamlessly as Encorp.

The new Encorp offering is based on the company’s well-regarded Gold Box™ and related software technology offerings. With over 1,000 MW of generation capacity under its control at 400 projects around the world, the company is betting big on the microgrid market. The new controller already has been successfully installed at a major international defense contractor site to ensure power reliability and reduce greenhouse-gas emissions. Among the projects Encorp is involved with is a small microgrid at Fort Sill, Oklahoma, where the firm’s technology is creating the building blocks to help meet cyber-security goals. The company hopes to help realize new revenue streams for the DOD by helping to secure power supply for critical processes at Fort Belvoir, Virginia from a new Combined Heat and Power (CHP) installation. And at an undisclosed East Coast military site, Encorp is keeping its fingers crossed that it can work with Power Analytics to help a military base operate indefinitely in the case of a grid outage by integrating 1 MW of solar PV with advanced battery storage.

The growing sophistication of the microgrid market is truly impressive. We’ve come a long way since 2009. Yet, without the basic on-the-ground know-how and technology provided by firms such as Encorp, all of the functionality and optimization promised by the microgrid value proposition will go up in smoke.