Navigant Research Blog

Microgrids or VPPs or Both?

— April 25, 2017

What’s the difference between a microgrid and a virtual power plant (VPP)?

I like to say that there’s a 75% overlap between microgrids and VPPs. What they have in common is the aggregation and optimization of distributed energy resources (DER). Where they differ is that a microgrid has a confined network boundary and can disconnect from the larger grid to create a power island. In contrast, VPPs can stretch over much wider geography and can grow or shrink depending upon real-time market conditions.

The DER portfolio in a VPP is as equally diverse as a microgrid. Yet, the primary value proposition for a VPP is that the services from these DER assets flow upstream to a utility or transmission grid operator; services are not sealed off into an island from the larger grid.

Once I go through this standard definitional description, the most common follow-up question is: Which of these two distribution networks represents the best opportunity for vendors over the next decade? While pundits like to pick winners and losers, I see future growth globally for both microgrids and VPPs.

Four Examples of Energy Cloud Innovators

Four companies active in what Navigant Research has dubbed the Energy Cloud—which encompasses both microgrids and VPPs—will share the stage at an upcoming panel at the fourth annual Microgrid Innovation Forum taking place in Washington, DC on May 16.

Navigant Research uses the term Energy Cloud to describe transcendent changes sweeping over the electric utility industry. Rather than bigger is better, which drove utility planning for over a century, the shift is toward smaller and smarter DER portfolios. While increasing complexity in energy management, the evolution of a collective Energy Cloud also promises a more dynamic energy market in which buyers and sellers engage in transactive energy.

Each of these four companies has a slightly different take on the Energy Cloud:

  • Sunverge: This San Francisco-based solar PV and energy storage innovator is focused on VPPs that aggregate the DER installed at residences to provide value to utilities. Its recent initiative to sell its software independent from its hardware components speaks to the value of its software.
  • Enchanted Rock: This Texas company offers a fresh take on microgrids. Focused on ultraclean natural gas generation, the costs of its microgrids are so low that cost-conscious commercial and industrial customers are jumping on board. The key part of its value proposition, however, is wholesale market participation revenue.
  • Enbala Power Networks: Ranked No. 1 by Navigant Research in last year’s Navigant Research Leaderboard Report: Virtual Power Plant Software Vendors, this Canadian company is hardly standing still. It has integrated machine learning principles into its new product architecture while also partnering with to develop a DER management system solution for utilities.
  • Blue Pillar: With its focus on Internet of Things (IoT) data management, this Washington, DC-based company’s claim to fame is the ability to bring networks of DER online quickly. Its approach is cost-effective due to the ability to squeeze more value out of existing asset base.

I think the VPP epitomizes the value of Energy Cloud trends since it addresses the so-called utility death spiral head on. If a residential home with solar PV and a battery are part of a VPP aggregation, the home can have it both ways. It can reduce its own energy costs while also contributing to the reliability of the larger utility grid.

The Energy Cloud is all about creating new relationships between and the grid. Which of these four companies do you think will have the greatest future impact?

 

Public Power + Solar PV + Batteries = Win-Win

— March 10, 2016

Solar heater for green energyThe stars are aligning for distributed energy resources (DER) to play an increasingly important role in providing energy services to consumers. Some see this growth in capacity (coming from devices such as solar PV panels, fuel cells, advanced batteries, and other forms of DER) as the supreme threat to incumbent distribution utilities, echoing the much ballyhooed “utility death spiral” storyline. Others see this evolution as an opportunity for utilities to reinvent themselves, aligning their business strategies and business models with the emerging digital economy.

While it is going to be a bumpy ride into the future, there are signs that it is possible to create win-win scenarios by leveraging the diverse services that energy storage can provide. Advances in software that can optimize DER to provide bidirectional value, along with the bridging capabilities that energy storage brings to the market, can create order out of what would otherwise be chaos.

Is there a way for everyone to come out as winners? The key is in intelligent distribution networks, an ecosystem of solutions that spans concepts such as nanogrids, microgrids, and virtual power plants (VPPs). These three platforms were described in a previous blog. Two companies are proving that the boundaries between these three unique market applications are blurring, thanks to innovative utility business models and the creative aggregation and optimization possibilities attached to energy storage.

Winners

PowerStream, the second-largest municipally owned utility in Ontario, Canada, is developing an innovative pilot project that involves 20 residential units, each to be equipped with a 5 kW solar PV array and a 6.8 kW/12 kWh lithium ion battery. The project is designed to enroll homes in select feeders (which may not be adjacent to each other) in order to provide system benefits.

Perhaps the most innovative aspect of the project is the business model dubbed DBOOME (design, build, own, operate, maintain, and energize). Customers have an opportunity to participate in a hassle-free, zero-maintenance solar storage program with an upfront cost to partially cover installation, followed by a nominal monthly service fee for a 5-year program (this DBOOME approach is also the model PowerStream plans to deploy for its microgrid program). In exchange for the customer’s upfront payment and ongoing service fee, PowerStream offers customers significantly reduced electricity bills and resilience.

The key vendor partnering with PowerStream is Sunverge, which provides residential and commercial building-sited energy storage solutions that integrate renewables such as solar PV. Sunverge offers a combination of onsite hardware and cloud-based services that enable remote monitoring and control of nanogrids, aggregating them into VPPs. Sunverge has also partnered with the Sacramento Municipal Utility District, a municipal utility that is using the company’s systems in 34 homes as part of its net zero energy demonstration project. A net zero energy home is one in which a home’s total annual energy use is approximately equal to the amount of renewable energy generated onsite. Each home is a nanogrid located on a single city block that can also island as a microgrid. Sunverge’s business model essentially links the concept of nanogrids to a VPP. All of its systems can be controlled remotely from a central control room and capacity can be offered to distribution grid system operators.

To learn more about how public power utilities and energy storage innovators are forging win-win DER solutions, listen to the Navigant Research Utility-Energy Storage Collaborations webinar on Tuesday, March 15 at 2:00 p.m. EDT.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Microgrid","path":"\/tag\/microgrid","date":"5\/26\/2017"}