Navigant Research Blog

Making the Case for Short-Term Solar Forecasting in Plug-and-Play Remote Microgrids

— August 25, 2017

The microgrid market is tilting toward solar PV generation as a preferred resource. This is especially the case within the context of remote microgrids due to the economic advantages these systems present from an ongoing operations and maintenance perspective. A concentrated effort to move closer to plug-and-play microgrids is also underway, with a variety of vendors touting this approach.

One can make the case that displacing high cost diesel fuel with fuel-free solar is a valid value proposition on paper. However, a variety of ancillary technologies can also be integrated into a remote microgrid setup to transfer this concept into economic savings in the field. Such integration could displace as much diesel as possible while also limiting wear and tear on fossil fuel generators and batteries. Yet, the hype surrounding the dynamic duo of solar plus storage is obscuring the fact that different tools can help build a market for microgrids, including short-term solar forecasting.

A Game Changer in Australia

The Commonwealth Scientific and Industrial Research Organization (CSIRO) of Australia has helped develop a plug-and-play microgrid offering that marries low cost short-term solar forecasting with load optimization and diesel scheduling innovations. The game changer is the ability to integrate low cost short-term solar forecasting into remote microgrids featuring ever increasing solar PV penetration over time, with early tests showing a 97% reduction in high ramp rate events and fuel savings of almost 8%.

Solar forecasting falls into two categories: long term and short term. Long-term forecasts look out over a period of time (such as a week) to optimize resource scheduling. This forecast is more relevant to grid-connected solar PV resources. Since these forecasts look out over a longer-term time horizon, error rates tend to be lower because the forecasts are far less granular than short-term solar forecasts.

Remote microgrids cannot sell any services back to a grid operator; thus, the prime focus for remote microgrids featuring high penetrations of solar PV is short-term solar forecasts. Fluctuations at this scale can lead to blackouts or inefficient use of scarce and expensive diesel fuel.

According to the analysis Navigant Research performed for CSIRO, it appears the key to commercial success of short-term solar forecasting is minimizing capital cost and error rates. One could argue that short-term solar forecasting should be the first response to managing the variability of solar energy, since it is far less costly than major hardware investments like advanced batteries.

Short-Term Forecasting Adds Value

The short-term solar forecasting technology embedded in the plug-and-play microgrid solution from CSIRO is well-suited to Australia. It also offers other forms of value. For one, it can be used in the planning process to shape the initial design. First Solar claims it can get within 1% accuracy of annual energy estimates from available solar resources, but the company has difficulty sizing batteries properly since short-term solar power production is too variable. The technology being developed by CSIRO can address this gap, developing better estimates of required capital costs during the design phase for better battery sizing.

Finally, short-term solar forecasting technology can also be an important tool utilized outside of a remote microgrid application such as in the case of virtual power plants (VPPs). Australia is emerging as a hotspot for VPPs, too. In fact, CSIRO is sponsoring a free event focused on VPPs on December 1. Australia just may be the center of digital grid innovations.

 

C&I Customers Are the New Rage in Today’s Evolving Microgrid Landscape

— May 8, 2017

The world of microgrids offers a spectrum of vendor opportunity. Each market niche has its own set of opportunities and barriers and vendor leaders and laggards, as well as preferred business models.

While governments and policy wonks tend to focus on the surge of interest in both the utility and community resilience microgrid sectors, the commercial and industrial (C&I) microgrid segment is now coming to life.

Just how big is the total C&I microgrid market? As discussed in the recently published C&I Microgrids report, Navigant Research expects the global capacity of these microgrids to reach 448.3 MW in 2017. This figure is expected to grow dramatically to 5,389.1 MW annually by 2026 at a compound annual growth rate of 31.8%.

Slow in Uptake, Quick to Catch Up

Thinking in terms of the typical evolution of a market, it makes inherent sense for the C&I sector to be slower in its uptake of microgrids than other microgrid market segments. With a razor sharp focus on the bottom line and an aversion to risk, the private sector initially lags behind other market segments that are privy to explicit government support. Yet, when the stars align on proven technologies and viable financing business models, businesses move swiftly.

Here are three reasons Navigant Research forecasts that C&I is emerging as the fastest growing of all microgrid markets over the next decade:

  • Steep drops in the cost of distributed solar PV and energy storage. While this trend benefits all microgrid developments, it is particularly pertinent to the C&I segment. C&I customers place a premium on reliability but also do not want to pay a premium for energy services. The lower the cost of key microgrid enabling technologies, the more attractive the microgrid value proposition becomes.
  • Major advances in software controls translate into the ability of microgrids to maximize the value of legacy assets (such as backup diesel generators) and new technologies (like solar and batteries). One of the primary sticking points in the past was confidence in the ability of smart inverters and software overlays to manage diverse distributed energy resources to substitute for the tried and true pure fossil fuel solutions of the past. Multiple commercial projects validate that this is now possible.
  • Business model innovation that addresses the fierce internal competition for fiscal resources within a corporate structure. Vendors offering no money down power purchase agreements, sometimes coupled with software as a service controls platforms, limit upfront capital expense. A microgrid looks a lot better from a corporate balance sheet perspective, as it is viewed as an ongoing operations and maintenance (O&M) expense.

Evolving Opportunity

As Navigant Research noted in its Market Data: Microgrid O&M Revenue Opportunities report, the microgrid O&M revenue opportunity is much larger than originally thought. As the fleet of all global microgrids grows, vendors are waking up to the opportunity. Likewise, both vendors and potential microgrids hosted in the C&I space are beginning to recognize the inefficiency of old school backup diesels, uninterruptible power supply systems, and redundant utility feeds. This is especially so for data centers, which have long focused on uptime linked to mission-critical loads, but abhor new technologies and anything that might be perceived as a risk.

Perhaps the best way to understand how C&I microgrids will lead future growth are these statistics: in 2017, C&I microgrids—both grid-tied and remote—are expected to capture just under 20% of the total implementation spend. By 2026, that market spending share is anticipated to surge beyond 35%.

 

The Energy Cloud: Is Australia Supplanting New York as Global Leader?

— March 13, 2017

The fact that Audrey Zibelman is leaving her top position at the New York Public Service Commission to become CEO at the Australian National Energy Market (AEMO) is just one sign that the world’s eyes are increasingly turning to the land down under for inspiration and innovation when it comes to an emerging Energy Cloud future.

The slow pace of New York’s Reforming the Energy Vision (REV) process should really come as no surprise. Trying to create new business models for an electric utility industry that existed as a monopoly for over a century is not easily done within just a few years. Zibelman was the perfect person to jump-start this effort, given her previous posts at Viridity Energy and PJM. Now someone else will need to finish the job.

A New Playground

In what can be seen as symbolic shift, Zibelman’s new job in Australia reflects something keen observers have noted for quite some time. Australia—once seen as a backwater that only provided fertile ground for off-grid microgrid innovation—is now also emerging as a playground for new business models spanning the entire nanogrids-microgrid-virtual power plant (VPP) spectrum.

This continent continues to lead with major innovations in remote microgrid management, as evidenced by the forward-looking work of utilities such as Horizon Power. Yet, what is just as fascinating—if not more so—are multiple projects pushing the envelope in new business models that epitomize the type of innovation occurring within the VPP space. Consider these two examples:

  • AGL Energy Limited, partnering with Sunverge of San Francisco—a leading energy storage and VPP firm—announced a 5 MW VPP last year that will aggregate 1,000 homes equipped with solar PV panels and batteries. The $20 million project will allow homeowners to save on their electricity bills while also contributing valuable peaking capacity to the grid in South Australia.
  • A new Distributed Energy Exchange is being created that will help facilitate similar programs on an ongoing basis, allowing for widespread adoption of VPPs. The new exchange is designed to tap spare capacity, especially from hybrid solar PV/energy storage nanogrids, that can then contribute to the creation of VPPs. Among the leading innovators behind what has been described as a new digital marketplace is Greensync.

At present, roughly 16% of Australian power supply comes from solar PV, a much higher percentage than New York or even California. The distributed battery storage market also grew 1,000% between 2015 and 2016, according to a recent report, with total capacity representing 50 GWh.

Microgrid Capacity

According to project data collected in Navigant Research’s Microgrid Deployment Tracker, Australia ranks third in terms of total project capacity (operating, under development, and proposed projects). Within the United States, New York ranks fourth in terms of identified capacity, but first in terms of total number of projects. Of course, this is partially a result of the over 80 projects proposed under the New York Prize program, of which only a portion will actually come online.

Top 10 Countries by Total Microgrid Power Capacity, World Markets: 4Q 2016

(Source: Navigant Research)

Curious about the details of microgrids in Australia or New York? Navigant Research now offers a data services platform where a client can custom sort data for the projects in any other part of the world. Data can also be sorted by technology—such as microgrid with lithium ion batteries—or by vendor, segment, or country.

 

Plug-and-Play Microgrids Are Building Momentum

— February 17, 2017

GeneratorThe concept of plug-and-play microgrids is picking up momentum. But like the term microgrid itself, plug-and-play means many different things.

To a software company such as Spirae, the plug-and-play concept is all about enabling software (the topic of a recent Navigant Research white paper and webinar). According to Spirae, configurable microgrids and the need for standardized projects of similar scale are necessary for the microgrid market to scale up. The diversity of services a microgrid could provide hinges on flexible software configurations.

In a similar vein, Blue Pillar is marketing itself as an Internet of Things (IoT) solutions provider. It was ranked as the top company globally in terms of identified microgrid deployments in Navigant Research’s Microgrid Deployment Tracker last year. The company claims it can bring a microgrid online in a matter of months thanks to its rich library of data pertaining to different types of distributed energy resources (DER).

Many Different Labels

Interestingly enough, to software companies such as Spirae and Blue Pillar, the term microgrid is too limiting for what they do. For Blue Pillar in particular, its controls platform spans smart buildings to virtual power plants (VPPs) and could also be considered simply a DER management system (DERMS) solution. As Spirae has argued, these different labels—microgrid, IoT, VPP, DERMS—really don’t matter from a software perspective. The key to unlocking value that may be hidden within DER is a shift away from complex customized engineering to a more standardized and modular approach. Think like Uber, but deliver like Comcast.

To ABB, a plug-and-play microgrid is instead a hardware offering in the form of a containerized solution. These microgrids, primarily designed for rugged, off-grid applications, can be put together like Lego blocks and reach a scale of up to 5 MW. Beyond that size, ABB admits the microgrid becomes overly complex, requiring customized engineering.

ABB is fairly unique among the long list of multinationals seeking opportunity in the microgrid space with both a distributed controls approach and a focus on off-grid projects, where the company believes the value proposition is clearest. For example, in Australia or Alaska, the business case for renewables does not depend upon renewable portfolio standards, net metering, or carbon reduction targets.

Increasing Modularity

Taking the concept of modularity in microgrids even further from a hardware perspective is startup ARDA Power, which extolls the virtues of direct current (DC) microgrids. The beauty of DC is that not only does it allow a project design to reduce power conversion devices, which simplifies design and islanding, but it is also much easier just to plug in other DC devices such as solar PV and batteries, two technologies poised to increase as a portion of the microgrid resource mix in the future.

The first company to offer a plug-and-play microgrid was Tecogen with its combined heat and power units. It recently upgraded, with the ability to plug in solar PV or batteries on a DC bus, creating a hybrid alternating current (AC)-DC microgrid. Yet another company touting a plug-and-play microgrid solution is SparkMeter, which offers low-cost but incredibly robust metering solutions for energy access solutions in the developing world. Ironically enough, one can make the argument that metering is even more important in these kilowatt-scale systems, where payment for energy services is vital for business cases.

From hardware to software, AC to DC, combined heating and power to smart meters, the plug-and-play concept appears to be all the rage in the microgrid space.

 

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