Many believe that the energy industry is going through radical changes where the traditional practices and business models will need to be carefully revisited. The bulk transmission system and centralized generation are now being complemented and challenged by Distributed Energy Resources (DERs), emerging cyber and physical security threats combined with the increasing severity and frequency of weather related events are driving the need for increased grid security and resiliency, and the grid infrastructure mainly built in the 1960s and 70s is aging. In addition to all these changes, customers’ expectations are also finding new ways where the reliability and power quality needs of yesterday are no longer the standards that are expected from the utility today. Adding to this picture in recent years is the significant amount of regulatory pressure, especially in states such as New York and California, to drive change in the existing utility operation and business models through regulatory actions. These drivers are creating an environment that is encouraging new technology solutions and models for the future grid. The microgrid is one of these emerging grid applications enabling this transition.
“All of these efforts are in line with the roadmap to advance microgrid technologies through critical infrastructure and resilient communities to advanced applications”
A microgrid, as defined by the U.S. Department of Energy (DOE), is “a group of interconnected loads and DERs within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid [and can] connect and disconnect from the grid to enable it to operate in both grid connected or island modes.” Although the DOE definition is clear, this characterization has not fully been agreed upon in the industry; instead, the term “microgrid” is often used loosely to describe DER systems even those without islanding capabilities. The distinction is important as the advanced functionalities of microgrids, in particular islanding, enable microgrids to offer system benefits that are not achievable through traditional T&D investments or various forms of DERs. Islanding enables microgrids to provide more secure and resilient power to the customers they serve while simultaneously improving reliability and power quality. Besides, enabling robust integration of DERs provides customers with more energy supply alternatives, and complements the existing T&D infrastructure by deferring or avoiding traditional grid investments. Despite these various value streams, given the significant investment cost they require, the true value of microgrids is difficult to capture through traditional cost-benefit analysis methods.
In order to “improve the economics” of these deployments, several state incentives and mandates to support microgrid programs are currently in place in states like California, Connecticut, Maryland, Massachusetts, New Jersey, and New York. These states, except California, were all hit by the Super Storm Sandy; an event which almost single handedly created an understanding for the value of resiliency that microgrids can provide. As a result, the state incentive programs on the east coast are now driven by the need to support critical infrastructure and emergency preparedness. For example, New Jersey has launched its Energy Resilience Bank (ERB), the first public infrastructure bank in the nation to focus on energy resilience with $200 million to support critical facilities. Similarly, New York launched the $40 million NY Prize competition to help build community-scale microgrids.
Although traditional means of analysis often fail to capture the full value of microgrid deployments (e.g. resiliency), initial microgrid cost-benefit studies on specific applications are already net positive. These early demonstration projects are providing an initial proof of concept and developing clear objectives for further microgrid deployment efforts, such as, demonstrating microgrids’ real and tangible value to customers through resiliency, security, reliability, power quality, and reduced carbon footprint, to name a few. Intuitively, these early demonstrations are focused around critical infrastructure to provide resiliency and reliability supporting mission critical activities during natural disasters or system failures. Candidates for this first wave of deployments include, but are not limited to, hospitals, water treatment facilities, police stations, critical communications centers, and transportation facilities. Community microgrids are the other clear cut application for the first wave of implementations; the objectives being the overall resiliency and the ability to recover from an event. Candidate communities can include critical facilities, but also community centers, gas stations, supermarkets, and generally any facilities that keep the communities up and running. Implementations for both of these applications are expected to occur within the next 5 years.
While critical facilities and resilient communities are the major focus areas of microgrid implementation programs, other applications are likely to share the spotlight. Microgrids in remote communities provide another method of serving these communities as an alternative to constructing new T&D infrastructure for purposes of redundancy, load growth, operational flexibility, or reliability. These microgrids can enable traditional T&D investment deferral, while providing an improved level of service to customers in remote communities. Premium power microgrids are another potential application for the future. These microgrids could provide tiered service/pricing structures to provide the customers with choices for reliability. Candidates for these systems include industrial parks, shopping malls, office buildings, and research and manufacturing facilities. Although they mostly represent R&D concepts today, hybrid microgrids with parallel AC/DC circuits are likely to be developed further down the road, but likely to emerge due to improved system efficiencies. Similarly, Freelance microgrids that operate beyond the traditional boundaries of utility service are potential future realizations.
Unlike many other states, Illinois has not seen regulatory activity calling for microgrid technology; instead Commonwealth Edison (ComEd), the electric utility serving northern Illinois, has taken a proactive multi-facet approach to advance the technology. It all started with a vision to pilot a community microgrid; and the first steps coming through R&D. In fall 2014, ComEd was awarded a $1.2 million DOE grant to research, develop, and test a commercial-grade microgrid controller for community microgrid application – a first of its kind in the world in spring 2015, ComEd took its proposal for microgrid implementation to new heights with the Illinois Future Energy Plan presented to the Illinois General Assembly. The proposed plan included the deployment of six microgrid pilots throughout northern Illinois to support critical infrastructure facilities. The company is also participating in a DOE funded study to deploy a concept hybrid microgrid with parallel AC and DC circuits within the campus of a major research university. All of these efforts are in line with the roadmap to advance microgrid technologies – through critical infrastructure and resilient communities to advanced applications.
Though the value of the microgrid to the T&D system and to customers is becoming more apparent, the progression to proliferation of the technology will only be further realized through implementations in strategic applications and via successful demonstration projects. Critical infrastructure and resilient communities build a foundation to utilize microgrids as alternates for capacity growth or other customer-specific solutions. Microgrids will be an integral part of the grid of the future, the journey through strategic applications will provide a foundation for their eventual proliferation.