Yes, we live in a utility grid dominant world right now that is mainly powered by fossil fuels and nuclear power. And yet, more and more microgrids powered by solar and other renewable technologies are coming on line or are under development today. In fact, Navigant Research recently stated that the microgrid is moving into full-scale commercialization and that the global microgrid market will grow from $10 billion in 2013 to more than $40 billion annually by 2020.
As of the beginning of the second quarter 2014, Navigant has identified a total of 4,393 MW of total microgrid capacity throughout the world. As with the rise of solar PV installations in the United States, microgrids are heading into the mainstream, and both utilities and customers wanting more electricity independence and security will benefit.
What is a microgrid?
There are many technical definitions for a microgrid, but let’s just keep it simple: A microgrid independently generates electric power, 24/7, to a small community—as well as plugs into the utility grid. So it has the ability to “island” and be completely off grid, or it can integrate itself into the wider grid, if needed.
Today’s microgrids don’t have to include solar energy, but they often do. In fact, microgrids typically combine different sources of renewable energy with fossil fuel based generators and energy storage (batteries). That may seem like a lot to manage, but these microgrids are smart—unlike older utility power management infrastructure.
Microgrids use modern “smart grid” technology to know when to distribute each microgrid energy source and when to store it. Its smart grid technology can even automatically feed in or turn off connected energy sources by the minute or even by the second. That kind of energy versatility stabilizes the local microgrid and it helps balance out any renewable energy surges feeding into the utility grid.
Who benefits from the microgrid?
First, the community that hosts the microgrid benefits. That community may be a rural area, such as Borego Springs, California, where it’s expensive and technically difficult to build power lines and transmit power without energy loss. Or it could be a Hawaiian island owned by billionaire Larry Ellison, who wants to significantly decrease importing expensive fossil fuels to his island. More commonly, a large university campus, such as UC San Diego, can benefit by protecting its important 24/7 buildings and research facilities from blackouts and by reducing utility expenses:
Moreover, entire states are now beginning to benefit from microgrids. The power outages caused by super storms Irene and Sandy have inspired the state of Connecticut government to implement a series of microgrids. Doing so will enable Connecticut cities to preserve essential services while downed power lines that are miles away are being repaired.
Similarly, military installations and other essential government facilities, such as the US Food and Drug Administration, benefit from the safety and security of an independent power source that is separate from an insecure and aging utility grid. And if you’re Google or Ebay with power hungry datacenters that need reliable power, rain or shine? They too will benefit from their own hands-on microgrid that includes non-fuel reliant wind and solar and batteries.
Although being an independent source of power may seem like a financial threat to the utilities, they can also benefit. Not only can utilities avoid building expensive infrastructure to support a rural community, they can also benefit from having an extra power source for peak times and for emergencies, such as hurricanes or other outages. Additionally, because microgrids often include renewable power sources like solar and wind, utilities can help meet their state mandated renewable energy portfolio standards.
Can microgrids save money?
As with all new technology, the initial price of microgrids is going to be expensive, but as they build to scale and the levelized cost of solar, wind, and other renewables continue to fall, microgrids will become increasingly cost-effective as well as efficient.
According to the above UC San Diego video, their microgrid has already saved the university “millions of dollars.” With island nations that rely on a constant supply of expensive imported oil, gas, and propane, solar and wind and its unlimited non-polluting clean power can easily see an ROI over the 20 to 30 year life of the microgrid.
In addition, it’s the costs of not having a microgrid during blackouts and natural disasters that is making Connecticut, universities, and government facilities invest in microgrid infrastructure. As microgrids are tested in the coming years, it’s inevitable that studies will show their true cost-benefit. That being said, the fact that microgrid projects are projected to grow exponentially within the next 10 years indicates that microgrid customers are already projecting an ROI.
Current microgrid challenges
While microgrids are expected to grow in the next decade, it won’t be without challenges. Its new energy dynamic has to adapt and integrate with the existing grid. In addition, while the microgrid technology may prove to be sound, local regulations may prevent microgrids from competing with utilities that have state-mandated monopolies.
Nevertheless, as utilities see the smart grid benefits and eventual cost savings of microgrids, they’re likely to get behind changing the regulations and adjusting their business models.
If you’d like to know how solar can be integrated with the new age of microgrids, contact REC Solar for a free consultation.