A Microgrid is a system with the capability to generate power and integrate it with a storage and software interface which can allow the system to work independent from the grid. Microgrids can take different forms and sizes depending on the needs and resources available for a particular project; however, many Microgrids in the US have Solar PV as one of the major generation components.
Microgrids are especially useful for urban or off-grid areas which require high levels of energy resiliency and need continuous demand response. Some of the advantages of Microgrids, not only in off-grid areas but also in urban spaces are:
Resiliency: Ability to keep the facility or community functional in case of a power failure or harsh weather conditions. In addition to providing power, these systems can also be a part of the grid and provide power to a critical nearby facility, like health care centers. Some industries value this resilience to be worth much more than the price of the solar and energy storage together.
Demand Response: This enables the system to use the interconnection with the grid, and the storage capacity in place, to fulfill the location’s energy/electricity consumption with minimum expense, using power from the grid at times with low rates, and using power from batteries at times of high rates. Businesses usually pay for their peak power capacity in addition to energy, and energy storage can mitigate those peaks. In commercial spaces, demand response is particularly beneficial for businesses that are:
(a) Charged time of use rates by their utility
(b) Prone to energy consumption during peak hours
Earning Additional Incentives for Installing Solar: The SMART program under Massachusetts provides additional incentives for energy storage and installing energy storage can also reduce the AC rating of a solar generation unit, which again, qualifies the system for higher incentives under SMART, as well as reduces grid-interconnection costs.
Demand response during 24 hours in a Microgrid system
As can be seen in the graph, a Microgrid system reduces the peak demand of a building or community by utilizing the storage capacity during the day. This is a reduction in electricity costs for the location in addition to the state and federal incentives. So, the question is, why don’t we see these Microgrid systems all around us as much as the typical solar PV system? And the missing piece of the puzzle here is an efficient and cheap energy storage system.
The most prominent form of energy storage now is lithium ion batteries, which are relatively cheap and widely available due to their established demand for electric vehicles and electronics. And still, lithium ion energy storage costs between $500-$1,000/kWh, requires about 15 months from the start of site engineering to installation, and is typically warrantied for ~4,000 complete discharge cycles and 10 years. Such storage systems typically form a major percentage of the total investment in a Microgrid system. In simpler words, they are appropriate for some projects but are still not cheap enough to be everywhere. However, we should keep in mind that solar PV panels were also in the same shoes 10 years ago, and now with increased demand, R&D and policies in place, they are far from where they started. We can see a similar trend in battery costs, too.
Evolution and Trends in Battery Systems
As we have seen recently, too much reliance on a centralized system which powers the grid can be risky. Especially during natural calamities, this risk can multiply itself in the form unavailability of emergency services, when they are needed the most. Case in point, Puerto Rico, where Microrgrids can prove to be a very effective solution to restore the grid and in fact they are being considered as an integral part of the new distribution system to ensure they don't face any more blackouts.
For commercial businesses, a Microgrid can ensure a significant reduction in market and inventory risks associated with continuous power demand, and for which businesses are already paying a hefty premium called the ‘Demand Charges’. They can transform the way we look at generation and distribution systems, where instead of 3-4 central generation units feeding the whole grid, there are numerous smaller Solar PV or other Renewable energy units that can fulfill their own needs and then pool into the grid. This kind of an arrangement ensures a more balanced grid, and thus, a smoother demand response without any fear of outages.
FireFlower Alternative Energy help commercial and real estate businesses profitably invest in clean and sustainable power. With recent trends in the energy scenario we think that Microgrids can prove to be an effective value generating asset for commercial businesses and can set a new benchmark for revenue generation with state and federal incentives slowly fading away. For more information on FIreFlower Alternative Energy, visit our website www.fireflower-ae.com