IEEE Electrification Magazine - March 2014 - 14
Capturing the Reliability Value Microgrids Provide
U
ntil recently, the vast majority of
microgrids coming online, whether gridconnected or off-grid, have been pilot projects
or R&D experiments. Now, the industry
is moving into the next phase of project
development, focusing on how to develop
projects on fully commercial terms. It appears
that the main technology components of a
microgrid have made significant headway. The
key to future growth now rests with greater
creativity in both the public policy and
business model arenas.
The increasing frequency of severe weather
is prompting utilities in the United States and
around the world to reconsider their historic
opposition to customer-owned microgrids
that can disconnect from the larger grid and
island, allowing critical mission functions to
stay up and running. Yet, utilities continue to
worry about how a proliferation of customerowned microgrids might complicate their
job and whether regulators would instead
allow utilities to build, own, or control these
microgrids in some sort of coordinated
enterprise-wide fashion.
Quantifying the benefits of reliability is both
art and science. At this point in time, there
is no widely recognized financial metric to
monetize the value of energy security and
reliability. An analysis conducted by the
National Renewable Energy Laboratory looked
at a military base, Fort Belvoir, and found the
that value of electrical energy security (VEES)
at that site ranged from US$2.2 million to
US$3.9 million annually. This range reflected
the mission of the respective loads within
the base and recent performance metrics of
each respective utility. Since each microgrid
is a customized solution, it is also difficult to
generalize about any VEES cost advantages
such networks can offer if compared to a
host distribution utility (whose cost of
service also varies per geography and utility
market structure). Despite this diversity and
complexity, the business cases for microgrids
continue to mature as project performance is
increasingly measured and quantified.
What About Remote Microgrids?
The remote microgrid market epitomizes
the promise and the perils attached to new
business models that shake up the status quo.
Although the term "microgrid" once applied
almost exclusively to off-grid hybrid systems,
it now refers more commonly to grid-tied
systems that deploy smart grid technologies.
From a vendor revenue perspective, remote
systems are remarkably robust, thanks to their
assumed 24/7 performance, which requires
significant investments in both hardware and
software. On a per-kilowatt basis, remote
microgrids represent a 50-100% cost
premium over equivalent grid-tied microgrid
installations: the smaller the system, the
higher the per-unit value.
Today's remote microgrids' target niche
markets are the following: commodity
extraction facilities-such as a mine-that
are not connected to an existing grid,
physical islands burning diesel fuel for power,
rural villages in the developing world, and
mobile and tactical applications for military
agencies. The key market drivers of today's
remote microgrid market are:
■■ declining cost of solar photovoltaic (PV)
technologies
■■ rising costs of diesel fuel, the default
generation choice for much of the
developing world and for physical and
commodity extraction off-grid applications
instead of using a utility smart grid program to raise the
level of homogeneous power quality for all captive customers of a regulated utility monopoly, microgrids that
function within the developed world's utility transmission
and distribution networks offer the flexibility to provide
heterogeneous power products and services to meet specific end-user needs and requirements. Microgrids can also
shrink the amount of fossil fuels consumed to create electricity by networking generators as a system to maximize
efficiency. in addition, they can be used to help integrate
renewable energy resources (such as wind and solar) at the
14
I E E E E l e c t r i f i c ati o n M agaz ine / MARCH 2014
investments in more advanced energy
storage options, many of which are ideally
suited to remote microgrid applications
■■ efforts by nongovernmental organizations
and governments to provide universal
access to energy in the developing world
■■ efforts by large technology companies,
such as ABB, Boeing, General Electric,
Lockheed Martin, Siemens, Samsung,
SMA, and Toshiba, to secure their place
in the emerging microgrid market
■■ growing interest among financial institutions
on new business models for energy delivery,
including on-site power generation
■■ the proliferation of cell phone technology,
which is prompting demand for electricity
in remote regions of the world, providing
a model of technology dispersal that
mimics the Internet, and is more in line with
microgrids than traditional utility distribution
systems.
The International Energy Agency estimates
that by 2020, developing countries will need to
double their electrical power output. The demand
for energy, especially electricity, is growing much
more rapidly in these nascent economies than
the rate of expansion of conventional electricity
grids in the major industrialized world. All told,
the developing nations will represent 80% of
total growth in energy production/consumption
by the year 2035. One could safely assume that
the majority of these new power supplies will be
produced and distributed via remote microgrids
and other related forms of DERs, offering
substantial vendor revenues (see Figure S1).
■■
Why Remote Microgrids Matter
DOE-defined grid-tied microgrids offer
significant societal value and billions of
dollars in potential vendor revenues. But the
local distribution grid level and even sell ancillary services
back to either utility or transmission system operators.
it has become quite clear that the modern digital economy requires a more advanced, robust, and responsive power
grid framework than what exists today, especially in North
america, which is the world's leading market for microgrids
(see Figure 1). while many smart-grid technologies can help
manage outages and allow power to be restored much more
quickly than in the past, the most promising technology
that has evolved to mitigate extreme weather events is, in
my view, the microgrid. Potential on-site der solutions, such
Table of Contents for the Digital Edition of IEEE Electrification Magazine - March 2014
IEEE Electrification Magazine - March 2014 - Cover1
IEEE Electrification Magazine - March 2014 - Cover2
IEEE Electrification Magazine - March 2014 - 1
IEEE Electrification Magazine - March 2014 - 2
IEEE Electrification Magazine - March 2014 - 3
IEEE Electrification Magazine - March 2014 - 4
IEEE Electrification Magazine - March 2014 - 5
IEEE Electrification Magazine - March 2014 - 6
IEEE Electrification Magazine - March 2014 - 7
IEEE Electrification Magazine - March 2014 - 8
IEEE Electrification Magazine - March 2014 - 9
IEEE Electrification Magazine - March 2014 - 10
IEEE Electrification Magazine - March 2014 - 11
IEEE Electrification Magazine - March 2014 - 12
IEEE Electrification Magazine - March 2014 - 13
IEEE Electrification Magazine - March 2014 - 14
IEEE Electrification Magazine - March 2014 - 15
IEEE Electrification Magazine - March 2014 - 16
IEEE Electrification Magazine - March 2014 - 17
IEEE Electrification Magazine - March 2014 - 18
IEEE Electrification Magazine - March 2014 - 19
IEEE Electrification Magazine - March 2014 - 20
IEEE Electrification Magazine - March 2014 - 21
IEEE Electrification Magazine - March 2014 - 22
IEEE Electrification Magazine - March 2014 - 23
IEEE Electrification Magazine - March 2014 - 24
IEEE Electrification Magazine - March 2014 - 25
IEEE Electrification Magazine - March 2014 - 26
IEEE Electrification Magazine - March 2014 - 27
IEEE Electrification Magazine - March 2014 - 28
IEEE Electrification Magazine - March 2014 - 29
IEEE Electrification Magazine - March 2014 - 30
IEEE Electrification Magazine - March 2014 - 31
IEEE Electrification Magazine - March 2014 - 32
IEEE Electrification Magazine - March 2014 - 33
IEEE Electrification Magazine - March 2014 - 34
IEEE Electrification Magazine - March 2014 - 35
IEEE Electrification Magazine - March 2014 - 36
IEEE Electrification Magazine - March 2014 - 37
IEEE Electrification Magazine - March 2014 - 38
IEEE Electrification Magazine - March 2014 - 39
IEEE Electrification Magazine - March 2014 - 40
IEEE Electrification Magazine - March 2014 - 41
IEEE Electrification Magazine - March 2014 - 42
IEEE Electrification Magazine - March 2014 - 43
IEEE Electrification Magazine - March 2014 - 44
IEEE Electrification Magazine - March 2014 - 45
IEEE Electrification Magazine - March 2014 - 46
IEEE Electrification Magazine - March 2014 - 47
IEEE Electrification Magazine - March 2014 - 48
IEEE Electrification Magazine - March 2014 - 49
IEEE Electrification Magazine - March 2014 - 50
IEEE Electrification Magazine - March 2014 - 51
IEEE Electrification Magazine - March 2014 - 52
IEEE Electrification Magazine - March 2014 - 53
IEEE Electrification Magazine - March 2014 - 54
IEEE Electrification Magazine - March 2014 - 55
IEEE Electrification Magazine - March 2014 - 56
IEEE Electrification Magazine - March 2014 - 57
IEEE Electrification Magazine - March 2014 - 58
IEEE Electrification Magazine - March 2014 - 59
IEEE Electrification Magazine - March 2014 - 60
IEEE Electrification Magazine - March 2014 - 61
IEEE Electrification Magazine - March 2014 - 62
IEEE Electrification Magazine - March 2014 - 63
IEEE Electrification Magazine - March 2014 - 64
IEEE Electrification Magazine - March 2014 - 65
IEEE Electrification Magazine - March 2014 - 66
IEEE Electrification Magazine - March 2014 - 67
IEEE Electrification Magazine - March 2014 - 68
IEEE Electrification Magazine - March 2014 - 69
IEEE Electrification Magazine - March 2014 - 70
IEEE Electrification Magazine - March 2014 - 71
IEEE Electrification Magazine - March 2014 - 72
IEEE Electrification Magazine - March 2014 - 73
IEEE Electrification Magazine - March 2014 - 74
IEEE Electrification Magazine - March 2014 - 75
IEEE Electrification Magazine - March 2014 - 76
IEEE Electrification Magazine - March 2014 - 77
IEEE Electrification Magazine - March 2014 - 78
IEEE Electrification Magazine - March 2014 - 79
IEEE Electrification Magazine - March 2014 - 80
IEEE Electrification Magazine - March 2014 - 81
IEEE Electrification Magazine - March 2014 - 82
IEEE Electrification Magazine - March 2014 - 83
IEEE Electrification Magazine - March 2014 - 84
IEEE Electrification Magazine - March 2014 - 85
IEEE Electrification Magazine - March 2014 - 86
IEEE Electrification Magazine - March 2014 - 87
IEEE Electrification Magazine - March 2014 - 88
IEEE Electrification Magazine - March 2014 - 89
IEEE Electrification Magazine - March 2014 - 90
IEEE Electrification Magazine - March 2014 - 91
IEEE Electrification Magazine - March 2014 - 92
IEEE Electrification Magazine - March 2014 - 93
IEEE Electrification Magazine - March 2014 - 94
IEEE Electrification Magazine - March 2014 - 95
IEEE Electrification Magazine - March 2014 - 96
IEEE Electrification Magazine - March 2014 - 97
IEEE Electrification Magazine - March 2014 - 98
IEEE Electrification Magazine - March 2014 - 99
IEEE Electrification Magazine - March 2014 - 100
IEEE Electrification Magazine - March 2014 - 101
IEEE Electrification Magazine - March 2014 - 102
IEEE Electrification Magazine - March 2014 - 103
IEEE Electrification Magazine - March 2014 - 104
IEEE Electrification Magazine - March 2014 - Cover3
IEEE Electrification Magazine - March 2014 - Cover4
https://www.nxtbook.com/nxtbooks/pes/electrification_december2022
https://www.nxtbook.com/nxtbooks/pes/electrification_september2022
https://www.nxtbook.com/nxtbooks/pes/electrification_june2022
https://www.nxtbook.com/nxtbooks/pes/electrification_march2022
https://www.nxtbook.com/nxtbooks/pes/electrification_december2021
https://www.nxtbook.com/nxtbooks/pes/electrification_september2021
https://www.nxtbook.com/nxtbooks/pes/electrification_june2021
https://www.nxtbook.com/nxtbooks/pes/electrification_march2021
https://www.nxtbook.com/nxtbooks/pes/electrification_december2020
https://www.nxtbook.com/nxtbooks/pes/electrification_september2020
https://www.nxtbook.com/nxtbooks/pes/electrification_june2020
https://www.nxtbook.com/nxtbooks/pes/electrification_march2020
https://www.nxtbook.com/nxtbooks/pes/electrification_december2019
https://www.nxtbook.com/nxtbooks/pes/electrification_september2019
https://www.nxtbook.com/nxtbooks/pes/electrification_june2019
https://www.nxtbook.com/nxtbooks/pes/electrification_march2019
https://www.nxtbook.com/nxtbooks/pes/electrification_december2018
https://www.nxtbook.com/nxtbooks/pes/electrification_september2018
https://www.nxtbook.com/nxtbooks/pes/electrification_june2018
https://www.nxtbook.com/nxtbooks/pes/electrification_december2017
https://www.nxtbook.com/nxtbooks/pes/electrification_september2017
https://www.nxtbook.com/nxtbooks/pes/electrification_march2018
https://www.nxtbook.com/nxtbooks/pes/electrification_june2017
https://www.nxtbook.com/nxtbooks/pes/electrification_march2017
https://www.nxtbook.com/nxtbooks/pes/electrification_june2016
https://www.nxtbook.com/nxtbooks/pes/electrification_december2016
https://www.nxtbook.com/nxtbooks/pes/electrification_september2016
https://www.nxtbook.com/nxtbooks/pes/electrification_december2015
https://www.nxtbook.com/nxtbooks/pes/electrification_march2016
https://www.nxtbook.com/nxtbooks/pes/electrification_march2015
https://www.nxtbook.com/nxtbooks/pes/electrification_june2015
https://www.nxtbook.com/nxtbooks/pes/electrification_september2015
https://www.nxtbook.com/nxtbooks/pes/electrification_march2014
https://www.nxtbook.com/nxtbooks/pes/electrification_june2014
https://www.nxtbook.com/nxtbooks/pes/electrification_september2014
https://www.nxtbook.com/nxtbooks/pes/electrification_december2014
https://www.nxtbook.com/nxtbooks/pes/electrification_december2013
https://www.nxtbook.com/nxtbooks/pes/electrification_september2013
https://www.nxtbookmedia.com