IEEE Electrification Magazine - March 2014 - 31
© digital vision
does not have to be implemented in a rigid
sequence. often phases overlap, and newer technologies might be considered later in the life cycle
of the project.
not all phases or assets will qualify for incentives or grants, and the overall capital investment is substantial. the simple payback
calculation might exceed 15 years. however, economic considerations are not the sole factors for
investors or end users. some are mostly interested in resilient, reliable, and secure power; physical and cybersecurity; planned transformation
and growth; regional and sector benefits; technology advancement and demonstration; environmental strategies; emission reductions; or
some combination of value drivers, although all
will include financial considerations. all such
investments will be driven by the need to deliver
value for end users.
starting from that premise, securing affordable
financing for a microgrid project depends first on
clearly defining value drivers and seeking opportunities to improve the cost-benefit attributes of
microgrid solutions and architecture while conforming to project schedules that satisfy customers' requirements. the strongest business
propositions will likely depend on the cost-effective deployment of energy management systems,
efficiency measures, and demand response (dr)
technologies to minimize capital costs and operating expenses. efforts to reduce consumption of
fuel, electricity, water, and other resources offer
quicker payback and higher returns on investment
(roi) and can be compounded with simple dr programs to further improve roi.
as project sponsors and host customers seek
to develop and finance cost-effective microgrid
systems, they face a range of variables that
change over time, from customer requirements to
long-range trends in utility market structures.
this article, adapted from Minnesota Microgrids,
the final report in a 2013 study performed for the
minnesota department of commerce (see Burr et
al.), seeks to address those issues as they relate to
microgrid development and financing. While
some examples and details are drawn from minnesota-a state in the U.s. upper midwest with a
well-developed and mostly reliable utility
IEEE Electrific ation Magazine / MARCH 2 0 1 4
31
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