POWER May 2016 - 40

DISTRIBUTED ENERGY RESOURCES
Who Benefits and Who Pays?
The question of who benefits from microgrid
development raises obvious questions about
who pays for it. In the case of buildingonly
or campus-only grids, answering those
questions is relatively straightforward. But
in the case of " community microgrids " -a
newer concept-the answers are far from
clear and will require careful analysis and,
likely, policy updates.
For example, should the costs of a microgrid
that supports selected " critical
services " in a community, such as a fire
station or wastewater treatment plant, be
spread across all customer classes in an
entire service territory?
Aside from the financing aspect, who
benefits can become complicated for other
reasons. Allison Archambault, president
of Earthspark International, noted at the
March Microgrids Summit that one difficulty
for microgrid development is that
the different value streams may accrue to
different stakeholders.
Consider a community microgrid that
encompasses a combined heat and power
(CHP) plant, some solar photovoltaic (PV)
capacity, battery storage, and electric
vehicle (EV) charging stations. The municipal
government might own the PV and
EV chargers, but a private entity (a small
ties [to increase DER and revise their business
models] that operate in a very formulaic
environment. More public service commission
guidance is needed, she said, on how
the money will flow to projects and whether
projects can be rate-based.
Other challenges that REV and NYSERDA
are facing include a higher-than-expected
volume of applicants and program timeframe
slippage. As early-stage, unique initiatives,
a learning curve is to be expected, and Isenhouer
Hanlin suggested that Hawaii, California,
and other states learn from New York's
experience. New York wanted to " stimulate
an energy market, " and " they have done that, "
she said, but not every community can have a
microgrid-for a variety of reasons. Still, she
noted that there are other ways to participate
in REV, including energy efficiency and renewable
energy resources.
States may play other nontraditional roles
in the microgrid market as well. Connecticut,
for example, was the first state to launch a
green bank to leverage public and private
funds for clean energy development.
40
college) might own the CHP plant, and an
out-of-state third party might own the
battery. In the case of an extended outage,
assuming the microgrid can island,
the college could presumably shelter and
provide some essential services to more
than just its regular campus users. In this
scenario, the microgrid provides community
resilience benefits that exceed the
ongoing economic benefits derived from
the CHP plant and battery storage-assets
that may be tied to a transmission operator
that pays for demand response and
ancillary services.
Konterra Realty has experienced the
split-value stream problem firsthand. Two
years ago, Richard McCoy, the development
company's executive vice president,
spoke at the same microgrid event, excited
about hosting a 400-kW microgrid
at a Konterra corporate facility that included
PV, EV charging, and a microgrid
controller. But this year he noted that the
goals of participating in demand response
and peak shaving " have been difficult to
achieve, " largely because of ownership
changes affecting the microgrid portion
of the project, which is owned by a third
party. Konterra owns the PV generation
and shares ownership of the inverter.
The Role of Utilities in Microgrid
Development
The Microgrid Summit included panels devoted
to progress in individual states as well
as at DOD sites. Although the military has
some special considerations for microgrids,
it has to answer some of the same questions
most new microgrids must answer: Who develops,
owns, and operates them?
The utility may be the obvious answer in
some cases, as utilities have expertise managing
loads and generation. That said, the
Navy has been more successful in partnerships
with some utilities than others, said
Monica DeAngela, director, installation energy
program integration, assistant secretary
of the Navy (Energy Installations and Environment).
She specifically called out Groton
Utilities as a good partner as well as Arizona
Public Service (APS), with which the Navy is
currently working on a microgrid at Marine
Corps Air Station (MCAS) Yuma (Figure 1).
The Yuma project uses a lease model
wherein the Navy leases land to APS for 30
years for development, operation, and maintenance
of a 25-MW diesel generating unit,
www.powermag.com
which was selected because it provides the
fastest reliable startup. In November last
year, an APS press release noted that the microgrid,
which is the first for the utility, will
supply 100% of the backup power for MCAS
Yuma should there be a grid disruption. The
facility was expected to be online by the end
of the second quarter of 2016. DeAngela noted
that the Navy is also looking at adding fuel
cells and renewables to the project.
How eager a utility is to develop microgrids
or partner with third-party developers
depends on its specific circumstances. Most
are in the very early stages of considering
their role in microgrid development. The
state of Illinois, for example, asked ComEd
to build six microgrids to protect critical
public infrastructure, and the utility has two
grants to date from the U.S. Department of
Energy to support that work. In California,
SDG&E developed the Borrego Springs microgrid
project (Figure 2) on its own initiative,
initially because it saw the project as
a way to study the behavior of anticipated
large amounts of DERs being added to its
system, and it wanted to learn how to accommodate
them.
SDG&E is, in fact, learning from this
project. Disconnecting from the grid during a
summer thunderstorm enabled the microgrid
to remain online and power the community
of Borrego Springs. However, during a more
recent disruption, the utility couldn't operate
the microgrid because of a problem with the
transmission grid, and the microgrid failed to
island. That experience is a reminder that microgrid
operation isn't easy.
Tom Weaver, PE, manager, distribution
system planning for American Electric Power
(AEP) commented that although his company
doesn't yet have a commercial microgrid,
it has experience with all the parts and sees
multiple benefits of microgrids, including the
abilities to:
■ Provide distribution circuit-level reliability
■
Power community critical loads
■ Power customer critical loads
■ Integrate renewables
However, AEP and other utilities need to
figure out who owns what parts of a microgrid,
because regulated utilities can only ratebase
the portion that fits with their regulatory
compact.
Another potential role for utilities is " microgrid
as a service, " something Duke Energy
is developing.
Beginning in 2013, Duke began pitching
the idea of a consortium of companies involved
with a variety of grid modernization
pieces, from meter manufacturers to conPOWER
| May 2016
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POWER May 2016

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