IEEE Electrification Magazine - March 2014 - 18

only true if the current is not leading or lagging. while
components are currently more expensive to address
such issues, these extra costs can be offset by the
large cost savings at the higher voltage distribution
level due to a 10-15% gain resulting from simplicity in
system design.
at present, the majority of progress in developing dcbased technologies has occurred at either the high-voltage
(more than 1,000 V) or low-voltage (less than 100 V) level of
electricity service. Since microgrids typically operate at
medium voltage (~380-400 V), much work needs to be done
to bridge this voltage innovation gap.
as Figure 2 illustrates, interest in dc microgrids is highest in the asia Pacific region, with the vast majority of
these being small remote microgrids featuring remote cell
phone towers as anchor loads. Banks will finance this
infrastructure. these networks can then be expanded to
local communities. the modularity of the dc backbone to
a microgrid is well suited to this application. the other
most promising dc microgrid market is grid-tied data centers, such as the 1-Mw dc microgrid deployed by aBB in
Zurich, Switzerland.

Emerging Organized Markets
for Grid Ancillary Services
a natural consequence of the growth in renewable generation is the emergence of a new organized market for
ancillary services required to keep the power grid in balance. as carbon limits clamp down on the fossil generation units that have historically been used to help mitigate
swings in renewable supply, new technologies such as
fast-acting dr are being called upon to the fill the void.
although regulators will always lag behind technology
advances, there is movement in key markets throughout
the world to open up to a greater diversity of third-party
solutions from an equally diverse set of new technologies.
the types of ancillary services that microgrids already
address internally, but which could be provided externally

to the larger utility grid with the right combination of
technology and regulations, include:
xx
Frequency regulation: Contracted with traditional generators, and/or new entrants to correct frequency variations in the operation of the grid. these services are
expensive to deliver, and generators, microgrids, battery
storage, and renewables providers can participate,
depending on the market structure.
xx
DR: automated or manual kilowatt demand load curtailment services, contracted and called on by the utility or the grid operator.
xx
Voltage control: Manages reactive power to maintain
the system at an acceptable range of voltage given its
operating conditions; this is a service that lasts just
seconds. in parts of europe today, semiopen markets
exist for voltage support. response time, when called
upon by grid operators, needs to be fewer than 1 min.
xx
Load-following reserves: especially relevant to variable renewable energy generation, these services,
typically provided by energy storage, are purchased
on a 5-min basis.
xx
Spinning reserve: a service to restore generation and
load balance; can take anywhere from seconds to
almost 10 min.
xx
Supplemental reserve: Similar to spinning reserve;
typically lasts fewer than 10 min.
xx
Replacement reserve: less urgent service, but also
designed to keep grid in balance; typically lasts fewer
than 30 min.
Much more work needs to be done to create viable revenue streams for provision of these grid services, and
many of these services can be provided without a
microgrid. at the same time, microgrid deployments help
bolster the business case for new der-focused solutions,
of which microgrids will become an increasingly attractive
vehicle to bundle up services previously rendered by more
conventional means such as gas-fired generators.

PPA Business Models
6,000
(US$ Millions)

5,000
4,000
3,000
2,000
1,000

Middle East and Africa
Asia Pacific
Europe

20
20

20
18
20
19

20
16
20
17

20
15

20
13
20
14

0
Latin America
North America

Figure 2. The dc microgrid revenue by region, base scenario, world
markets from 2013 to 2020. (Source: Navigant Research.)

I E E E E l e c t r i f i c ati o n M agaz ine / MARCH 2014

this is the business model that now dominates the U.S.
residential and commercial solar PV markets, and, moving forward, is expected to become the primary vehicle
for commercial grid-tied microgrid projects. Similar to
the energy service performance contract (eSPC)
described previously, there are no upfront costs for the
customer. in the case of solar PV, deep private-sector
pockets own the hardware and lease out the systems
until all tax credits and accelerated depreciation is maximized. Some vendors in the commercial space are now
moving forward with PPas for microgrids, taking on the
risk of performance in exchange for capturing revenue
streams from ancillary service sales.
For this business model to work, the network controls
element needs to use a streamlined and open architecture,
limiting customized engineering costs as new hardware
is added to the microgrid over time. Performance also

Table of Contents for the Digital Edition of IEEE Electrification Magazine - March 2014