California Microgrids resounding success, if a little labor-intensive

The California Energy Commission (CEC) has announced that its seven microgrid demonstration projects are providing promising results, four years after funding the tests. The next phase for the microgrid technologies will be finding receptive customers that are interesting in their implementation, and with figures like these, that process shouldn’t be too difficult.

Microgrids are essentially a localized energy grid, far smaller in scale than a national electricity grid. They are intended to serve a building or campus, and are particularly interested in resiliency, with most having an uptime angle to them that is usually constituted by battery storage. Distributed Energy Resources (DERs) like rooftop solar are often integral, and the goal for many is to create an ‘islanded’ microgrid that can operate with little or no interaction with the national electricity grids.

The CEC reports that its microgrid pilots have achieved between 20% and 60% utility bill reductions, mostly through mitigating the higher peak-demand charges by using storage – to hold cheap electricity for use when the per-unit cost would be higher. Some of the microgrids also successfully remained online during power outages.

Now, the CEC wants to expand its microgrid initiative, allocating $84.5mn that will build 20 new projects across the service territories of California’s three investor-owned utilities – over three times the $26.5mn that funded the first seven projects. This funding is being generated by the Electric Program Investment Charge, which is derived from ratepayers and intended to be an energy innovation research program.

For utilities, microgrids offer a less complicated way of providing customers with value-add services, such as backup power or renewables, which are especially suited for new-build locations. Retrofits are possible, but there is a huge opportunity for businesses that can get in on the ground floor in any discussion for construction projects that are uptime or environmentally conscious.

If a customer wants to predominantly use renewable energy, then rooftop solar can be easily integrated into the microgrid – avoiding the farce that is paying for renewable energy that is then transported over the national grid, which is akin to paying for fancy spring water but then having it delivered via tap.

This new solar generation can be used to power new customers without placing an additional burden on the grid, and if the panels are generating surplus energy, that can be fed back into the national grid and treated as a proper DER asset.

Building on this, the batteries that are used to store surplus energy within the microgrid can be used as a grid-scale asset too, as well as their primary use for smoothing out the microgrid’s demand for electricity from the national grid. Further, the same batteries can provide the backup power generation, should the national grid suffer an outage.

A microgrid would have to comprise at least solar or storage, but preferably both. Depending on the level of desired utility involvement, they can be left largely alone, for the sole enjoyment of the end customer, or they can be incorporated more fully into larger grids – considered akin to a very large battery or a solar array.

The CEC outlined the lessons that it learned in a recent workshop session. The seven projects consisted of three fire stations in Fremont, an installation at Kaiser Permanente’s Richmond Medical Center, one in a Honda distribution center, one at the Las Positas College, another in the Santa Rosa Laguna wastewater treatment plant, one in a tribal community, and a 26MW solar array run by San Diego Gas and Electric (SDG&E).

The workshop saw a number of presentations, and the gist of the lessons learned was that getting the necessary building and utility permits still takes too long, as do the interconnections between the microgrid and the main grid. Lower equipment costs are also needed in many projects, to provide the returns needed, and another looming problem are the long-term third-party support contracts, with the service agreements being necessary to keep these microgrids running.

Another pressing concern is the high degree of planning and custom design work needed for microgrids. They are far from off-the-shelf systems, and because of this, there is not a one-size-fits-all approach. These are systems that take a lot of upfront investment, in both equipment costs and the work need to install them, and that doesn’t look like something that is going to change in the near future.

In time, vendors will get better at being able to sell more generally-applicable designs, which can be more easily implemented by a broader cross-section of customers, and while this means that there will always be a lot of work available in the consulting and project management side of things, it means that microgrids are going to be quite slow to come to anything resembling a mass market footprint.

Legislation is going to be a key driver too, with energy efficiency and emissions targets being one of the most likely motivators. Some companies will want to get the street-cred and warm-fuzzies from PR campaigns that stress their environmental credentials, but many are going to be driven by the cost savings on offer. For some, it will be the stick, for others, the carrot, but it seems certain that microgrids are going to start cropping up with some frequency in the coming years.