As this year’s hurricane season bears down on Puerto Rico, people are bracing for more power outages, while holding out hope that new microgrids will be built to fortify the island and people’s access to electricity.

The Puerto Rico Energy Commission a few weeks ago adopted a final microgrid regulation to help drive development of the resilience technology.

The move was widely applauded by the renewable energy and next-generation power technology industries. Now, the question is how long will it take for investment to flow to Puerto Rico to build more microgrids.

“I’m seeing signs that investment might be available,” said PJ Wilson, president of the Solar and Energy Storage Association of Puerto Rico. “People have come to me and said, ‘I have hundreds of millions of dollars of investment funds to build microgrids in Puerto Rico.’ Now that the microgrid rules are out, there’s literally nothing in the way of that happening.”

A microgrid is a local power grid with control capability that allows it to disconnect from the traditional grid and operate autonomously.

Puerto Rico needs advanced microgrids to ensure that communities have electricity after a big storm, power technology experts say. Electricity systems that are decentralized and can operate independently of the central power grid can continue to provide backup power, even when the grid goes down, when switched to “island mode,” which means they are disconnected from the grid and operating in a self-contained manner. Solar panels backed with batteries are popular microgrid resources, but such systems can be powered by just about any generator.

“One of the most perplexing challenges facing this promising market is figuring out how to steer private investment towards projects that offer the greatest value,” Peter Asmus, research director at Navigant Research, said. “The ideal resource mix for regions challenged by hurricanes remains an open question. Nevertheless, I do believe this regulation is one of the most comprehensive approaches to microgrid development put forward and may serve as a model for other countries looking to scale up microgrids.”

Remote communities across Canada’s far northern provinces rely on diesel and bunker-fuel generators for electricity. A dramatic change for the better may be in store – if efforts to fully realize a wind power-battery energy storage microgrid come to fruition.

The conceptual designers of IceGrid – a university marine research scientist, a city councilor and business analyst, and an entrepreneur – recently won the first prize at the CanInfra Challenge, an open competition that sought to bring forth ideas from local community residents deemed to have the greatest potential to transform lives and livelihoods for people living throughout Canada.

Energy – how best to produce and distribute it – looms large for Canadian residents, businesses and communities. That’s especially true in remote towns and cities in Canada’s far north, where electricity rates are the highest in the nation and quality of service suffers. Their reliance on diesel generating stations also comes with costs to human and environmental health and quality, said IceGrid team member Brett Favaro, a marine research scientist at Memorial University of Newfoundland’s Fisheries and Marine Institute.

IceGrid and the CanInfra Challenge

CanInfra Challenge judges awarded the IceGrid team first prize for their proposal to replace diesel-fuel generating plants with a grid-connected, wind power-battery energy storage microgrid, first in Iqaluit, the capital of Nunavut, and then throughout the northwestern Canadian province. Microgrid Knowledge spoke with Favaro and Brett Halliday, director of the BCG (Boston Consulting Group) Center for Canada’s Future, which organized the CanInfra Challenge competition and conference, to learn more.

Nearly a quarter of the 1.1 billion without access to reliable electricity are located in India, which is critical to its development and which requires creative solutions. While the growth of centralized power generation and delivery is expanding there, so too is onsite rooftop solar energy with localized microgrids.

India’s government is crafting a plan to build such decentralized power and delivery mechanisms over the next five years — a $2.5 billion effort. While the focus there is on extending access to those rural areas without electricity, it could also be used in its industrial and manufacturing sectors.

India is an example of how microgrid technologies could be applied in the world’s growth regions. To have universal electrification by 2030, microgrid expansion would need to double, notes the Microgrid Investment Accelerator, which was founded by Microsoft and Facebook, along with Allotrope Partners. And that requires reduced barriers to entry to entice risk takers.

“Microgrid (and solar home system) solutions powered by renewables provide electricity to nearly 90 million people,” says the Microgrid Investment Calculator. “To achieve universal electricity access by 2030, the current pace of expansion will have to double. It is estimated that off-grid solutions will supply 50%-60% of the additional generation needed to achieve universal electricity access by 2030.”

About 95% of those without electricity are in sub-Saharan Africa or Asia and 80% of those are in rural areas. General Electric and Italy’s Enel are active in Africa while Schneider Electric and Chili’s Engie are investing in Southeast Asia.

Unlocking Capital

The good news is that the microgrid technology market is growing by 20% a year, says Bloomberg New Energy Finance. It totaled $6.8 billion globally as of 2017, adds the Advanced Energy Economy; the Pacific island nations announced 15 different projects in the last year. Even better, the costs of both renewables and energy storage technologies — two assets central to microgrids — are falling.

The bad news is that CrossBoundary told the Clean Energy Finance Forum that the payback for microgrid systems takes 10 years, which requires developers to charge more per kilowatt-hour. That is because developed nations have dense urban areas that consume much power while developing countries have sparse populations that use much less, meaning that companies must charge more.

California has opened the door for residential microgrids in all new homes with the recent release of 2019 building standards aimed at improving energy efficiency.

Issued by the California Energy Commission, the 2019 Building Energy Efficiency Standards require solar photovoltaics for all new homes. They also provide new home builders with incentive to include energy storage and to focus on demand response opportunities — all common elements of residential microgrids.

“These new codes are a good step toward making sure every house can be its own microgrid,” said Kelly Speakes-Backman, CEO of the Energy Storage Association.

Homes with onsite generation, storage, smart inverters and controls will have what they need to ride through outages.

“This is a big deal for storage,” she said. “Storage is already on a path of growth in California.”

Just as important, the new building requirements don’t just focus on batteries. Homeowners can also use water heaters, for example, as a form of storage for demand response programs, she said.

The new code requirements provide credits toward a building energy scoring system, including credits for thermal storage, Speakes-Backman said.

The credits, or energy incentives, are calculated when the features of the home are entered into energy modeling software during home construction, according to Amber Beck, spokeswoman for the California Energy Commission.

An exception in the solar requirements say that the PV capacity for a home can be reduced by 25 percent if installed with battery storage.

Additional energy incentives aim to encourage battery storage and heat pump water heaters that shift the energy use of the house from peak periods to off-peak periods. The standards also mandate technologies that help with demand response — thermostats in homes or lighting controls in nonresidential buildings, for example.

Incorporating demand flexibility

Incorporating demand flexibility becomes an important emphasis during the design of new buildings, said Speakes-Backman.

“Half the energy demand is heating and cooling. Thermal storage playing into demand response will be an important part of the whole California grid,” she said.

These localized, small-scale power grids operate independently from the main electrical network and are increasingly being used to boost the amount of power in remote areas or act as a back-up for mission critical buildings like hospitals and data centers. They are able to integrate various sources of decentralized energy – most notably renewable energy.

“There is a trend all over the world for power to be decentralized from the main grid and the biggest driver of this is decarbonization,” says Dominic Szanto, Director – Energy and Infrastructure Advisory at JLL. “Increasingly, microgrids are being considered by real estate developers to not only cut energy bills, but also to boost their green credentials.”

Commercial appeal

In India, power and automation technology company ABB installed a solar power microgrid with battery energy storage at its Vadodora manufacturing campus in Gujarat. And in the U.S., Schneider Electric developed a microgrid at its Boston One Campus, which aims to provide greater power resiliency, reduce costs and use more sustainable energy via solar power.

With access to renewable energy more of a corporate focus, microgrids could become a key selling point for landlords trying to attract commercial tenants in the future.

“For a landlord trying to maximize the rental value of their property, a green building ties in well with today’s environmentally conscious world and companies’ corporate social responsibility initiatives,” explains Szanto. “We could one day see a situation whereby landlords lease electricity supply alongside the building, enabling tenants to get energy at a price that is fixed for five or even 15 years. It could add real value and certainty for tenants.”

For large companies with multiple offices in one continent, the stability and security offered by long term, fixed electricity prices could be a real aid to managing their business better. In the U.S., a California-based healthcare provider with several doctor surgeries commissioned the development of carports with solar panels in its carparks. This not only gives the company a consistent supply of green energy, but also offers price certainty.

A plan by Edison-owned Exelon Corporation to build one of the first utility-scale microgrid clusters in the US has been approved by regulators.

Renewable Energy News reports that the microgrid in the Bronzeville neighborhood on the South Side of Chicago will connect with an existing microgrid on the campus of the Illinois Institute of Technology (IIT), creating one of the most advanced clustered urban microgrids in the United States.

Joe Svachula, vice president, Engineering and Smart Grid Technology, ComEd, said in a statement, “By connecting with the IIT microgrid, we’ll learn how to integrate microgrids with renewable energy resources and how to maximize the value of the interaction between two microgrids. It’s an important step forward in our effort to develop a more secure, resilient and reliable distribution system in the future.”

According to ComEd, the neighborhood was selected following a comprehensive study to identify an overall resiliency metric for small sections of ComEd’s northern Illinois service territory and map locations where a microgrid could best address both security and resiliency. The project will serve an area that includes 10 critical service facilities.

ComEd said that the first phase of the project will include 2.5 MW of load and require reconfiguration of an existing feeder, and installation of battery storage and solar PV. The second phase will add 4.5 MW of load and 7 MW of distributed energy resources, enough to meet the peak electricity demand of customers within the microgrid footprint and maintain service when the microgrid is islanded from ComEd’s grid.

Microgrids collaborate copasetically with distributed renewables, they guard against widespread blackouts, and they insure institutions against the losses those blackouts cause, so why aren’t they sprouting up everywhere?

A posse of microgrid developers pondered that question yesterday at the Microgrid 2018 conference in Chicago. Development can be slow because of planning, design and construction, they agreed, but the languor in microgrid development also has to do with a lack of understanding.

“It’s a simple discussion to get people excited,” said Michael Carlson, the president of Smart Grid North America for Siemens. “We can walk in and almost anywhere (people) are embracing the discussion—but moving forward there’s a lot of understanding that has to go along with it.”

1 Ignorance About Cost

A city Carlson declined to name wanted a completely green microgrid in a proposed development, he said. Siemens’ experts sat down with city officials, economic development officials and corporate leaders who had been working on the plan for some time. But then someone mentioned they wanted the microgrid “at or lower than the price I’m paying for power today.”

The city is in a region where power costs 8¢-9¢ per kilowatt hour, Carlson said, and a completely developed, sophisticated microgrid couldn’t promise to beat that price for electricity.

But customers who don’t understand the initial cost often don’t understand how the microgrid will ultimately save them money.

2 Ignorance About Revenue

Ameresco sells microgrids “under an energy savings approach,” said Michael Bakas, executive vice president for Ameresco’s Distributed Energy Systems. The capital cost of the microgrid is paid for over time by energy-demand savings, he said, as well as by revenue it may generate as an independent system operator selling power.

So the developer should anticipate two sources of support: energy savings and energy revenue.

“If we can drive it to a point where it’s an easy business decision, that will see them move along quicker,” he said.

Those cash flows can be invisible because they have little to do with the reason institutions pursue microgrids: resilience from power outages.

If you think of microgrids as mere backup power, think again. That was the message from panelists at Microgrid 2018 who described how microgrids serve the greater good in the U.S and abroad.

Their projects include electrifying parts of Somalia, helping prevent brain drain in Africa and India, cost-effectively solving a utility’s peak problems in New York City, and providing electricity and heat for communities during outages.

Moderator Michael Kilpatrick, vice president of power systems solutions for S&C Electric, related a personal story that drove home how microgrids serve the greater good. While he was staying in a hotel with his family, power was knocked out. He and his family went downstairs to the lobby to leave, only to find that about 14 panicky people in wheelchairs had assembled.

If a microgrid had been close by, these people who needed medical care would likely have found a safe haven, he said.

“As big storms displace people in communities, the grid is critical,” he said.

Stabilizing war-torn Somalia

During the first panel, Sean Brooks, director of business development, SolarGen Technologies, described his company’s move into Somalia as the war-torn country started to stabilize. SolarGen began in Nigeria with solar pumping projects, but saw that Somalia, with some of the highest electricity rates in the world, was a good market for mini-grids.

At first, people in Somalia wanted solar street lights, Brooks said. “This was simple with an enormous impact” because it allowed Somalian businesses to operate for longer periods of time, he said. Next the company provided solar-powered pumping stations. And last year, SolarGen was awarded funds from government and aid organizations to electrify 200 houses in Somalia with solar mini-grids.

There is no longer any room for doubt — our climate is changing and it’s largely our fault. Thankfully, the sciences have done what they do best and provided us with several short- and long-term measures to help us stop and eventually reverse the trend of ever-higher average temperatures across the globe.

The microgrid is almost certainly one of the most exciting and revolutionary examples of climate-fortifying technology. It could, if we get serious about it, help us meet the two-degree temperature rise benchmark scientists recommend for staving off planetary-scale disaster. These are the stakes.

What Are Microgrids and Why Have They Become Necessary?

Industrial technologists and climate scientists have found a consensus on one of the first steps required to prevent catastrophic changes across our planet brought on by our overreliance on fossil fuels — hook everything up to the electric grid.

Does it sound deceptively simple? It’s nearly as straightforward as it sounds. Consider the energy needs of the average family home. It already requires electricity to power the refrigerator, the lights and many other appliances. It might have a natural gas hookup for a fireplace insert or a propane tank outside for the range. That’s a lot of redundancy and a lot of waste.

Technologies that rely on combustion, including our vehicles and those big, ungainly heating oil tanks in our basements, are wasteful and dirty up the atmosphere. So, we have to shift toward hooking up everything that requires energy to function to the electric grid.

Of course, that’s where things get complicated. Enter the microgrid.

Along with this newfound dependence upon a larger, more interconnected electrical grid comes a host of other requirements, not the least of which are:

• A greener electric grid powered by renewable energy
• A more stable electric grid that delivers uniform supply even during peak demand
• An electric grid hardened against predictable and unforeseen natural disasters, such as hurricanes.

Hurricane Maria is known to have caused the most widespread electrical blackout in this history of the United States. So we know it’s not enough that our electrical grid becomes more sustainable — it must also become more resilient and more predictable when it comes to output.