By Stephen Kishewitsch
Observe the old world that everybody knows we’ve already started to leave behind: centralized power generation with one-way flow to customers. Since then of course, the grid has been integrating distributed resources with a variety of characteristics, using ever deeper system awareness and smarter algorithms to manage the new resources. Now, peering over the horizon, we have perhaps the next evolution, a new world of self-contained cells controlling their own generation to serve their customers, imbedded in and relying generally on the continent-wide grid but self-reliant when appropriate. Is that the future, and how far away is it?
We’re talking micro-grids, of course.
“Game-changer” is the term IESO’s Kim Warren, Chief Operating Officer & VP, uses for micro-grids – “I think it’s inevitable that we’re going to move in this direction. We’ve been seeing what my predecessor here called the blurring of the lines between high and low voltage. There’s so much activity going on – there’s no more bulk generation and transmission; we have a more engaged and educated consumer base, with, especially, commercial and industrial customers able to do more for themselves. Ninety-five per cent or more of solar power is distributed-connected, as opposed to being connected directly to the IESO-controlled grid. Some of it is dispatchable now, and more is going that way. We’re going to see more and more of a migration to local combined heat and power (CHP). The local distribution companies (LDCs) are going to want to grow beyond their traditional role of just providing power at a regulated rate of return. We’ve not talking ten years away either. I think we may see pilot projects before the end of this decade. There’s not a groundswell yet, but the conversations are starting. People are thinking it’s going to become something.”
In fact the June issue of IPPSO FACTO covered a pilot micro-grid project by PowerStream at its headquarters in Vaughan, Ontario with several sources of power, including solar, wind and battery storage, and nine modes of operation in connection with the grid or in island mode. PowerStream has since then added an electric vehicle charging station that can join the rest of the installations in receiving power from or sending it to the grid.
See the related story on PowerStream working with South Korea’s KEPCO on the development of micro-grids, page 29.
Benefits
A customer-specific reliability requirement is probably the most frequently cited reason for interest in micro-grids. Hurricane Sandy on the US eastern seaboard was a wakeup call to many. A “microgrid primer” by the Electric Power Research Institute (EPRI) points out that over 8.5 million customers from Delaware to Massachusetts lost power during that episode. Nevertheless, power remained on for the New York University campus in the middle of Manhattan, even as the grid went down around it. At Co-op City, a large housing development in the Bronx, 60,000 residents continued to have access to power throughout the storm – thanks to micro-grids.
The experience in those locations highlights the benefit to customers inside the micro-grid. However, the larger system around them can also expect to benefit in various ways. For one thing, EPRI’s Mark McGranaghan, VP for power delivery and utilization, explains that if system operators can make sure critical facilities like hospitals, emergency centres and communication hubs are able to support themselves in an outage, it will allow the utility to optimize how it restores the rest of customers without having to worry about the critical centres. Restoration time can be improved for everyone.
Energy cost optimization is another reason for the increasing interest in micro-grids, allowing the local utility or large customer to manage demand when prices are high, a common factor of concern in California.
With multiple sources of power within the LDC’s service territory, and an increasingly sophisticated system that can detect problems and automatically isolate a micro-grid within a few cycles, the smart micro-grid system can seamlessly protect increasingly sensitive computer-controlled operations from interruption.
Aside from all that, micro-grids can reduce or defer the costs of more expensive line replacements, avoid line losses, and enable options for a more diverse supply.
A micro-grid can provide services to the larger system, like demand response, voltage regulation and the like, with load control functions within its territory, or by drawing on its power and storage resources.
Microgrids are smart from the outset
Intelligence is a built-in feature of the micro-grid – in effect the latest aspect of the smart grid – that regional grid operators have been adding incrementally to the transmission and distribution system for something like a decade now. In the case of the smart micro-grid, its owners and designers have perhaps an advantage in that they can put together the smart architecture, with all of its distributed components, its system awareness and its automated response capacity, in one go at the outset, with one organization making all the decisions. Larger grid investments must inevitably contend with the complexity of diverse stakeholders overseeing planning, multiple forms of ownership for many of the key assets, the need to achieve consensus on the management of control systems, and sharing of the benefits amongst numerous beneficiaries.
Even with a single owner micro-grid, proper grid integration requires an extension of intelligence from the larger system to the local. Mark McGranaghan says, “We’re working on a project with the US Department of Energy to develop minimum requirements for a micro-grid controller to include the kind of coordination that has to happen, allowing a regional transmission operator to interface with micro-grid. When a part of the distribution system has the ability to control its demand, and can disconnect and restart, it needs to be able to talk to the larger utility. There needs to be intelligence at both ends of the wire, something that doesn’t really exist right now.”
John Mulrooney, Director of Smart Grid Technologies at PowerStream, describes their pilot system this way: “We’re in discussions with the IESO, working on getting energy management system installed, so it will run automatically, where it’s now operating manually. It’s a Toshiba control system, a ‘black box,’ located at headquarters, a GE SCADA D400 Simplicity system, with an EMS [energy management system] that goes on top of it, working with data from sensors on all the devices in the field. There are many layers. Even a battery has its own energy management system, that regulates charging and discharge rates.”
It, and other installation controllers, will talk to the main controller at headquarters, and that will talk to Ontario’s grid control at the IESO – all of it responding to changing conditions within milliseconds.
Where are they going?
Bala Venkatesh at Ryerson University offers the following: “Despite the huge achievements in the smart grid field, a lot of more technical potential is yet to be explored. A transition from Home Area Network (HAN) to Building Area Network (BAN) is expected to push the technology a step forward. High response and more flexible demand response at the residential or commercial building level is an obvious advantage. New algorithms of smart meter data analysis are expected to maximize the technical benefits of the vast amount of data. Condition monitoring, fault classification, and fault location routines based on smart meter data would function as a support service to network protection and repair. Improving internet protocols of data exchange between smart meters and control centers will also enhance the performance of smart grids in terms of real time control and decision making.”
If micro-grids are relatively few on the ground so far, there’s one thing that might release them – storage. The price of storage is what’s keeping them from sprouting like mushrooms, McGranaghan thinks. A breakthrough on cheap storage may be the factor that releases them in quantity. Lacking the right economics for storage, it takes something else, like problematic local reliability, to justify a micro-grid. Anyone who wanted to could be a (grid-connected) micro-grid, even relying on PV, if storage were inexpensive, he thinks.
Until that day, he says, the experimenting that’s going with micro-grids now will prepare them for release when that day comes.
Professor Venkatesh estimates that even remote microgrids, despite being smaller on average than grid-connected systems, could reach 357 MW in worldwide capacity by 2016. The average remote microgrid in Canada, for example, is expected to be approximately 100 kW, he says, and many systems in the developing world could be much smaller. The computed annual growth rate (CAGR) by 2016 is 15.9% with revenues reaching just beyond $200 million.
As for grid-connected systems, Europe leads the community/utility sector of micro-grids to date, with Denmark’s 132 MW of community/utility micro-grids representing 86% of the total Europe’s current micro-grid capacity. However, the commercial/industrial sector should be robust over the long term, given the need for certain private sector segments to have reliable power supplies, as mentioned above. Near-term commercial projects are mainly limited by a lack of well-known standards. Overall, Venkatesh says, the average expectancy of projected worldwide capacity of micro-grids in 2016 is 3500 MW, with an optimistic estimate even higher, at 4500 MW. The US microgrid capacity is anticipated to exceed 1.8 GW by 2018. While the 2011 annual microgrid revenue was $200 million, the 2016 annual micro-grid revenue is anticipated to be between $1.8 and $3.2 billion.
Challenging questions
New York City’s Central Hudson Gas & Electric isn’t sitting back passively waiting for customers to bring forward micro-grid proposals. It’s applied for permission to proactively develop, build, own and operate micro-grids for customers. Partly in response to New York State’s Reforming the Energy Vision (REV) initiative, the utility intends to focus on customers with a total or aggregated load of 500 kW or more – customers like colleges, hospitals, prisons, and large residential or corporate campuses interested in the benefits of added reliability and resiliency. Smaller customers could be considered in future versions of the program. The news outlet Utility Dive reported that the customer would agree to have Central Hudson install generating capacity onsite designed to meet critical power needs during an outage, with the cost of the micro-grid included on subscribers’ utility bills under a tariff provision. Such initiatives could raise questions of whether micro-grids should be considered a competitive business or a utility service, and who has the first right to develop a micro-grid in certain situations – the customer or the utility?
As the technology advances society will be faced with questions of whether our legal systems are ready to manage the effects of micro-grids. For example, if the benefits of micro-grids flow primarily to those connected to them, is it fair to other customers if they have to shoulder any costs related to the proliferation of micro-grids, either the cost of adapting existing grids to accommodate micro-grids, or the carrying cost of existing assets that may suffer reduced levels of utilization due to the growth of micro-grids? Conversely, how should owners of micro-grids be compensated for benefits they create for other users of the grid?
Another challenge arises because micro-grids allow the electric system to deliberately separate (“unbundle”) certain kinds of reliability costs from customers’ bills. Some customers with high reliability requirements can effectively buy more reliability with a micro-grid while other customers may prefer to stick with “standard” levels of reliability in order to enjoy monthly cost savings. Customers may eventually be able to choose from a menu of reliability options, with commensurate pricing. A key policy and regulatory question will be how to define the base level of reliability service that everyone receives, and which everyone must pay for.
See also “US DOE testing 2 microgrid systems in Maryland,” page 40.
See also “ Microgrids moving to mainstream: report” from the June 2013 issue of IPPSO FACTO.
Examples of Canadian micro-grids in operation
• The British Columbia Institute of Technology claims Canada’s first “third generation smart microgrid,” embarked on in 2007 with government agencies, technology providers, utilities like BC Hydro and universities, to chart “a path from lab to field for the evolving smart grid.” “A fully functioning Smart Microgrid at BCIT has enabled Canadian regulatory agencies to experiment with and validate various standards, protocols and frameworks suitable for Canadian applications,” says Dr. Hassan Farhangi, Principal Investigator.
• Natural Resources Canada lists the remote community of Hartley Bay on the coast of British Columbia as boasting Canada’s first off-grid smart microgrid, with three diesel generators using smart controls and advanced metering and monitoring. A demand response system resulted in an estimated savings of 77,000 litres of diesel, worth $77,000, per year.
Other microgrid projects, all remote, are located in Bella Coola, BC; Nemiah Valley, BC; Kasabonika Lake, Ontario; and Ramea Island, Newfoundland.
• Canadian Solar has opened a Canadian Solar Microgrid Testing Centre in Guelph, Ontario. The British Columbia Institute of Technology and BC Hydro began studying microgrids in 2007.
Microgrid Resources Coalition
Formed in early 2014, the Microgrid Resources Coalition is a consortium of owners, operators, developers, suppliers and investors formed to advocate for policies and regulations that support microgrid deployment. The MRC advocates for “policy and regulatory reforms that recognize and appropriately value these services, while assuring non-discriminatory access to the grid for a wide variety of microgrid configurations and business models.”
The MRC mission statement says, “By providing power when the grid is down and energy savings when the grid is operating, microgrids meet their hosts’ needs for enhanced reliability, energy savings and reduced emissions. By responding flexibly to the needs of the grid, they deliver energy, capacity, and ancillary services that improve the reliability of the bulk power system and the efficiency of energy markets.”
For more information see, http://www.microgridresources.com/.
What is a micro-grid?
US DOE definition: “A group of interconnected loads and distributed energy resources (DER) within clearly defined electrical boundaries that act as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected and island-mode.”
From the Micro-grid Resources Coalition: “A local electrical system that combines retail load and distributed generation. A microgrid may include integrated management of thermal and electrical load, thermal and electrical storage or a “smart” interface with the grid. It can operate in parallel or in isolation from the grid.”
From a survey by Utility Dive: A microgrid disconnects or ‘islands’ when the central grid fails, protecting the power flow to nearby buildings. The microgrid also can sell services to the central grid through such features as demand response and frequency regulation.
As the survey report noted, microgrids have been operating in the US for decades, many of them on college or business campuses that use combined heat and power and district energy. The market for them is growing because of concern about the reliability of the US grid, particularly as storms become more severe. In addition, conventional equipment is aging, and microgrids are seen as a part of grid modernization.
