How Microgrids Will Change America's Energy Infrastructure

Microgrids are poised to force a high-level rethinking of the American power system.

by Owen Poindexter - Contributing Writer / September 3, 2014

In nearly every home, office and facility in America, one can turn on a light, and it shines with unwavering brilliance at any hour of the day, every day of the year. This modern miracle is made possible by a system of power plants, transformers, and millions of miles of wire, collectively referred to as the grid. Nearly every light bulb in the continental U.S. receives power from one of three large grids. This deeply entrenched colossus of American infrastructure has an emerging challenger, one which may take decades before it truly competes with the grid for power distribution, but will almost certainly force a high-level rethinking of the American power system: the microgrid.

While there isnt a universally agreed on definition of a microgrid, the most defining element is a power generation and distribution system that can cut itself off, or island, from the centralized grid. Hospitals and other essential facilities often have their own microgrids so that they can continue to operate during blackouts. Emergency backup is the motivation for most existing microgrids (a handful of East Coast states began microgrid projects after Hurricane Sandy). It is only recently that the idea of microgrids that exist primarily for cost-competitive power distribution has reached some level of credibility. That, however, is enough to spur action from state governments and utility companies, who see a potential sea change on the horizon.

For the foreseeable future, the shift toward a more decentralized system of power distribution will be incremental. Investment in this area is focused on trial projects, as utilities and state governments try to get a handle on what we are capable of.

We know we need to figure this out, said Josh Castonguay of Green Mountain Power, a Vermont-based utility company. We need to come up with alternative ways to manage, supply and control the grid. Green Mountain Power recently broke ground on a project to build out 2.5 megawatts of solar power and 4.5 megawatts of energy storage.

The California Energy Commission (CEC) released a program opportunity notice, which devotes $26.5 million to several types of clean energy initiatives. Among these is high-penetration, renewable-based microgrids, which could power a community or large facility (such as a stadium) while meeting the standards of consumers accustomed to modern power availability. While this investment is not huge, it represents an interest in non-emergency decentralized power generation, one which is likely to only grow.

The CEC projects are proving grounds for what can happen in the future, said Chris Villarreal of the California Public Utility Commission. They will manage it as a pilot to prove technologies and capabilities.

Interest in microgrids is driven in part by the rise of solar as an increasingly popular and economical power source. Microgrids supplied by solar can manage the produced energy, and act as a middleman when the panels produce more energy than their owners need.

If I have some generation and I dont need it, Id like to sell it back to the utility at market price. I want my meter to work backwards, explained Dr. Robert Lasseter of the Department of Electrical and Computer Engineering at the University of Wisconsin in Madison.

A microgrid is helpful in this case, because the centralized grid is built for one-way power distribution, and is not well-equipped to receive power from downstream.

Opinion varies widely on how close we are to localized power generation and distribution forcing a full rethinking of how we manage and operate our energy systems. To HG Chissell of Viridity Energy, a smart energy company that facilitates consumer interaction with the grid, the logical place to start is not with microgrids, but with a more dynamic centralized grid. A smarter grid, able to work with buildings and facilities that can reduce or produce their own power could benefit all parties involved.

The ability for consumers to provide reductions on command really is a positive for [utilities], said Chissell. This ability to reduce load can be incorporated more and more into infrastructure planning, and can push off infrastructure upgrades for years into the future, with the knowledge that consumers can manage the peak.

Energy costs can triple or quadruple when the grid is near peak capacity, so reducing load at these times provides a huge potential for savings.

Castonguay sees exponential change not so far off.

If you look at the curve of how much solar has been built, its a square functionit just skyrockets, he said. Were going to see a ton less energy coming in from the utility.

Utilities have varying profit models, based largely on state regulations, but consumers generating their own power is a big problem for many of them. Their infrastructure investments, sometimes planned thirty years out, are based on a certain level of consumer demand, and now that profit model is in danger of being eroded. If nothing else, this provides some urgency for both states and utilities to get a sense of how much load microgrids will siphon away from the centralized grid.

Its possible that most calculations on microgrids economic viability are too pessimistic, because they think of microgrids as fundamentally similar to the centralized grid. That is the case made by Lasseter and several colleagues at the University of Wisconsin. They argue that microgrids have a unique advantage in their ability to recapture energy that is usually lost as heat.

When I run natural gas or any other fuel through an internal combustion generator, its only about 30 percent efficient, said Lasseter. So I lose 70 percent of what I use. Now if I take the exhaust heat and run it through a heat exchanger and heat hot water, or run it through an absorption chiller and chill my air, if you run it around its maximum, you get somewhere around 90 percent efficiency. Thats a big bang for your buck.

This is echoed by Dr. Thomas Jahns, Lassters colleague in the Department of Electrical and Computer Engineering at the University of Wisconsin, Madison.

The addition of Combined Heating and Power (CHP) to a natural gas genset makes a big difference in the unit efficiency and, therefore, its cost effectiveness, he wrote. There are documented cases of CHP making as much as a 30 percent difference in building energy efficiency, raising it from approximately 50 percent to just under 80 percent.

The day when decentralized power distribution causes a paradigm shift in energy production and distribution has an uncertain date and direct cause, but its coming eventually. Perhaps incrementally through gradual infrastructure upgrades or potentially from a more disruptive and difficult to anticipate leap in our capabilities. The companies and institutions making forays into this field today will both accelerate the coming of that day, and make us better prepared for its arrival. Our light bulbs will continue shine on command, and for many, that is the beginning and end of the story, but the underlying mechanisms that power that basic fact of modern life may be on the cusp of a dramatic change.