This is the first in a series of articles focusing on ideas that emerged from Microgrid 2019, held in San Diego May 14-16. Here we look at “The Great Debate: What’s the Utility Role in Microgrids?”
Until recently, the power industry focused almost solely on generating and delivering electricity through a centralized system. But changing times and evolving demands now mean that more production and delivery is done on site. How is this affecting utilities, and are they adapting to the new realities?
Centralized networks will no doubt remain a staple of the electricity business. But the political reality is that expanding transmission networks and permitting large generation plants is a headache. Enter microgrids and distributed energy resources, which can solve a number of issues that include increased reliability and sustainability and at times cheaper energy costs.
“We will not go back to a centralized grid,” says Charlotte Ancel, director of clean energy development at Eversource, a New England utility. “Utilities have to be players when it comes to resiliency and cleaner electricity.”
She spoke at the Microgrid 2019 conference in San Diego last week on a panel that explored the question: Should utilities own and operate microgrids in restructured states?
Microgrids are becoming more commonplace among those businesses that cannot afford even momentary losses of power: hospitals and chip makers, to name two, and even the US Department of Defense. And utilities are not just sitting idle. In fact, many are diving in, recognizing that microgrids are complementary to their business models, sometimes through their deregulated arms.
Often central to the concept of microgrids is energy storage, which can harness electricity and release it within the microgrid when it is needed or sell it to the central grid. Such storage is not only used to keep network operations flowing smoothly but also to help spur green energy development.
The combination of those distributed energy resources results in greater efficiencies at reduced costs. Witness the wildfires that rampaged through PG&E’s territory, which knocked out power for an extended time and levied heavy costs on northern California’s economy. On site generation and a localized grid became a life saver for those with such assets. Similarly, severe weather has facilitated microgrid development in the northeastern U.S.
Utilities involved in half of all microgrids
“Half of all microgrids have some type of utility involvement compared to 10% a few years ago,” Lola Infante, senior director at the Edison Electric Institute, said at the conference. “Utilities own and operate the distribution assets that microgrids need. They are able to extend and maximize the benefits that microgrids offer.”
To be sure, on site generation, battery storage and microgrids are disruptive technologies and utilities are generally slow movers. It was less than five years ago that utilities spoke of a death spiral — an economic unraveling caused by customers departing from their utility and instead generating their own juice, leaving fewer entities to pay the necessary monies for utility upgrades and expansions.
Infante said that utilities, collectively, are investing $100 billion to upgrade their networks. State regulators decide how to share those costs based on the premise that the grid is an essential public resource. Even those entities with on site power and microgrids must still access the grid — either to take electrons from it or to return their own excess power to it. The goal now is to find that sweet spot that encourages decentralization and green energy but that fairly compensates all parties involved.
“Utilities have three choices: obstruct, facilitate or engage and implement,” Gary Oppedahl, vice president of emerging technologies for Emera Technologies told the conference. “There will be chaos from the outside if they obstruct. They need to be engaged and to implement. Utilities have a distinct role.
“If you are disrupted from the outside, the people who can afford will get it first,” he adds. “Companies come and go. So utilities are the ultimate backstop. If the utilities can step up” and partner with private enterprise, it will advance the cause.
Microgrid as a revenue producer for utilities
Utilities do see microgrids as a chance to increase their revenues. According to Accenture, 40% of the utilities it surveyed said that they see microgrids along with energy storage and data as key opportunities through 2025. Indeed, those business lines are a natural path forward for power companies.
Note that Bloom Energy says that its on site power generators can take 60% to 80% of a business’s electricity load away from utilities. When asked how utilities are responding to this, it says that the stress on their transmission systems is reduced by this amount and utilities are thus avoiding wear-and-tear.
At the same time, power companies are investing in distributed energy resources. Southern Company and Bloom Energy, for example, are working together to power a biogas pilot at a landfill. Bloom says that its 50 kW Bloom Energy Server began in February and is delivering renewable baseload power into the local grid.
A way to better serve customers
“Utilities have a challenge serving end customers,” says Asim Hussain, vice president of commercial strategy at Bloom Energy, at the conference. “Where their networks are constrained, they can deploy our technology and serve their customers.”
The proactive utilities are now part of the shifting energy landscape and they are getting increasingly involved in microgrid development. It’s a win-win, given that they have the knowledge and the deep pockets to take projects from the drawing board to commercialization.
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