Microgrids Part 2: Microgrids in Practice

In the last installment of our Microgrids Blog Series, we defined microgrids and the three distinct features that distinguish them from a normal ‘macrogrid’: 

1. an easily identifiable boundary from the rest of the grid
2. resources within the microgrid are controlled together
3. the microgrid can function whether or not it is connected to the larger grid

We also discussed higher-level applications of microgrids, including cost-cutting, emergency backup, and extended islanding. Microgrids can improve grid reliability, resiliency, security, and control, but widespread implementation is challenging.

Benefits of Microgrids

Ease of connection for efficient, low-cost clean energy

The microgrid manager (e.g. local energy management system) can balance generation from non-controllable renewable power sources, such as solar, with distributed, controllable generation, such as natural gas-fueled combustion turbines. They can also use stationary energy storage and EV batteries to balance production and usage within the microgrid.

Improved operational efficiency and stability of the regional grid

When sited strategically within the electricity system, microgrids reduce or manage electricity demand and alleviate grid congestion, lowering electricity prices and reducing peak power requirements. In this manner, microgrids may support system reliability, improve system efficiency, and help delay or avoid investment in new electric capacity.

Ancillary grid services: energy storage or spare capacity

A microgrid in grid-connected operation can provide frequency control support, voltage control support, congestion management, reduction of grid losses, and improvement of power quality. Usually, an energy storage system is used to provide these services to the regional grid, but the microgrid can be used as either a load or a generator if needed and in some places, can be financially compensated for ancillary services.

Challenges Facing Microgrids

Lack of geographical diversity, inertia to compensate for variability in generation

Microgrids lack geographical diversity, so relative variability (e.g., increased demand or reduced generation from weather) will greatly impact the system’s performance. Most microgrid generation sources also lack the physical inertia inherent to large synchronous generators on the macrogrid for frequency and demand response. Energy storage in the microgrid can help alleviate the effects of variability, which is also part of the reason for staying connected to the larger regional grid.

Increased equipment costs, energy losses

Extra protective devices can add up to as much as 50% of the total microgrid cost. These added costs are heavily dependent on local regulations and the microgrid design. Microgrids give up the economy of scale that is financially advantageous to the macrogrid. In addition, DC-AC conversion can waste more than 15% of total energy produced, depending on the number and type of inverters in the design. Some of this energy loss is compensated by the lack of transmission distance required, but it should still be taken into consideration in any microgrid design.

Remaining legal and regulatory questions

Microgrids face three types of legal hurdles: (1) laws that prohibit or limit specific activities; (2) laws that increase the cost of doing business; and (3) uncertainty, including the risk that new laws will be implemented to regulate microgrids and impose restrictions or costs not anticipated at the time of development or construction. Finally, several regulatory questions remain before the widespread adoption of microgrids is even possible:

• Should microgrids count as “utilities” and be subject to state/federal regulation?
• Will microgrids be subject to consumer protection laws like utilities?
• What are the laws for buying/selling excess electricity and other ancillary services if not considered a utility?
• Who determines microgrid size constraints?
• Who is responsible for the operation and maintenance of a microgrid?

Real-World Examples

Oftentimes, the benefits greatly outweigh any potential risks involved with the microgrid, so what are some real-world examples where microgrids have proven to be beneficial? 

• During wildfire season, many of the power outages in California are planned outages – a microgrid makes planned outages easier to handle. Homeowners connected to a microgrid can produce and store their own power via solar PV and energy storage, staying completely self-sufficient until the main grid is back online. 
• When Hurricane Maria tore through Puerto Rico in 2017, causing the longest power outage in U.S. history, microgrids would have been much easier to restore, especially for hospitals and emergency responders. One of the major benefits of a microgrid is that it can extend beyond a single house or building and create a tiny electricity-isolated island within a community. A perfect example would be a microgrid between a fire department, a school, and a senior center for emergencies, or even between multiple resorts on an island community.
• The University of California – San Diego (UCSD) microgrid now powers a campus that covers 1200 acres and serves a community of about 45,000 faculty and students living and working in 450 buildings. Two high-efficiency 13 MW natural gas turbines, a 3 MW network of solar resources, a 2.8 MW fuel cell, and a 2.5 MW advanced energy storage system allow the university to generate about 85% of its own energy at about half the price that utility power would cost. The microgrid earns USCD money by helping the utility meet peak demand by reducing campus loads upon request. They also generate a high excess of electricity from the PV array, so local energy costs go negative to around -2¢/kWh during midday.
• A heat wave and storms led to power outages that affected hundreds of thousands of New York and New Jersey electricity customers in June 2019. Through it all, Home Depot stores in the New York area remained open thanks to microgrids that provided each store’s critical power needs during their outages and eliminated the need for any back-up generators. With a combination of solar PV, fuel cells, and other energy storage on their microgrids, Home Depot has been able to meet sustainability initiatives in New York and elsewhere while supporting the retailer’s goal to ensure that stores remain available to the communities they serve in the event of a natural disaster or grid power failure.  

There are pros and cons for microgrids, but a microgrid can be a great solution for many applications. In our next installment, we will discuss the stages of a microgrid design, how to make it a successful project, and some of the challenges of developing a microgrid.  

If you have any questions about this new and emerging design strategy, Mayfield Renewables is here to help. Feel free to contact us at hello@mayfield.energy or by filling out a project request form here.