Microgrids Continue to Progress – With Some Bumps in the Road

by | Dec 12, 2016

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microgrid Microgrids increasingly are being seen as a hedge against grid failure and as a way to more efficiently harness renewable resources.

Microgrids are doing well, according to Frost & Sullivan. Farah Saeed, a Principal Consultant for the firm, told Energy Manager Today that the category was worth $2.04 billion last year and will finish 2016 at $2.26 billion. In 2022, she said, the market will expand to $5.8 billion.

Frost & Sullivan sees significant progress in the years ahead. The compound annual growth rate (CAGR) during the period of the study is expected to be 16.1 percent, according to Saeed. Though those numbers look pretty good, there is of uncertainty on how the market will move forward.

That uncertainty is matched by the tendency of microgrids to grow at different rates in different areas. The east coast – and Connecticut in particular – have taken to the idea of using microgrids as a key tool to avoid the type of long outages caused by Superstorm Sandy four years ago.  “I think that it how it will proceed will vary from state to state,” Saeed said.

The road may become bumpier. Some predict that the incoming Trump administration will be less amenable to renewable strategies. In a Q&A at Midwest Energy News, Microgrid Institute Director Michael Burr sounded ambivalent about the prospects going forward:

Some analysts expect Trump and the Republican Congress will eliminate research and development funding for advanced energy development. I doubt R&D will be cut entirely, but we can expect declining renewable energy support and easing on environmental regulation. That changes the picture a bit, and maybe a lot when it comes to integrating renewable energy into microgrids.

In Illinois, microgrids were cut from the Future of Energy Jobs Bill (Senate Bill 2814), which was passed on December 1 and sent to Governor Bruce Rauner for signature. The story at Microgrid Knowledge says that the move was intended to reduce costs. Originally, Commonwealth Edison was to be authorized to recover $250 million for five microgrids. The number was gradually reduced and eventually microgrids were eliminated. The story notes that the Xelon subsidiary “has yet to announce how the lack of legislative support will affect its microgrid development plans were part of the legislation.” Thus, they may not be completely out of the picture. However, as of right now microgrids are on the outside looking in.

There is a lot of good news, too. Two recent examples:

NJ Spotlight reports that the New Jersey Board of Utilities has directed staff to create policies for creation of “localized power sources” in “town centers” that are capable of providing power during emergencies. The story suggests that these will be microgrids combined with fuel cells, solar energy, battery backups and combined heat and power (CHP) plants.

Late last month, Yahoo! Finance reported that American Electric Power subsidiary AEP Ohio filed a proposal with the Public Utilities Commission of Ohio (PUCO) to modify and extend the Electric Security Plan for six years past its current exploration date of May 2018. Part of the plan is AEP Ohio’s partnership with the City of Columbus and Smart Columbus, which mandates that eight to ten microgrids be placed in critical areas such as police and fire stations and medical facilities in the city, the story says.

The technology is maturing as well. Microgrids are very complex. Saeed suggested that one of the reasons that the category is expanding is that microgrids are coming of age. “A microgrid typically has data management, energy storage and communications [elements],” Saeed said. “These devices are from different vendors. The question is how to ensure that each of these devices operators seamlessly. On that front we are seeing a lot of interesting innovation that could scale to larger systems. Data analytics and even artificial intelligence could be used to ensure that devices are operating at optimal levels. It is very exciting. From that level I am optimistic.”

The news generally is good for microgrids. Two trends — the desire to harness renewables and the eroding reliability of the grid — provide strong rationales for them to move from the periphery to the center of energy distribution. There are bumps in the road, but the progress is in a direction that should make proponents happy.

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