How to Make Microgrids Affordable for Businesses

by | Feb 8, 2022

This article is included in these additional categories:

When a massive outage hit Latin America in July 2017, Establishment Labs was ready. The Costa Rican-based maker of breast implants and other medical devices had installed a localized microgrid, enabling it to “island itself” from the primary grid and to use electricity stored in a battery. 

Costa Rica runs almost entirely on green energy. But its energy infrastructure has not kept pace with the country’s growth. By choosing a microgrid, Establishment Labs had prioritized resilience and reliability  — the ability to keep running during an outage. If the lights are on, the company prevents the loss of its products due to temperature changes while maintaining the ability to keep its machines working.

Indeed, businesses want resilient and sustainable networks at prices they can afford. That is happening as those technologies gain economies of scale. Most microgrids work in concert with rooftop solar power and energy storage. Because Costa Rica is blessed with an abundance of wind, solar, geothermal, and hydro energy sources, it can keep the lights on for its 5 million residents.

“We build the system to size,” says Michael McCuen, founder and managing partner of Energías Limpias de Centroamérica (ELCA), in an interview with Environmental Leader. “We are utilizing and taking advantage of the arbitrage: Costa Rican electricity is inexpensive at night, and the energy storage systems have the ability and the intelligence to store energy at night and to use it in the middle of the day.” 

McCuen and his company designed Establishment Lab’s microgrid. But companies may have different objectives. Some are interested in peak shaving and load-shifting to reduce their bills. Others want to align the mini-grids with grid storage and reliability. Still, others are focused on increasing their use of sustainable fuels. 

But what makes ELCA’s business proposition attractive is that it offers “energy-as-a-service” contracts. That means customers only pay for the services they use. It also means they can avoid putting up any upfront capital. As a result, the investment involves mostly hiring a lawyer to review the contract, and thus the payback is immediate. If a company finances a microgrid with a 20% downpayment, the returns happen a year later. The company says that there are some associated “credit risks.”

Financial Cents

Electroplast îs another Costa Rican company that built a microgrid using energy-as-a-service under a 20-year contract. It makes injection molding for companies like Ford Motor Company and Bosch. Injection molding is a scalable process that allows parts to be mass-produced — a procedure that cannot afford to stop because of an outage. 

Its goal is to ensure that its business remains operational during outages. That saves it a lot of money. Moreover, the electricity is more affordable, because it is stored at night and used during the day. According to McCuen, the company’s operations run 24-hours a day in three shifts. It does not want to use a diesel generator because it leaves too high of a carbon footprint. Electroplast îs billed based on the amount of electricity that ELCA provides. 

ELCA also designed the onsite generation, battery storage, and microgrid for Costa Rican-based MicroTech — all under an energy-as-a-service contract. It makes components for the big automakers that include Toyota and Volkswagen. The investment is paying off: McCuen says that the company’s processes are continually running and that its electricity bill is much lower. 

“These companies want peace of mind and to avoid problems,” says McCuen. “We are helping companies get to net-zero. We are helping companies become resilient and more reliant — to have business continuity.” 

If onsite generation with microgrids can work in Costa Rica, then it can do so in the United States. That’s what New York is doing. Half of the backup generation failed when Superstorm Sandy hit there in 2012. But the microgrids performed, helping to restore power to important buildings in seven minutes, the PJM Interconnection had said. But microgrids have a role nationwide. 

ELCA, for example, says that it is currently trying to get a few projects in Colorado. The good news is that there are federal and state tax incentives, along with accelerated depreciation and grants. But as soon as you go south of the border, the incentives vanish. Microgrid projects are therefore judged on whether they can deliver reliable, clean, and affordable electricity. .

“Everything has to financially make sense based on the electricity saved and the avoidance value,” says McCuen.

Costa Rica may be an ideal place to set up shop: its educated workforce, combined with its abundance of sustainable fuels, are offering a lot to businesses. And microgrids with onsite generation and battery storage are helping to ensure that their operations run smoothly. But those assets must be accessible to commercial and industrial customers — something made possible with the energy-as-a-service arrangement.

Additional articles you will be interested in.

Stay Informed

Get E+E Leader Articles delivered via Newsletter right to your inbox!

This field is for validation purposes and should be left unchanged.
Share This