[Editor's Note: As managing principal of Smart Buildings, Jim Sinopoli discusses the benefits of using a microgrid to generate power.]
Centralized power plants have been around since the 1880s. More than a century later, we’re starting to see growth of microgrids -- decentralized or distributed generation of power at individual buildings, primarily through renewable sources such as solar panels or wind turbines. With microgrids, real estate developers, building owners or the local community builds the power grid for their large development, industrial park, campus or even an entire neighborhood. No longer just a new concept, microgrids have moved beyond the pilot phase – they are now.commercialized with roughly 300 microgrids operational worldwide.
Within a microgrid are small power generators such as traditional fossil fuel generators, photovoltaic, wind and fuel cells. Different sources of power generation improve the microgrid’s reliability. The microgrid may be able to operate independently (such as in remote villages or military bases) or it could be connected to a larger utility power grid, in which case the microgrid then appears as one customer to the larger grid. The organization and management of the microgrid could be a cooperative arrangement for a community, coordinated by developers, or it may just be a large campus with one owner.
Microgrids improve the reliability of the older grid and the overall power system as well. Locally generated power lessens the burden on centralized generation and related transmission and distribution systems. Energy losses in the transmission process, which are significant in the larger grid, are negligible with a microgrid.
Microgrids will soon be a reality for each of us involved with designing, constructing, operating and managing buildings. So why would a developer or building owner be interested in a microgrid? Here are some compelling reasons:
· The microgrid improves power reliability. A microgrid with multiple generation sources provides diversity and therefore greater reliability. Connecting a microgrid to the larger grid simply means increased power dependability.
· The microgrid has more potential to lower energy costs. While it’s true that centralized power plants produce cheap power, there are opportunities to lower costs further with a microgrid. For example, if a microgrid is connected to the larger grid, the operator can use power from that grid when prices are cheaper than the microgrid. Conversely, the operator can maximize the use of the microgrid when prices from the larger grid are high. Given variables such as time-of-day rates, demand charges, weather, potential demand response events and load shedding scenarios, some analytics can be used in order to optimize when to use the larger grid or the microgrid. This will eventually minimize the cost of energy or could even facilitate making money by selling power into the larger grid. Owning a microgrid offers more flexibility for the owners in managing their energy costs.
· The microgrid is energy efficient. A typical coal-fired power plant might only be around 38 percent efficient, meaning 62 percent of the original energy is not converted to electricity. Add to that another 7 percent loss in transmission and distribution. A microgrid with multiple generation sources is likely to be more efficient through renewable sources, eliminate the transmission and distribution energy losses and have the capability to recover and use heat locally. The result is higher energy efficiency and lower carbon production.
A recent study by Lawrence Berkeley National Laboratory looked at a microgrid in Canada with 10MW peak load and a 6.2 MW average load. The study, called A Framework for the Evaluation of the Cost and Benefits of Microgrids, found the average cost of electricity for customers via the microgrid to be $5 less per MWh. The load reduction provided benefits to the grid operator related to investment deferral, which means a utility company can defer or doesn’t need to make a capital investment in generation, infrastructure and land. There were also substantial gains to society related to reduction of GHGs. Finally, the study monetized benefits related to increased power reliability that accrued primarily for customers, but also the microgrid operator and the larger grid.
The take-away from this study is that while most gains from microgrids are related to the customer, everyone benefits.