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The rise of local low-carbon and renewable distributed energy solutions

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Renewable power sources, such as solar, play an important role in the energy transition and provide a gateway to cleaner, more sustainable microgrids. Source: Shell Technology Center Houston.

This article is sponsored by Shell New Energies.

Sustainable. Affordable. Resilient. 

What is the first thing that comes to your mind when you read those three words together? I bet it is not how you would describe your power supply. 

That is because most of today’s power grids were not set up to withstand fluctuating and extreme weather conditions, with the International Energy Agency (IEA) calling them a weak link as the power sector begins transitioning over to a low-carbon approach. Over 2 million Americans lost power in 2019 due to public safety power shutoffs. Many have faced unplanned outages because of operational issues and lack of generation to meet demand, while others have been tolerating recent blackouts because of efforts to mitigate the risk of wildfires. 

And the 2 million Americans who lost power? That’s just California. 

Where will people get their power in the decades ahead? And how low-carbon will it be?

With more extreme weather across the U.S., a global pandemic that has consigned vast swaths of the population to working from home and an aging power infrastructure, much of which was built in the last century, it is a question that many are working to resolve.

Both residents and commercial ventures are revisiting new energy solutions that can help them navigate the shift towards a low-carbon future and provide reliable infrastructure for years to come. 

So-called distributed energy resources (DERs) are one such solution. In short, DERs are a broad range of technologies that can provide power to the user outside of the grid and include demand-side measures. These technologies can play a key role to a cleaner and more resilient energy system, as well as boost energy independence for customers. 

And demand is growing. A report published by Wood Mackenzie in 2020 suggested cumulative DER capacity in the U.S. could reach 387 gigawatts in the next five years. In fact, both residents and commercial ventures are revisiting new energy solutions that can help them navigate the shift toward a low-carbon future and provide reliable infrastructure for years to come — with companies such as Shell developing a variety of clean energy options in recent years, customizable as needed for distinct needs.

Much of the trend towards DERs is driven by digital technology and a greater sense of empowerment among energy customers. Indeed, as more states, cities, businesses and large institutions start to take control of meeting their own energy needs, new patterns and strategic investments are emerging. DERs provide multiple solutions based on geographies and allow customers to build reliable microgrids that incorporate low-carbon and renewable technologies such as solar, fuel cells and battery storage. 

The Department of Energy defines microgrids as "a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid," For many experts, a microgrid may be the best solution to maintaining reliability when the rest of the grid has a power failure. According to one Smart Energy article, by the end of 2023, renewable generation and storage are expected to represent 22 percent of the annually installed capacity — much of which will be part of a microgrid. 

"Solar and energy storage can, today, cost-effectively form the backbone of an onsite energy system," said Matt Baker, business development manager at Shell New Energies. "At the same time, accessibility of advanced microgrid controls has become dramatically higher than just a few years ago."

From aging infrastructure to renewable microgrids

Currently most operational microgrids in the U.S. run on hydrocarbons such as diesel and natural gas. While this is a resilient option today, the path to a cleaner electric grid for the long term requires renewable energy. And that’s where the tide could turn. 

Electricity is the fastest-growing part of the energy system and, when generated from renewable sources, has a big role to play in reducing greenhouse gas emissions. Microgrids powered by renewable electricity could help society achieve a decarbonized and digitized energy future. The energy providers best-positioned to make that a reality will offer customers different options for cleaner electricity based on their needs and location. 

"Think about it — the demands on our power infrastructure will only continue to grow as we begin to electrify segments of the transportation system," Baker said. "If I’m a facility manager considering electric vehicle charging for my fleet, how can I do that when my local grid is not as reliable as I need it to be?" 

As an example, he references a site in Houston operated by Shell New Energies: A microgrid that consists of a solar array, two types of energy storage systems, gas generation, electric vehicle charging and an intelligent energy management platform powering it all. Comprehensive and reliable. Besides, the system capacity is able to participate in wholesale markets.

And it proves the point Baker is making: that it is critical for customers to understand that a renewable microgrid is no longer conceptual or expensive. The technology is here. The scale is here. And now regulation is starting to fall in line as well, albeit not as quickly as Baker would wish. 

"Customer demand is outpacing regulation,” Baker said. "People understand the importance of becoming energy-independent and are motivated by playing a role in building a cleaner energy system. With costs down, microgrids powered by renewable energy are a win-win for everyone involved — you are producing your own energy, storing surplus for when it’s most valuable and remaining connected to the main utility when you need to." 

With adoption numbers growing, microgrids could shape the future of energy. Investing in a microgrid tied to the local utility provides added resilience, while still gaining the many benefits of utility supply and creating the mutual benefits of an integrated grid — a win in the short term and a competitive advantage for the long term. 

"For the renewable microgrid, the magic is in the sum of its parts. Now no longer conceptual. And that’s where the future of energy independence for institutions must live," Baker said. "A net-zero, community-based approach that is both resilient and renewable."

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