Who uses microgrids and why?

Aug. 21, 2017
As the fledgling microgrid industry matures, the technology’s advantages become apparent in more applications. Here we describe what types of businesses and institutions commonly use microgrids and why.

A range of businesses and institutions now use microgrids to boost electric reliability, green their energy supply, lower costs, improve efficiency and better serve customers or the local citizenry.

As the fledgling microgrid industry matures, the technology’s advantages become apparent in more applications. Here we describe what types of businesses and institutions commonly use microgrids and why.

Hospital microgrids

The senior population is on a path to double in the US, according to the US Census Bureau. This creates pressure to expand hospitals, health care networks, assisted living facilities, adult day care and nursing homes.

But hospitals use 2.5 times as much energy as commercial buildings of the same size.

It’s no surprise then that energy use is a top concern for health care executives, especially when they look at electricity price projections that show rates rising in the coming years.

Health care microgrids bring intelligence and efficiency to a hospital’s energy planning. An advanced microgrid controller is able to optimize and synchronize the various pieces of energy equipment. It allows the microgrid to reliably deploy its assets 24/7 in a way that provides energy when it is needed to serve hospital management goals.

Health care microgrids are not just fancy generators. They seamlessly integrate hospital power generation with their electric utility, back-up generators and active on-site supply, all configured with a dynamic software intelligence. The microgrid tends to hospital energy needs — and energy budget — while hospital management tends to core critical care goals.

Learn more by downloading Microgrid Knowledge’s free guide “HealthCare Microgrids: The Path to More Reliable, Clean, Lower Cost Energy in Hospitals.”

Microgrids for universities/research facilities

Colleges and universities were early adopters of microgrid technology in the United States. That’s because microgrids provide a campus with reliable and affordable power on a 24/7 basis. This keeps critical facilities up and running to serve the campus and larger community by acting as a shelter in the event of a power outage.

Microgrids are particularly important to university research labs because they often have temperature-sensitive specimens. Power outages can cost them years of effort and millions of dollars of work.

Colleges and universities often install microgrids to help them achieve climate change goals. The microgrid also can be used in programs that train students for energy-related jobs.

Because they use large quantities of heat, steam and hot water, college campuses often are well-suited for combined heat and power (CHP) microgrids. CHP plants reuse waste heat created as a byproduct of generating electricity. This makes CHP a highly efficient form of energy.

Some of the most advanced microgrids in the US are at universities, among them Princeton University, the University of Texas at Austin and the University of California, San Diego.

In Ontario, a microgrid at Algonquin College demonstrates how to achieve maximum return on investment. Doubling its CHP plant’s capacity — from two to four megawatts — offered a way for the college to secure all of its power on-site. The microgrid also incorporates green technologies, such as solar power and energy storage, and provides demand response and heat recovery benefits to the college. Algonquin’s microgrid can operate independently from the central grid. But it will only do so at times when a power outage occurs or when being off-grid offers economic advantage. At other times, the microgrid will operate in parallel with the local utility grid.

Smart cities and communities

Many communities began developing microgrids following a spate of severe storms in the Northeast and Mid-Atlantic over the last decade. Connecticut, Massachusetts, New Jersey and New York are channeling state funding to communities to help the effort.

Community microgrids (also called public purpose microgrids) typically provide power during an outage to critical services, such as police and fire departments, communications towers and wastewater treatment plants. Many also include a shelter where people can take refuge during a storm.

Microgrids also often are incorporated into smart city designs. Smart cities optimize limited tax dollars by using technology to analyze, improve and deliver customer services to residents and visitors. Microgrids, with their sophisticated controllers, can help fulfill a smart city’s energy needs.

Pittsburgh’s smart city design presents a sophisticated use of microgrids. The city intends to build energy “spines” that interconnect smart energy, transportation and communications. The plan includes microgrids in and around the city that will work together and incorporate existing district energy systems.

Pittsburgh’s localized grid of microgrids is designed to serve hospitals, universities, data centers and critical infrastructure. The city hopes to reinforce grid security, reduce redundancies and create energy continuity for businesses through the “inter-relationships” of its energy systems.

The city sees microgrids creating a more energy efficient future.

“The idea of having an energy plant that is 100 miles away producing energy to make your toast would be left in the 19th century, where it was started,” said Pittsburgh Mayor William Peduto.

Learn more by downloading Microgrid Knowledge’s free report, “Community Microgrids: A Guide City Leaders Seeking Clean, Reliable and Locally Controlled Energy.

Microgrids for government buildings

New York state government not only “walks the talk,” it “walks the walk.” Confused? Don’t be. The state that has been encouraging and funding its communities to install microgrids now will build its own microgrid in Albany, the seat of state government.

The 16-MW microgrid will power the 98-acre Governor Nelson A. Rockefeller Empire State Plaza. It offers an example of the growing use of government to bring resiliency and energy efficiency to its buildings via microgrids.

The Albany microgrid will use CHP to supply 90% of the power, as well as heating and cooling for the 10 buildings where 11,000 state employees work. After it comes online in late 2019, the microgrid is expected to cut state energy costs by $2.7 million annually.

State officials are siting the microgrid in Albany to ensure government services are powered in a crisis. The project also is designed to help the state meet its goal to reduce greenhouse gases 40% by 2030 (from 1990 levels). The state calculates that the microgrid will cut 25,600 tons annually.

Utility microgrids

Utilities and their customers want lower prices, better reliability and cleaner energy – deliverables that microgrids provide.

Increasingly, utilities see microgrids not as an adversary but as a solution. In 2016 alone utilities put up at least $1.2 billion to pursue microgrids and related distributed energy. Large utility leaders, such as Duke Energy, Exelon, National Grid, Sempra and Southern Company, are among those making the investments.

Microgrids can provide utilities with a lower cost alternative to meeting peak demand requirements and other chain of supply issues. Also called non-wires alternatives, local energy microgrids are built in lieu of centralized infrastructure, such as power plants, substations and transmission and distribution.

Some US utilities develop microgrids for customers within their service territory; others have competitive affiliates that install microgrids throughout the country. Duke Energy is an example of a utility that does both.

Utility microgrids are not without controversy and roadblocks. Utilities in some states are struggling to convince state regulators to allow them to pay for microgrids out of funds collected from ratepayers. Opponents say that a microgrid benefits only a select number of customers so should not be paid for by all. Utilities counter that ratepayer funding is warranted because the microgrids can bolster the wider grid in various ways. For example, the utility may use the microgrid as a resource to supply power and services to the grid during days when demand for energy is high. Or the microgrid may provide a place of refuge for the wider community during a storm.

Disagreement also exists over whether utilities should be allowed to own and operate microgrids in restructured states. These states allow independent companies to compete with utilities to supply power to customers. To maintain a level playing field, these states prohibit utilities from owning power plants. The question becomes, then, is a microgrid a power plant or something else?

See more on our utility microgrid channel.

Military microgrids

Parris Island — we know it as the facility where the Marine Corps trains some of the toughest soldiers in the world.

But did you also know it will soon be home to one of the toughest microgrids anywhere?

Planned for the Marine Corps Recruit Depot in Parris Island, South Carolina, the microgrid will include a new 3.5-MW, gas-fired CHP plant, 6.7 MW-DC of solar photovoltaic panels and 8 MWh of battery energy storage.

What makes the microgrid so tough?  

Its advanced microgrid controller will monitor and coordinate the dispatch of the energy assets and emergency diesel generators. It will continuously check the health of the utility connections and island the microgrid during a grid outage. The on-site energy sources will then supply the military base. The controller also will facilitate fast load shedding.

The Parris Island project is just one of several nationwide that are designed to help military bases become more energy independent. The military also is installing microgrids to help green its energy supply and improve cybersecurity.

Microgrids come into play in the battlefield, too, in the form of mobile units that can be quickly installed. Because they often use renewable energy or batteries, mobile microgrids reduce the need to ship fuel to remote outposts. Afghanistan revealed why saving fuel means saving lives. Vulnerable to attack, one in 24 US fuel supply convoys resulted in a casualty there, according to an Army study.

See more on our military microgrid channel.

Microgrids for stores/gas stations

Houston is notorious for its severe storms, wind and flooding. But providing aid in times of disaster is the cornerstone of the H-E-B grocery chain’s philosophy. “Keeping our stores open in times of need strengthens our ability to serve our communities,” said George Presses, vice president of fuel and energy for the 110-year-old food chain. H-E-B has more than 370 stores in the US and Mexico with $23 billion in annual sales.

That’s why the chain installed microgrids in 45 Houston area stores. Using natural gas-fired generators, the microgrids will allow the chain to keep refrigerators and freezers running and continue to provide the public with food and even emergency supplies such as charcoal, candles, batteries and flashlights when storms knock power out.

In Brooklyn, New York, Whole Foods has developed a microgrid so community members can gather during a power outage to charge phones, connect with family members and get hot food.

Across the nation, community microgrids also include service stations in their power network. Like grocery stores, service stations are privately owned, but municipalities consider them to be critical infrastructure that provides refueling for the general public, police, fire, rescue and national guard as well as utility crews. Service stations with convenience stores have the additional benefit of offering supplies, food and possibly electric charging for cell phones and other devices during a power outage.

Microgrids for businesses

Until recently, it was mostly the military, communities, institutions and utilities that used microgrids. But that’s changing. Businesses are now poised to adopt microgrid technology faster than any other sector, according to Navigant Research.

Why? First and foremost, power outages are expensive and they hurt the bottom line.  The US government pegs the annual cost to the nation’s economy at $18 billion to $33 billion

Power outages are particularly costly for data centers — and it’s getting worse. The Ponemon Institute said that the average cost of a data center outage increased from $505,502 in 2010 to $740,357 in 2016, a 38% net change.

For an industrial facility, even a momentary outage can be costly. For example, if a dairy processor loses power for just a few minutes, it must shut down its operation to clean equipment under safety regulations. The process can take several hours.

So having a microgrid on-site can make a business park a magnet for premium tenants that are sensitive to power outages. It’s also likely to attract businesses with green leaning customers who are more apt to patronize a merchant who shares their environmental values.

And because of their efficiency and ability to leverage energy markets, microgrids can help keep energy costs down — another big plus for business parks. Microgrids that include CHP offer a particularly strong financial advantage for commercial and industrial operations that require a lot of heat, steam, air conditioning or hot water.

Residential microgrids

Microgrids are still too expensive for most households — with some exceptions. However, microgrids can be cost-effective for multi-unit residences.

For example, in June 2017, New York unveiled the first microgrid that serves the city’s affordable housing stock at the Marcus Garvey Apartments. The microgrid was installed as part of a $190 million refinancing and renovation for the 10 city block Brooklyn development. In addition to new kitchens, bathrooms and other upgrades, the 625-unit apartment complex now has a solar plus storage microgrid. Now, 21 of its rooftops have solar panels that make up a 480-kW array, coupled with a 400-kW fuel cell and a 300-kW lithium battery.

In other cases, microgrids are being installed in neighborhoods where households are aggregated into virtual power plants. Green Mountain Power (GMP), a Vermont utility, recently installed solar plus storage microgrids in 14 low-income renters’ modular homes. Batteries from the systems provide backup power for tenants during outages. In addition, they serve as a flexible resource for the utility to reduce its grid costs. The utility, which owns the systems, aggregates and discharges the battery energy onto the grid during periods of high demand. GMP’s goal is to lower the transmission and capacity charges it pays to ISO New England.

Want to learn more about microgrids? See other articles in our About Microgrids series.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

Twitter: @ElisaWood

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