Customers generally are looking for three things from microgrids: resiliency, cost savings and sustainability.
After the Texas storm in February that crippled the state’s power system, potential customers became more aware of microgrids’ ability to operate through power outages. They also became more attuned to the problems associated with large, decentralized grids.
“The Texas events were very detrimental to many of the businesses in the state,” said Eric Dupont, executive vice president and chief commercial officer at PowerSecure. The highly publicized storm has boosted customer interest in resiliency.
Resiliency has also become more important because now it’s a year-round need. No longer are microgrids most in demand during hurricane season. With more destructive storms, more wildfires and the increasing use of public safety power shutoffs by utilities, more businesses across the country are looking to avoid power outages. Not only are business customers becoming more knowledgeable about microgrids, but policymakers are beginning to understand the benefits of microgrids, too.
Electrification shines light on microgrids
The move to electrification is also shining a light on microgrids. As companies work to electrify their fleets and businesses, many utilities are struggling to understand how to best serve these customers. They are looking into the investments needed to supply the power for charging stations and what transmission feeder upgrades are required.
For those electrifying their fleets, microgrids can provide alternative solutions that benefit both businesses and utilities. For example, the Antelope Valley Transit Authority in California found that choosing electric buses powered by a microgrid was an easy decision. The agency expects significant fuel savings from the move.
Microgrids can charge electric vehicle fleets, helping lower fuel costs for businesses, and they can reduce the load on utilities. They can do this often at costs lower than the price of utility system upgrades.
“As electrification grows, so likely will microgrids,” said Dupont.
Businesses are also looking into microgrids to meet their sustainability goals, which often focus on incorporating renewable energy and reducing their carbon footprint.
Customers want microgrids for economic reasons, too
Cost savings are also an important goal for businesses looking into microgrids. Companies can cut costs by using microgrids to reduce their demand charges. They do this by operating the microgrid when their demand for utility power would otherwise be high. For example, the city of Medford, Massachusetts, installed a microgrid to help reduce its demand charges.
To lower demand charges, customers reduce electricity use to lower their spikes in demand.
Microgrids help with this strategy because the customer can use microgrid power, instead of grid power. Demand charges are set based on the short period of time that a customer’s demand is at its highest. So, if customers cut back on use of the grid at that point, they lower what they pay in demand charges.
Businesses can also cut costs by operating microgrids in markets that provide real-time pricing. This allows businesses to benefit during power price spikes. For example, during the Texas storm, prices skyrocketed. By operating a microgrid during periods of high prices, businesses avoid purchasing from the grid and paying the associated high costs of doing so. In some regions, microgrid operators can sell power to the grid when prices are high and benefit from the high prices.
Microgrid customers are often interested in meeting all three goals —resilience, sustainability and cost savings. For microgrid providers, it’s important to balance all three goals. That means incorporating technologies that can meet a customer’s business objectives.
“If you get too focused on one individual goal, you could end up with the wrong set of technologies incorporated into your microgrid that don’t meet the customer’s ultimate requirements,” said Dupont.
While microgrids are helping customers meet their goals, they often provide a larger benefit by supplying power to the grid when it’s most needed. Microgrids can participate in demand response programs under which they cut back their draw from the utility during peak hours. These programs provide societal benefits: They help utilities meet their demand, rely less on fossil fuels and cut costs.
While business customers don’t always focus on helping out utilities and creating larger societal pluses, they’re often happy to provide this important benefit as a byproduct of their investment.
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