Behind the Rise of Microgrids: News from PJM, Navigant & Macquarie Capital

March 28, 2017
Behind the rise of microgrids…PJM celebrates 20 years of competition…Navigant counts 43,000 energy storage systems…Macquarie Capital closes on the first-of-a-kind financing of battery-based energy storage systems with CIT Bank
The impetus behind the rise of microgrids

image by By Sergey Tinyakov/Shutterstock.com

Many trace today’s rise of microgrids, energy storage, and distributed energy to the opening of competitive electricity markets. So, it’s worth noting that PJM, the nation’s largest grid operator, is celebrating its 20-year anniversary of operating competitive wholesale power markets.

Known in energy-speak as ‘industry restructuring,’ the country’s first bid-based electricity market began with PJM on April 1, 1997. Regulators opened transmission lines to competitors, as a precursor to retail choice – the ability of electricity customers to choose their power suppliers.

PJM then aligned locational prices with corresponding grid conditions, a model now used around the world. The grid operator says that as a result the 65 million customers within its 13-state (plus the District of Columbia) region have saved $2.8-$3.1 billion annually.

“The impact of the markets was to open up the power industry to a much broader group of potential participants – many with new and more efficient technologies,” said Andrew Ott, president and CEO of PJM, who designed the initial market. “Electricity has become more affordable because we have more and more people competing.”

Among those innovations spurring the rise of microgrids: energy storage

Energy storage is becoming a key technology that is helping the rise of microgrids — and it’s growing fast.

“Overall, the global energy storage industry is poised to continue to grow quickly over the next several years,” says Ian McClenny, research analyst with Navigant Research. “With emerging infrastructure becoming increasingly integrated, dynamic, and complex, flexible resources like storage will provide added value to existing and new power generating assets.”

Navigant has released its Energy Storage Tracker 1Q17 that identifies 1,420 energy storage projects encompassing and more than 43,000 individual systems

The report finds that utility-scale energy storage projects are decreasing and distributed sector deployments are on the rise.

In 2017, new projects are being announced on a weekly basis as the global energy storage industry continues to explore different business cases for energy storage systems, Navigant says.

[clickToTweet tweet=”Navigant identifies 43,000 #energystorage systems” quote=”Navigant identifies 43,000 energy storage systems”]

And speaking of energy storage business cases…

Macquarie Capital has closed on the first-of-a-kind financing of battery-based energy storage systems with CIT Bank. The non-recourse financing backs a 50-MW fleet of behind-the-meter, battery storage systems located in grid-constrained pockets of the West Los Angeles Basin.

Macquarie Capital acquired the project from Advanced Microgrid Solutions (AMS) in August 2016. Since them, Macquarie and AMS have been developing and constructing the portfolio, which is expected to come online in phases over the next 12-24 months.

The fleet will be located at various commercial, industrial and government sites in Los Angeles and Orange counties, an area served by Southern California Edison (SCE). The batteries will provide utility grid services, including flexible and reserve capacity, solar integration and voltage management in addition to retail energy services such as demand management, back-up generation and enhanced power quality.

SCE, which is California’s second largest utility, will purchase capacity from the Macquarie-owned fleet of behind-the-meter, battery-based energy storage systems under 10-year capacity contracts to provide load reduction services as part of SCE’s plan to modernize the grid by 2022.

AMS, which led the development of the portfolio, will serve as the asset manager of the projects. “Macquarie is financing a revolution in the energy industry,” said Susan Kennedy, CEO of AMS. “The era of energy storage has begun.”

[clickToTweet tweet=”Macquarie Capital closes on first-of-a-kind #energystorage financing” quote=”Macquarie Capital closes on first-of-a-kind energy storage financing”]

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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.

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