Key Players Shed Light on Why the Microgrid Market is Growing

Nov. 12, 2020
Natural disasters, the pandemic, new business models and state policies drive the microgrid market forward, while regulatory hurdles hold it back, say industry players who will be speaking November 17-19 at Microgrid 2020 Global.

Natural disasters, the pandemic, new business models and state policies drive the microgrid market forward, while regulatory hurdles hold it back, say industry players who will be speaking November 17-19 at Microgrid 2020 Global.

The natural disasters spurring microgrid growth include hurricanes and wildfires. In some cases, the wildfires have prompted utilities such as Pacific Gas & Electric in California and Pacific Power in Oregon to implement public safety power shutoffs (PSPS) to reduce the risks of fires from electrical equipment.

“This year has certainly brought its challenges, with COVID, a very active hurricane season, and fires in the west,” said Allan Schurr, chief commercial officer, Enchanted Rock. “As a result, we’re seeing companies focused on crisis-proofing operations before the next event.”

Schurr was among several Microgrid 2020 Global speakers that Microgrid Knowledge interviewed in advance of the upcoming event, which has drawn thousands of registrants worldwide.

Echoing Schurr’s idea, Gary Leatherman, vice president, power advisory and smart and distributed energy for Worley, said, “To keep the lights on during PSPS, entities looked to develop solutions; this increased the demand for microgrids.”

Added Paul Roege, vice president for strategic initiatives, Typhoon HIL, “It seems clear that the greatest impact on microgrid projects has been broad impacts of disruptive events — particularly natural disasters, with some contributions by human actors.”

Increased demand also is coming from areas ravaged by hurricanes.

Hurricane Maria in Puerto Rico, even though it occurred in 2017, continues to spark significant interest in that area, said Harold Ruckpaul, director, strategic alliances, Eaton.

In the face of storms and wildfires, energy security is critical, said Kati Sidwall, simulation specialist for RTDS. “Our standards for power system protection and control must change. Increasing the deployment of microgrids that can operate securely and effectively is part of the solution, as is examining the performance of existing protection and control schemes under a wide variety of contingency scenarios,” she said.

COVID’s influence on the microgrid market

Another issue affecting microgrid growth is changes in energy consumption due to the COVID-19 pandemic. Overall, consumers used less electricity, which created higher levels of renewables, resulting in grid destabilization, said Cordelia Thielitz, vice president, microgrid solutions, Rolls-Royce Power Solutions.

“Microgrids have proven to boost power grid resilience to extreme weather events,” she said. Meanwhile, heat waves in California have led to increased consumption for air conditioning.

“The ongoing heat wave of the area generated a high demand for electricity, which could not be met rapidly enough due to the mix of conventional and renewable energy source generation and the lack of storage capacity,” she said.

She expects sustainable microgrids to emerge globally in the wake of hurricanes, earthquakes, wildfires and destabilized grids.

Another effect of the pandemic is the rising need for electricity from people working from home and using their electricity consuming electronic devices. Reliability is important for residential customers who previously didn’t seem as concerned about it, said Jason Marenda, electrical engineer, Power Engineers.

“Additionally, the same pandemic has increased the appetite for even more secure power at our hospitals and first responder locations so that they are able to react to a wide scale emergency,” he said.

The disruptive weather and wildfire events are prompting companies and government agencies to view microgrids as infrastructure that can provide resilience for people locally, said Rishi Chandra, director, business development, Cummins Power Systems.

The wildfires also prompted municipalities in California to look at how to add blackstart capabilities to their existing generation and how much of their systems they can power with existing generation if they experience outages due to a PSPS event, said Power Engineers’ Marenda.

“My hope is that the innovation that is found by these microgrid developments in California will be able to be used in other areas for other reasons to increase microgrid deployments,” he said.

Wildfires and storms are not the only events stimulating interest in microgrids and distributed energy resources (DER). Technological advances plus decreasing prices for batteries, PV and wind generation have boosted the competitiveness of DER compared to conventional options, said Rolls-Royce Power Systems’ Thielitz.

What’s more, the increased need for rural electrification is driving the microgrid market, she said.

Value of resilience: Goodwill

In response to power disruptions, commercial and industrial customers are recognizing the monetary and goodwill value of resilience, said Samantha Reifer, director, special projects for Scale Microgrid Solutions. This is prompting commercial and industrial customers to acquire microgrids.

Said Cummins Power Systems’ Chandra, “A pivot in 2020 has been growing realization of the effect of climate change and the ensuing value of resiliency.”

Businesses aren’t interested in resilience alone; they’re also acquiring microgrids to help meet their decarbonization goals, said Enchanted Rock’s Schurr.

“They’re increasingly turning to microgrids, which provide a simple and cost-effective approach to reliable on-site facility backup power as well as support a greener grid,” he said.

To meet corporate sustainability goals, customers are deploying renewable energy in their microgrids, said Doug Sansom, managing director, DER Sales, NRG. “This translates to freedom to access energy on their terms: at a cost-efficient rate and when they need it,” he said.

Rolls-Royce Power Systems’ Thielitz agreed that corporate sustainability is an important driver in the microgrid market, noting that in 2020, the European Commission created a climate plan calling for carbon dioxide emissions to be reduced 55% by 2030 compared to 1990. “This increases the need for sustainable energy solutions, and it is up to us to be prepared for the upcoming demand in the next years,” she said.

Influence of government policy

Photo by Javier Cruz Acosta/

Other positive policy and regulatory moves include some state policies, especially in California and Maine, said Kay Aikin, co-founder and CEO, Introspective Systems.

For example, California’s SB 1339 calls for new California Public Utilities Commission (CPUC) regulations promoting microgrid tariffs, lower microgrid interconnection barriers and utility microgrids, she said. And Maine’s LD13 would help streamline the process of implementing microgrids, she said.

What’s more, FERC Order 2222 will allow DERs and microgrids to take advantage of additional revenue streams, said Power Engineers’ Miranda.

“This will provide the ability for multiple microgrids in an area to be aggregated with distributed resources and other DERs to act as a single resource and support the grid,” he said.

Other helpful legislation includes New York’s Take Charge program , which awards funding for microgrids.

With such regulations and the demand for resilience, microgrid designers are expanding the capabilities of microgrids, said Michael Boswell, vice president, distributed generation projects for Concord Engineering.

“As more complex hybrid and transactional microgrids are proven, this creates confidence by investors, owners, utilities and regulators,” he said. This is good news, and could be expected as technologies and commercial models mature.

While investors and others are gaining confidence in microgrids, industry members still want to see more movement on the regulatory and policy front, said Scale Microgrid Solutions’ Reifer.

“In many states, due to the complexity of interconnection, ownership, rate design, and more, microgrids are being hampered,” she said. Policymakers need to respond to community and customer needs more efficiently.

“The policy space is the next big hurdle for the microgrid market and the next largest opportunity for market growth,” said Reifer.

Where microgrids are clear winners

In the short term, however, wildfires, hurricanes and PSPS have underlined the need for reliable power.

“This years’ experience in the industry has shown that having a reliable and up-to-date power supply is an asset worth investing in, even when a pandemic crisis makes it hard to foresee the future,” said Rolls-Royce Power Systems’ Thielitz.

Or, as Introspective Systems’ Aikin said, in the last few years, with increasing awareness of microgrids’ ability to provide resilience, “microgrids are starting to be clear winners in keeping the lights on.”


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About the Author

Lisa Cohn | Contributing Editor

I focus on the West Coast and Midwest. Email me at [email protected]

I’ve been writing about energy for more than 20 years, and my stories have appeared in EnergyBiz, SNL Financial, Mother Earth News, Natural Home Magazine, Horizon Air Magazine, Oregon Business, Open Spaces, the Portland Tribune, The Oregonian, Renewable Energy World, Windpower Monthly and other publications. I’m also a former stringer for the Platts/McGraw-Hill energy publications. I began my career covering energy and environment for The Cape Cod Times, where Elisa Wood also was a reporter. I’ve received numerous writing awards from national, regional and local organizations, including Pacific Northwest Writers Association, Willamette Writers, Associated Oregon Industries, and the Voice of Youth Advocates. I first became interested in energy as a student at Wesleyan University, Middletown, Connecticut, where I helped design and build a solar house.

Twitter: @LisaECohn

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