What Isaias Laid Bare about the East Coast’s Progress — or Lack of — on Energy Resilience

Aug. 11, 2020
Superstorm Sandy got the conversation started about microgrids eight years ago after it knocked out the grid in large swaths of the East Coast. How far have we come since then? Isaias provided the answer last week. It wasn’t good.

Isaias’ punch to the East Coast last week in many ways resembled that of Superstorm Sandy, the storm that eight years ago launched a drive for microgrids to ward off power outages.

Brooklyn, NY in the aftermath of tropical storm Isaias. By Leonard Zhukovsky/Shutterstock.com

So it naturally raises the question, When it comes to electric reliability, how far has the East Coast come since Sandy? 

By the outage numbers, not far. Isaias shut down power to 6.4 million homes and businesses — less, but not a lot less than Sandy’s 8.1 million. And again recovery is proving to be a mammoth job for utilities, extending for days and requiring the help of thousands of utility workers from other states. Connecticut, New Jersey and New York were particularly hard hit.

PSEG Long Island reported Monday that 6,000 workers, working 16 hours shifts, were trying to restore power in a territory that saw 5,000 trees break or fall.

In New York City, 7,000 wires went down. The storm was second only to Sandy in its destruction, according to the city’s primary electric utility, Consolidated Edison. And like Sandy, Isaias had no pity for hospitals or other essential services. New Jersey’s largest utility, PSE&G reported August 5 that 700 critical facilities were out.

 “That’s hospitals, police/fire/ambulance, gas stations, transit systems, supermarkets, nursing homes – other utilities – water and sewage companies,” said the utility in a media statement. 

In all, seven New Jersey hospitals lost power and none had microgrids.

Governors’ threats echo Sandy

Six days after Isaias struck, PowerOutage.US was reporting hundreds of thousands remained in the dark. Recovery was still underway at this writing.

Again, governors are upset and demanding accountability from utilities, as they did post-Sandy. Again utilities are saying that they are working as fast as possible.

New Yorkers should not suffer because electric utilities did not reasonably prepare for this eventuality — Gov. Andrew Cuomo speaking about Superstorm Sandy, quoted  Nov. 8, 2012 by Reuters 

After Sandy, these were the circumstances that led to a government push for microgrids on the East Coast, most notably the $40 million NY Prize launched by Cuomo. But some of the programs have been slow to produce microgrids, despite good intentions by the states. (More on that later.) 

Where microgrids kept the lights on

The massive outages caused by Isaias show that although the microgrid industry has been growing swiftly, it’s barely begun to stitch a quilt over the power landscape. Still, there was good news.

Powersecure said that its microgrids kept the power flowing to 167 facilities. Most were located at retail operations and grocery stores but some serve hospitals and industrial sites, according to the company, a subsidiary of Southern Company.

Bloom Energy’s microgrids prevented 25 outages for customers in New York, New Jersey, and Connecticut across 14 microgrids on August 4.

Michael Bakas, executive vice president, distributed energy systems of Ameresco noted that the microgrid at Bradley International Airport again came through. The storm caused the grid to trip several times, so the Hartford, Connecticut airport kept its microgrid in island mode, meaning it had disconnected from the grid and was providing power independently to the airport, the key reliability feature of a microgrid.

Ameresco designed, built and operates the project for the airport, which has proven itself in multiple storms. The system kept the airport powered during the notorious 2011 October Nor’easter. Also known as white Halloween, the storm dumped snow on Connecticut while the leaves were still on the trees, causing extensive power line damage. Again in 2012, Bradley’s system proved itself, keeping the airport up and running during Superstorm Sandy.

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Connecticut’s government took an early lead on microgrids, pushing for their development even before Sandy. The state operates a microgrid grant and loan program that has awarded funds to 13 microgrid projects. Eight have gone into operation.

The state checked on the microgrids after Isaias and found one successfully operated and one did not. Five of the microgrids were in areas that did not lose power. 

The state had not yet received a response from the remaining operator by the deadline for this article, according to a spokesperson for the Connecticut Department of Energy and Environmental Protection. This isn’t surprising. Reports from microgrid operators tend to come in slowly following the chaos in the aftermath of a storm. And private companies with microgrids sometimes decline to make information about their energy plants public. 

Whatever the actual number of microgrids that islanded and kept the power flowing, it’s far more than reported here — and far less than was needed.

The slow pace of government

By Sideways Design/Shutterstock.com

Not helping is the slow pace of government programs that were meant to boost microgrid development after Sandy, such as the NY Prize. Once a crowning jewel of microgrid policy, New York’s $40 million program hasn’t budged since 2017, when the state awarded $11 million to 11 community microgrid projects. The projects received the funding to complete detailed engineering designs and business plans in what was phase 2 of the program. 

Earlier — in 2016 — the program had awarded $100,000 to 83 microgrid projects to conduct feasibility studies, the culmination of the first phase.

The third phase, with funds for microgrid buildout, was supposed to occur last year, offering a chance for projects to vie for an additional pot of $20 million in grants and $50 million each in loans. The program is not dead — the state says it’s still under consideration — but it’s unclear when or if phase 3 will move forward. Its proponents point out that it at least NY Prize provided a body of data that others can access, and the program may have situated some projects for eventual financing. 

Neighboring New Jersey has been working on its Town Center microgrid program since late 2016, when it was approved by the Board of Public Utilities. In 2017, the state divvied up $2,052,480, which went toward feasibility studies for 13 community microgrid projects.

Microgrid proponents have expressed concerned about an inability to build the New Jersey microgrids because of state rules that make it difficult to form public/private partnerships.  However, the state moved forward with the second phase, receiving 11 applications for microgrids May 29. The projects are competing for $4 million. The state has yet to provide a date when it will complete review.

Massachusetts has been nurturing 14 community microgrid projects, which each won grants of $75,000 for feasibility studies in 2018. Maryland, the most recent state to kick off a microgrid program, in June divvied up $1.05 million among 14 facilities. The money is being applied to detailed feasibility analyses, engineering, planning, and designs.

Why have state programs been slow to produce microgrids? Industry insiders cite good intentions by state officials, but red tape and regulatory restrictions  get in the way. Equally significant, many of the states are tackling complex, customized microgrids that lack appeal to private developers.

In my opinion the states sunk far too much effort into one-off engineered microgrid projects (like those associated with NY Prize, the NJ Town Center projects, and Connecticut microgrids) that primarily resulted in a bunch of engineering consultants getting paid to design things that wouldn’t ever exist,” said Duncan Campbell, vice president, project analysis for Scale Microgrid Solutions, a microgrid developer based in New Jersey. “Developers mostly avoided these projects because they’re all multi-year processes that likely won’t lead to deals.”

Where are the community microgrids?

Montgomery County, Maryland, community microgrid project. Photo courtesy of Schneider Electric

Many of the state programs focus on community microgrids, which tend to be more complex and less standardized than microgrids for commercial and industrial facilities. Often community microgrids serve several different customers, such as critical municipal services, schools and homes, and may involve multiple forms of generation, energy storage and sometimes electric vehicle charging.

Unfortunately, community microgrids are exactly what’s needed during a storm like Isaias that causes an extended outage. They’re meant to ensure the community has health, safety, water, food and the ability to communicate, even if the grid is down. A handful have been built in Connecticut, and Maryland’s Montgomery County developed a community microgrid project often touted as as model.

But microgrids for businesses are being installed at a much faster clip than microgrids for communities. Among new entries globally, the commercial sector accounts for 85.8% of microgrid installations, according to Guidehouse. These projects are taking advantage of microgrid standardization and customer-friendly financing that’s accelerated the pace of microgrid adoption for businesses.

Most notable among these is energy-as-a-service financing (EaaS) financing. Also known as microgrid-as-a-service, EaaS allows the customer to access microgrid benefits with little or no money down. Instead, the customer pays only for the service provided by the microgrid. The model now accounts for 87% of new microgrids, according to Guidehouse.

“Providing end customers with an option of either addressing their energy/resiliency/sustainability needs without the use of CAPEX funding will continue to drive the microgrid market,” said Gregg Morasca, vice president, microgrid content officer, for Schneider Electric.

Barriers to microgrids persist

But even private microgrids face stumbling blocks that delay their development.

“It is our experience that challenges still exist in deployment of microgrids in terms of local permitting and interconnection of these systems with the local utility grid. The lack of standard utility interconnection requirements creates challenges, delays and uncertainty in the cost of implementing a microgrid,” said Eric Dupont, PowerSecure’s chief commercial officer.

So what can be done to move microgrid development along more quickly? 

In addition to streamling interconnection and permitting, microgrid advocates frequently call for a method to pay microgrids for their key benefit — the electric reliability they bring to society. This is sometimes described as the value of resilience or value of distributed energy (VDER). 

Calculating this figure is relatively easy for business projects, since it’s often clear how much money they lose from power outages. With this figure in hand, they can derive a return on investment for their microgrid. It’s more difficult to determine VDER for community microgrids. Yet, clearly the health, safety and convenience afforded by electricity has value. 

It is often argued that this is a “private value” and shouldn’t be a part of a compensation tariff. But this, of course, isn’t true for many types of facilities,” said Scale Microgrid’s Campbell. “You want supermarkets, medical centers, distribution centers, refrigerated warehouses, etc. to be functional during outages.”

As a solution, Campbell suggested development of VDER credits that could be applied to microgrid projects with extra credit going to critical facilities.That would actually be scalable by creating a market signal any project developer could capitalize on,” he said.

Time for East Coast states to regroup?

Whatever the approach — grants, better utility interconnection rules, or policy innovation like VDER credits — it’s clear that the East Coast needs to take some new action when it comes to microgrids, especially those built for communities. Weather forecasters say this is the beginning of what could be the most active hurricane season on record. Isaias laid bare that eight years after Sandy, East Coast states still aren’t prepared. 

Peter Maloney contributed to this article.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of EnergyChangemakers.com. She is co-founder and former editor of Microgrid Knowledge.

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