Power outages are a nuisance to some, an economic burden to others, and even lethal in some cases. Because the pain that outages inflict varies so much, it is hard to place a universal price on electric resilience.
So it is crucial that each customer knows what power loss costs them as they weigh their need for a microgrid, according to Michael Bakas, senior vice president of Massachusetts-based Ameresco.
Bakas recently sat down with Microgrid Knowledge to discuss valuing electric resilience and other issues that are emerging as the microgrid market takes off. Bakas will be a plenary panelist at Microgrid 2017 in Boston November 7.
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“Network downtimes, natural disasters and external attacks – like we had here with the [Boston] marathon bombing – are increasing the need for grid-connected facilities to become more independent,” Bakas said. “But in those cases where there are not clear financial benefits to be enumerated, if clients don’t assign a value for resilience, it will be challenging to move projects forward.”
Too often electric resilience — the ability to withstand or bounce back from an outage — is an intangible in the minds of energy users, he said. They don’t consider the cost of downtime, even though power outages create clear financial losses that can be quantified – and that microgrids can avert.
For example, a supermarket may lose hundreds of thousands of dollars in frozen food. A college may have to reimburse students for dorm shutdowns due to storm-related outages or could lose millions of dollars in research. A utility may need to spend tens of millions on a new substation when existing lines become overburdened.
The Northeast was shocked into understanding the value of electric resilience after Superstorm Sandy. “Back-up generators failed, and wastewater treatment plants were dumping raw sewage into rivers in New Jersey…Hospitals had to vacate and move their patients to other hospitals in NYC. That woke everyone up,” Bakas said.
Soon after, the Northeast embarked on what has become one of the most earnest microgrid development efforts in North America to date.
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Microgrids mirror renewable growth
Pricing resilience is just one challenge that the microgrid industry needs to overcome to realize full growth. Regulatory barriers exist as well, particularly sorting out the utility role. Some utilities may try to block microgrids, seeing them as a threat to their business model. Others may want to be in the microgrid business themselves. As rules are established and the market shakes out, players are likely to come and go, he said.
“I’m bullish on this space. I think it’s coming. But just like renewables, there are some challenges that must be overcome for microgrid adoption and deployment,” he said.
“I’m bullish on this space. I think it’s coming. — Michael Bakas, Ameresco
Bakas sees parallels between the rise of renewables a decade ago and today’s emerging microgrid industry. Ameresco was an early player in the renewable portfolio standard (RPS) market, a state regulatory structure that boosted clean energy development. The company created the nation’s first tradable renewable energy credits (RECS) by way of its landfill gas-to-electricity project in Chicopee, Massachusetts, which went on line in 2004. Utilities and retail supply companies purchase RECS to meet state portfolio requirements.
“It was good business – they offered good annuity streams. We started to do more. We felt a wave coming and sure enough here we are in 2017 and renewables are here to stay,” he said. “That wave, I’m feeling it now with microgrids, energy storage, distributed energy.”
Join us at Microgrid 2017, where Bakas and other thought leaders will provide insight into the microgrid market.