Analysis: Is Siemens Redefining Microgrid?

Oct. 7, 2016
Siemens appears to be redefining microgrid, the term, as it places increased emphasis not on what microgrids are, but what they can do.

Bill Gates’ early realization that his company would win through software, not hardware, remains among the legendary stories in tech history.

The computer was just a box; what mattered was the intelligence.

Today, a similar story is emerging for microgrids. The generators and buildings within a microgrid are the box. But they become more than the sum of their parts through software intelligence, the microgrid controller.

Indeed, when Siemens gathered analysts together in Boston last month to talk microgrids, it was microgrid controls that dominated the discussion.

When a microgrid is viewed in terms of its controls, it’s less about what’s in the microgrid and more about what the microgrid can do.

Clark Wiedetz, microgrid director for Siemens Energy Management, said that each day he gets emails from customers saying they want a microgrid. He then has to get down to what it is they  need — immediately and for the future — since a microgrid can mean many things to many people.  Is it reliability, security, integration of renewable resources, lower cost power?

The simplest microgrid might just offer back-up power; the most complex enables wholesale market transactions. In between, microgrids offer a range of abilities from energy management to integrating renewables and optimizing assets.

Video: The Story of the Algonquin College Microgrid

Industry can’t define microgrid

By emphasizing controls, Siemens – a lead company in microgrids — is side-stepping or maybe solving one of the oddest problems faced by the industry. The microgrid industry cannot seem to define ‘microgrid.’

Even at the Siemens conference the audience debated, and didn’t agree, on the definition. Almost all definitions require that a microgrid can island from the central grid. But how many kinds of distributed energy must a microgrid have? How many buildings? Must it have advanced energy storage? Renewables?

Strict definitions, such as those put forward by the Department of Energy, require that a microgrid include multiple sources of distributed generation within a defined geographic footprint.

But the marketplace appears to have broadened its thinking and now puts simpler projects into the microgrid bucket. This is largely because customers want these less complex systems — such as solar-plus-storage — to have at least some microgrid capabilities.

Controls allow connection and disconnection from the grid. They can ‘optimize’ or constantly configure the most efficient and least expensive combination of their resources – including electricity from the grid – at any given moment. The controller does this with speed and automation not possible when a human is making the decisions.

So are the simpler systems microgrids or not? It doesn’t seem to matter to the customer. And Siemens seems to be following the customer’s lead by de-emphasizing the box and re-emphasizing its operating system.

Redefining microgrid for one or all?

Clark Wiedetz. Siemens

To be clear, redefining microgrid is not Siemens’ intent; it is not urging the industry to follow its mold.

But Siemens’ ideas are influential. It is one of the biggest gorillas in microgrids. In a soon-to-be-released survey by Microgrid Knowledge, Siemens scored as the top company associated with microgrids. And a May report by Navigant Research placed Siemens in the top spot for capacity among microgrid vendors.

The approach – thinking of microgrids in terms of the controller — works for Siemens because its controllers are a key product differentiator.

“Some of our competition offers one controller and then engineers a solution. We have a number of controllers that we can use depending on the functionality and capability the customer is looking for,” Wiedetz said.

The company offers a suite of controls — from those used for relatively simple back-up generation to advanced controllers for highly sophisticated, conventional microgrids.

In a soon-to-be-released survey by Microgrid Knowledge, Siemens scored as the top company associated with microgrids.

Siemens controllers are based on software it already offers widely to utilities, Wiedetz said.

“Utilities are comfortable with what it is we are offering; they are comfortable with the software ahead of time. Either they are a client or they have heard about it,” he said. “We have engineered our microgrid controls from those systems. We are not starting from scratch with brand new software that we have to get bugs out of. We are not taking a building automaton system and re-engineering it to provide capabilities and functionalities.”

For example, Siemens’ advanced microgrid controller contains the same optimization intelligence found in the operating package that the company supplies for the California Independent System Operator’s day ahead market. Siemens scaled down the software to run on a smaller server. It fits on a USB stick.

Interestingly, though, utilities are not Siemens’ number one microgrid client (although they expect to see their utility customers grow). Right now utilities account for roughly a quarter, which is surprising given that utilities are a major client for Siemens’ other products.

“With the amount of utility business Siemens has you would think that they would be number one. But we are seeing interest from all the markets. There is not one specific driver making microgrids popular. There are different drivers for different markets,” Wiedetz said.

He added: “This is an emerging business that has a lot of opportunity attached to it.”

So defining microgrid may be somewhat beside the point. Customers know what they want a microgrid to do. Call it what you want.

Read more about microgrid financing in our report, “How Microgrids Can Achieve Maximum Return on Investment (ROI): The Role of the Advanced Microgrid Controller,” downloadable at no cost, courtesy of Siemens.

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, 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.

Twitter: @ElisaWood

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