Avista to Test Economic Model for Utility Microgrids

Sept. 30, 2016
Reliability is just the cherry on top for utility microgrids. Avista is out to show that the real value is economic.

Avista plans to demonstrate that investing in utility microgrids is good for all ratepayers.

The Washington-based utility and its partners this week outlined plans to test the economic case for utility microgrids with a $7 million project. The microgrid is part of a larger smart cities initiative in Spokane.

Heather Rosentrater, Avista vice president of energy delivery, described the microgrid Wednesday at the Smart Cities Week conference in Washington, D.C., and in an interview later with Microgrid Knowledge.

Communities often develop microgrids to ensure that critical facilities have power during a crisis. But Avista is pressing an additional case for microgrids — grid economics. The utility wants to show how to leverage a microgrid’s various assets, such as generation, storage and load, during normal operations when it is connected to the grid.

Using a microgrid for reliability is “just the cherry on the top,” said Rosentrater. In fact, a microgrid serves that purpose only about 0.01 percent of the time.

“What we are looking at is using those assets for the system 99.99 percent of the time,” she said.

On a day-to-day basis, when the grid is operating normally, Avista will leverage the microgrid’s assets for price arbitrage, conservation voltage reduction, frequency control, and other services that support the larger grid and the ratepayers who use it.

Announcement of the pilot comes at an important time. Maryland regulators in July turned down a microgrid proposal by Baltimore Gas & Electric (BGE) partly on economic grounds. Industry insiders have expressed concern that the decision could act as a precedent in other states.

The Exelon subsidiary had proposed two microgrids as places of refuge during power outages for community members, where they could go to shop, charge phones, gas up cars and use other services that require power. BGE sought to pay for the microgrids with a surcharge, spread out among all of its ratepayers. But the Maryland Public Service Commission questioned the fairness of asking all ratepayers to cover costs for services that likely would benefit a few.

Avista intends to eventually seek recovery of costs through a general rate case, and believes it will be able to prove the investment is prudent for all of its customers.

The utility plans to do so by identifying the “stacked values” of the microgrid and charging based on each situation.

“If a storm is moving in you are going to be operating [the microgrid] based on the resliency piece. If you are peaking on your system, you are going to be operating to reduce peak demand. If there is large fluctuation in on peak/off peak prices, you are going to be operating in an arbitration situation,” she said.

‘Economies of scope’ for utility microgrids

Utilities typically try to achieve economies of scale. But with its microgrid pilot, Avista is after “economies of scope,” Rosentrater said. That means optimizing the microgrid’s assets minute by minute to take advantage of multiple value streams.

To that end, Avista is not using the word ‘microgrid’ to describe the project; instead the utility uses the Uber-like phrase “shared energy economy.” This is because the term ‘microgrid’ is often associated with grid disconnection, Rosentrater said, while the Spokane project will focus mostly on the economics of a grid-connected microgrid.

Contracts are still being worked out, but Avista estimates the project will cost about $7 million. The Washington Department of Commerce will provide half of the funding. Avista and the partners will supply the remainder.

Among the partners is Schweitzer Engineering Laboratories (SEL), which described the microgrid as “technology that will shape the electric grid of the future.”

“The seamless integration of renewable energy into our existing power distribution system will help us learn and benefit from a shared energy model. As leaders in the power industry, we recognize that the energy landscape is changing, and we are focused on providing the technology to move the grid forward and continue to make electric power safer, more reliable and more economical,” said Mark Zeller, SEL regional sales and service director.

“…we are focused on providing the technology to move the grid forward.” — Mark Zeller, SEL

SEL Engineering Services will provide a range of services for the microgrid, among them engineering design for the microgrid control system, often described as the brain of the system. SEL also will handle:

  • Engineering design of the secure communications network
  • Protection and control equipment assembly
  • Factory acceptance testing using SEL’s Real Time Digital Simulator to perform hardware in the loop testing
  • Commissioning and startup support
  • Personnel training

Other microgrid partners are UniEnergy Technologies, McKinstry, Pacific Northwest National Laboratories, the U.S. Department of Energy, Washington State University. Itron, a smart meter provider, is participating as a technology partner.

The microgrid will serve two buildings in the city’s university district with solar, flow batteries, smart inverters and controls.

The project is still in design but is expected to include two solar arrays, one 75 kW and the other 125 kW. The solar will be paired with two vanadium flow batteries, one 100 kW/500 kWh and the second 500 kW/ 2 MWh. The energy resources would be integrated with the two buildings’ energy management systems and Avista’s distribution management system. The utility has added additional remote switches in the area to give the grid more flexiblity.

Urbanova

Spokane calls its larger smart city effort Urbanova. Already two years in planning, Urbanova is a living lab in the city’s 770-acre University District.

Urbanova is centered around technologies that “enable healthier citizens, safer neighborhoods, smarter infrastructure, a more sustainable environment and a stronger economy,” according to Avista. Among other things the smart city project will include air quality sensors, a connected streetlight pilot and shared communications technology provided by Itron.

Avista presented the smart cities project at a session on microgrids and distributed energy. Moderated by David Chiesa, S&C Electric’s senior director of global business development, the panel also featured, Andres Carvallo, founder and CEO of CMG and co-author of the book, “The Advanced Smart Grid.”

Sponsored by the Smart Cities Council, the conference drew 1,100 people to the Walter E. Washington Convention Center this week.

Should state regulators allow utilities to recover microgrid costs in rates? Offer your thoughts on our LinkedIn group, Microgrid Knowledge.

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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