The Town of Mount Kisco, NY has proposed a community microgrid that is the energy equivalent of a home run. It touches all of the critical power bases by:
- Securing electric supply during power outages
- Reducing energy costs for its customers
- Contributing to New York’s clean energy goals with combined heat and power (CHP) and renewables
- Accelerating New York State’s transition from the traditional utility model to a more decentralized grid
Mount Kisco, which lies between the Hudson River and Long Island Sound, has suffered numerous power outages from Hurricanes Floyd, Irene, and Sandy, not to mention heat waves, northeasters, and snowstorms. These storms resulted in costly damages, including power losses to critical town services, homes and local businesses.
The town’s proposed $8.6 million microgrid would secure critical services during such outages. It is one of 83 that won funds for a feasibility study during Phase 1 of the NY Prize, a state-sponsored competition to encourage microgrid development.
Inside the community microgrid
The microgrid design incorporate five facilities, according to its feasibility study filed with the NY Prize. The facilities are: the Northern Westchester Hospital, the staff housing facility at the hospital, the Boys & Girls Club of Northern Westchester (which could serve as an emergency shelter), the Mount Kisco Medical Group, and the Diamond Properties office building.
During an emergency, the microgrid would island from the central grid and rely on its 3.75 MW of distributed energy resources. These include a new 3.5-MW CHP unit with black start (emergency startup) capability at the hospital; a new 200-kW solar photovoltaics (PV) array on the rooftop of the hospital, and an existing 50-kW PV array at the Boys and Girls Club.
When not islanded, the project will be capable of selling power and services into the larger central grid, creating a revenue stream for the microgrid. A Siemens microgrid control system will govern and optimize the microgrid’s assets and its interaction with the central grid.
The hospital staff housing facility would only buy CHP steam, not electricity, because the facility is connected to a separate utility feeder. By using steam from the CHP system, the hospital can avoid a potential $40,000 upgrade to its aging on-site boilers. The existing boilers will continue to serve the hospital on a limited basis, since the CHP plant will supply only 41 percent of the hospital’s annual thermal energy demand.
The community microgrid will help Mount Kisco resolve several energy challenges:
- The hospital’s existing diesel generators are non-spinning and hence, may be subject to delayed start-up in an emergency.
- Existing back-up generators are limited in their ability to fully power the hospital during a grid outage.
- The other microgrid customers have no backup generators and are therefore vulnerable to prolonged loss of power if the central grid fails.
- Severe heat often causes energy price spikes, as demand soars on New York’s grid. The microgrid will help stabilize prices by relying on its own on-site energy when the grid is under pressure.
- By feeding energy into the broader grid, the microgrid could help balance grid frequency and voltage.
Project sponsors estimate that the microgrid will cost $1.8 million to operate annually, and will accrue annual revenue of about $2.2 million, primarily through selling electricity to the grid and by selling thermal resources to the hospital.
The proposed microgrid’s commercial feasibility may depend on NY Prize Phase III funding, according to the study. The project team estimates that the microgrid will need 5,500 feet in new underground distribution lines at a cost of up to $3 million. Hence, the feasibility study notes that the project may require the additional NY Prize funding to attract adequate third party investment. (Editor’s note: NY Prize funds are not typically meant to cover the full cost of winning projects, but are a vehicle to sweeten the project’s economics to attract private investors.)
The Mount Kisco microgrid proposes a hybrid ownership model.
A special purpose vehicle (SPV) would own the CHP unit and microgrid infrastructure (including control equipment, distributed intelligent electronic devices, and new distribution lines) and the hospital would own the solar array planned for its rooftop.
Private investors would likely own a majority stake in the SPV given its capital requirements. However, Mount Kisco may also elect to purchase shares in the SPV.
The SPV owners would sell electricity from the CHP system to Con Edison under a buy-back or other long-term power purchase agreement, providing them with stable cash flows. Solar energy will be valued at the average commercial rate according to a net metering agreement between the hospital and Con Edison.
What’s needed to proceed
Finally, the project team notes that the commercial viability of the Mount Kisco microgrid may depend on the NYSERDA CHP Performance Program and the federal investment tax credit. Together, these programs offset around 50 percent of initial investment costs. Both programs are due to expire on December 30, 2016, and the CHP program may exhaust available funds before then. If neither program is available at the time of construction, the project may still be commercially feasible with NYSERDA NY Prize Phase III funding.
Phase III NY Prize funding, which would provide up to $5 million for the purchase and installation of microgrid and DER equipment, would cover 50 percent of the total capital. The balance of capital financing would come from third party sources. The project is expected to generate sufficient cash flows to cover debt service payments and maintenance costs of microgrid infrastructure and generation assets.
The project partners for Phase 1 of the NY Prize were Siemens, Sustainable Westchester, Power Analytics, Pace, Mount Kisco and Con Edison. Phase II partners are Siemens, Enel, Pace, Mount Kisco, and Con Edison.
Track microgrid projects by subscribing to the free Microgrid Knowledge newsletter.