Maryland Utility Proposes $44.2M Pilot for Public Purpose Microgrids

Oct. 3, 2017
Pepco has filed a $44.2 million proposal with Maryland regulators to build two public purpose microgrids, designed to keep power flowing to essential societal services during a grid outage and bolster utility operations on normal days.

Pepco has filed a $44.2 million proposal with Maryland regulators to build two public purpose microgrids, designed to keep power flowing to essential societal services during a grid outage and bolster utility operations on normal days.

The Exelon subsidiary petitioned for approval of the microgrids before the Maryland Public Service Commission (Case 9361) last week.

To be sited in Prince George’s and Montgomery counties, the advanced microgrids would together serve 19 facilities with 13.6 MW of solar and natural gas-fired generation and 1.8 MW of battery energy storage.

In Prince George’s County, a microgrid is planned near Prince George’s Regional Medical Center in Largo. In addition to serving the hospital complex, it will provide power during an emergency to five other facilities: a county administration building, a medical facility offering healthcare to the public, a pharmacy, a gas station, and a grocery store.

With 6.8 MW of distributed generation and 1.6 MW of energy storage, the Prince George’s County microgrid would be an electrified safe-haven during a crisis to about 220,000 people living within a five-mile radius.

For the Montgomery County microgrid, the utility is looking at a site in Rockville that would serve 13 facilities, including multiple grocery stores, gas stations, a pharmacy, a fire station, local government, and other facilities that can accommodate the public during periods of prolonged outages.

Montgomery County’s microgrid would operate with 6.8 MW distributed generation and 0.25 MW of battery energy storage.

The two microgrids would be the first in Pepco’s territory to be fully integrated with the utility grid.

Resolving competitive market issues

Pepco attempts to deal with the controversial issue of microgrid ownership in a restructured state – one where competitive entities provide generation and utilities distribute the power. The plan does so by incorporating the competitive market into aspects of the project.

For example, private developers would be selected to build the microgrid through a competitive solicitation. (More information about the solicitation will be forthcoming when Pepco files an update to the microgrid plan around February 15, 2018.)

The developer or another third party would own the microgrids’ solar and natural gas-fired generators. An exception may occur if ownership by private developer proves too expensive. Then Pepco will petition state regulators for permission to own the generators. In any case, Pepco would own the batteries and microgrid controller.

The utility also attempts to stay within competitive rules by proposing that buildings served by the microgrid remain customers of whatever retail energy supplier they choose. That means that participation in the microgrid does not change the supply rate the customer pays.

Pepco said it tried to develop a broad framework for microgrid ownership and payment because the market for microgrids and distributed energy resources (DER) “continues to evolve rapidly as a result of technological change and declining costs.”

Montgomery County microgrid as illustrated by Pepco

Why public purpose microgrids

In offering public purpose microgrids, Pepco is following Exelon’s philosophy that building microgrids for community good fits with the utility mission. While private microgrids might serve business campuses, data centers or other commercial enterprises, public purpose microgrids keep the power flowing to critical services for communities during an emergency.

By providing power during outages, the microgrids will avert an estimated $10 million in potential costs to customers, according to Pepco. Local businesses are often especially hard hit when power is out for an extended period.

But like most contemporary North American microgrids, the Maryland projects would not just operate during power outages, but will run all the time. Connected to the central grid during normal operations, the microgrids would provide various services to bolster the utility system.

For example, Pepco will be able to dispatch the microgrids’ assets when needed. This might be when electricity demand is high, the grid is under stress, and customers might otherwise be required to curtail operations.

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Use of one of the microgrids may also allow Pepco to delay installation of its White Flint Substation by two years, from June 2022 to June 2024, estimated to be a $14 million benefit, according to the filing.

In addition, Pepco also expects the projects to offer lessons in how to use microgrids to integrate and control renewable energy on the distribution level, an ability increasingly cited as a key virtue of the technology.

Pepco said that the microgrids “promise to deliver a new level of capability to the distribution system that is not practical or feasible with other conventional distribution system technologies.”

And finally, Pepco noted that microgrids offer cybersecurity protections. If the central grid is breached, the microgrid can separate itself from the disturbance and provide power to customers independently, just as it would during a storm-driven power outage.

“In addition, microgrids use distributed monitoring and computing that, during a cyberattack, could help protect the system and coordinate efforts to keep the larger grid functioning,” Pepco said.

Prince George’s County microgrid proposed by Pepco

Paying for the microgrids

Since all of Pepco’s Maryland ratepayers will benefit from the public purpose microgrids, the utility says it’s fair to spread the costs among them. Pepco expects the microgrids to add about 46 cents per month to each ratepayer’s bill.

Some of the microgrid costs may be offset by various incentives and market opportunities.

For example, whoever owns the distributed generation may be eligible for solar renewable energy credits, community solar programs, net metering, or revenue from wholesale market participation. Pepco estimates that the projects could accrue $5.1 to $7.7 million in this type of revenue over their 20-year lifetime.

In addition, Pepco says it will pay whoever owns the microgrid generation for services it will provide to the system, such as microgrid stand-by and electric distribution system reliability support, under a negotiated contract.

What’s next

In proposing the microgrids, Pepco also is fulfilling a condition of its March 2016 merger with Exelon. But the utility says it  may propose additional microgrids in the future, so it sees the two projects as a way to learn more about the technology.

Pepco is still working with county and state officials on finalizing plans for the first two public purpose microgrids. It plans to file the final proposal in February, with the hope of winning commission approval by June 1, 2018.

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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.

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