Community Microgrids: Where, Why and How?

July 5, 2016
In a Q&A interview, Hitachi’s Brian Levite describes the emergence of community microgrids. Where can they be found? Why are they good for the economy and at-risk populations? And how can we make more of them?

Brian Levite, Hitachi Americas

In a Q&A interview, Hitachi’s Brian Levite describes the emergence of community microgrids. Where can they be found? Why are they good for the economy and at-risk populations? And how can we make more of them?

How would you define a microgrid and what are the major features and components?

We utilize the Department of Energy’s definition of what a microgrid is:

“A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid.  A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island mode.” DOE Microgrid Exchange Group, October 2010

The major features of a microgrid is that it is built to serve a combination of customer objectives around better economics, better reliability and resilience, and reduced emissions. The major components include onsite renewable and clean energy resources, energy storage, technology to rapidly isolate from the main grid, and the real-time control system to make it all happen.

What is the NY Prize and how will it be a catalyst for community microgrids?

NY Prize is a grant program run by the New York State Energy Research and Development Authority (NYSERDA). The first round of NY Prize issued grants to 83 different communities to cover the cost of a feasibility study to determine if a microgrid would make sense technically and economically. The goal of NY Prize is to identify technical and business models for community microgrids that will be replicable across NY state. While the program has additional funding rounds to support the detailed design and even part of project construction, Hitachi has identified some projects that are attractive enough financially to move forward without any additional NY Prize grants. That is exciting to these host communities, to Hitachi, and to NYSERDA because it means that the program has worked and some community microgrids will be going online as a result.

What is Hitachi’s role in NY Prize?

Hitachi is partnering with 12 different communities to provide the technical and economic analysis for their NY Prize effort. Our team uses both public and proprietary tools to design an optimized microgrid system. We then work with the community stakeholders to identify the best ownership models and present information about the system performance and economics.  Our goal is to help these communities understand what a microgrid would do for them and how they can make that happen in the most cost effective way.

How can microgrids help support economic development, help protect at-risk populations and spur new economic development in urban areas?

First, it’s important to know that energy resilience is not just about protecting the bottom line – it is about protecting vulnerable populations like hospital patients, elderly citizens and low income residents that don’t have the ability or resources to just pick up and evacuate the area until the power comes back on. These people need the ability to shelter in place when the grid goes down and microgrids support that. Beyond powering critical public services such as police, fire, and emergency medical, community microgrids can maintain additional critical services in communities like grocery stores, pharmacies and even ATM’s. As we think about community energy resilience, we have to consider not just the end of hour one, but the end of week one. Emergency services and heating/cooling are critical in the short term, but healthy food, medicine and the ability to quickly get back to normal are energy resilience threats that disproportionately affect low-income residents.

From an economic development perspective, microgrids can be a real catalyst. Today’s digital economy means that more economic transactions rely on energy as a pre-requisite than ever before. At the same time, businesses in the U.S. are demanding higher power quality and resilience to keep their operations on track – whether they are manufacturing goods or providing services as a data center. Low-cost, high-quality, always-on power is a highly attractive resource for businesses looking to locate new offices and plants. Microgrids are one way that communities can differentiate themselves for expanding businesses.

What role does solar play in Hitachi’s microgrids?

Solar is an important element of all of the microgrids we have designed. Most locations in the U.S. experience peak energy demand in the afternoon when the sun is at its highest. Conveniently, that’s the time that solar panels produce the most energy. Incorporating solar into our microgrids (along with baseload generation and energy storage) gives us a resource that is at its most potent when the need is greatest. This allows us to build smaller, more cost effective systems that can still meet peak demands.  At the same time, solar power is a great economic play in these systems. The biggest cost of a microgrid is not in building it, it’s in operating it. Generating kilowatt hours from photovoltaics with zero fuel costs and near-zero operating costs is an outstanding way to create microgrids that can generate power at (or sometimes even below) what our customers are currently paying for energy.

How will lessons learned from Hitachi’s work on microgrids and energy resilience in Japan be applied to their work in the US?

Hitachi’s work deploying microgrids and energy resilience projects in Japan has been valuable in understanding what is possible. Our system in Kashiwa-no-ha, for example, is deploying a wide array of energy resources across a small city. Hitachi’s software and operation approach there allows us to not only send power to the most critical buildings at a given time of day or week, it also allows us to perform data analytics around system performance to continually improve the systems operation and maintenance. We’ve added those lessons from Japan to a U.S.-based team with deep experience in designing, financing and building microgrid systems that have been successful here in North America.

How will more widespread adoption of community microgrids be implemented?

Community microgrids are going to really take off if we can identify the factors that tend to yield cost effective microgrids in community settings – because not all communities are going to be well set up to leverage a microgrid. Our work with communities in the U.S. and Canada is helping us to refine our evaluation of those factors and fine tune our business models to identify and engage those communities that make the most sense. Coupling this risk reduction approach with the Hitachi team’s internal financing option is going to allow us to engage communities more rapidly. As for the market as a whole, we believe the greatest driver is going to be education. Once more people understand the value proposition of microgrids, those communities that have a real need for these systems are going to be able to raise their hand and pretty quickly start working with professional firms to make it happen.

How will microgrids make biogas an even more critical player in the renewable market?

Microgrids really need some form of baseload generation to be cost effective. Solar-only microgrids either need very large (and expensive) energy storage or simply can’t meet a considerable portion of the 24-hour, 365 days-a-year energy needs for an islanded network. For communities or organizations that are looking to pair energy resilience with carbon reduction, a microgrid with biogas generation is going to be an outstanding combination. Biogas generation is the nearest technology for microgrids to include a renewable baseload generation resource.

How will the process get started and who are the key instigators?

This market is already off to a running start with organizations developing behind-the-meter microgrids at the same time some utilities are building microgrids of their own. The real trick to opening the floodgates on microgrids is clear regulatory language that allows microgrid developers to serve the needs of an organization or community while also making the local electric utility whole for their services and investment. New York REV is working to achieve this now and I am excited for other states to see the positive economic activity that is going to take place as a result.

Brian Levite is a senior manager, Hitachi Americas, Energy Solutions Business Unit. This interview was originally posted by Alternative Energy Magazine.

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