Every once in awhile, after a lot of humdrum news, something really cool comes along, the kind of thing that can reshape the energy industry. That’s what might have happened last week in Atlanta at the 27th Annual Campus Energy Conference of the International District Energy Association (IDEA).
IDEA members formed a lobbying organization for microgrid. On the surface this may not sound like such a big deal. The energy industry has plenty of advocacy groups. So what makes this important?
First of all, microgrid has been an orphan among energy approaches – or maybe it’s had a bunch of parents (cogeneration, district energy, solar, energy storage). Now the Microgrid Resources Coalition (MRC) is stepping in with a guiding hand.
A new asset class?
But more important – and what makes this potentially historic – is what the group thinks microgrid can become – a new asset class in energy markets, alongside generation, demand response, energy efficiency and other resources that vie to fill grid needs. MRC’s goal is to ensure that this asset class gets a chance to compete in wholesale markets and gets paid properly for what it offers – which is not happening now, says MRC.
Microgrids are a mini version of the larger grid. And as MRC defines them, they offer both power and heat. A microgrid can operate in a self-contained fashion serving only its customers and islanding itself when the central grid experiences outages. Or the microgrid can act as a component of the larger grid and provide it with benefits, such as back-up power, reduced locational marginal pricing, frequency support. Often microgrids include combined heat and power facilities, and energy storage, and sometimes solar.
At this point, microgrids are something of a phantom to regulators. Rules don’t exist that define their place in the wholesale market. That’s what MRC hopes to change. It intends to advocate before the Federal Energy Regulatory Commission, regional transmission organizations and state public service commissions to create a place at the table for microgrid.
What’s the big vision here? If this new player succeeds as it hopes to, the electric grid will look very different in a decade or two. Much of our energy will come from decentralized systems with the central grid acting more as a coordinator. This approach is considered more efficient and better able to protect us from large scale outages.
Since Superstorm Sandy, microgrids are all the talk in energy circles. But they are not new. They’ve been around for more than 100 years as district energy systems, many of them on college campuses. Princeton University is often held up as a model system and is serving as one of the founders of MRC. Others are NRG Energy, ICETEC Energy, Concord Engineering and IDEA.
“Today’s wholesale market rules and transmission planning were not designed with the dynamic capabilities of microgrids and their tremendous cost synergies in mind,” said Thomas Nyquist, MRC chairman and executive director of engineering and campus energy for Princeton University. “As an owner and operator of one of the world’s most advanced microgrids, Princeton has seen first-hand the benefits these systems provide for our community and the grid. The MRC’s work to bring power market rules and practices up to date so they can integrate and incentivize microgrids with these features is critical to create more value for microgrid hosts, their communities, and the grid as a whole.”
Watch the competitors try to quash it
MRC has a big job ahead. Established market players – including utilities and generators – are bound to try to quash microgrids as a competitive threat. In addition, microgrids aren’t clearly defined. Given the term’s new popularity, suddenly everything is a microgrid. Some even use the term microgrid to describe what is nothing more than a diesel generator with an extension cord, said Rob Thornton, IDEA president and CEO.
“What is a microgrid? It’s a little bit like art, you know it when you see it. But it’s not defined yet. As an industry, we are in the process of defining it,” Thornton said.
Of course, the energy industry is littered with brilliant ideas that never take off. (Where’s my extreme gravity car ?) But given that microgrid is already proven, it seems far more likely to succeed.
“This isn’t new territory. It seems like the impediments are not practical or technical. They are more policy or political,” Thornton said.
Thornton sees the MRC group as ideal in leading the way because its members operate district energy systems, so can show real world examples of microgrids in action.
But he warned that the group is racing against time. America has a short attention span for “new shiny things,” he said.
“We do run the risk without rules in place that we are not going to accelerate fast enough to deploy microgrids. Then people will say, “That didn’t work. Let’s go on to the next thing’.”
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