Microgrids are not new. What is new is the sophistication of controls and digital communications that allow for integration of more diverse distributed energy resource (DER) options. Armed with these novel advanced digital controls, microgrids help utilities organize DER assets systematically, unlocking new value such as increasing renewables’ hosting capacity, providing resilience to critical facilities and communities, and providing grid network benefits. In short, microgrids are a building block for utilities to reimagine their place in the electricity supply value chain by leveraging DER resources to serve their customers in new and exciting ways.
New sophisticated digital control platforms allow microgrids to address the need for utilities to manage increased generation and load complexity on distribution and transmission systems. This white paper elucidates that value proposition, using a case study with Portland General Electric (PGE) and a use case from San Diego Gas & Electric (SDG&E) to illustrate the synergy possible with this opportunity. In the process, new business models for utilities are highlighted, positioning them to play a leadership role in building microgrid market momentum. As PGE is discovering, microgrids offer benefits for the utility itself as well as its customers.
In the microgrid space, the role of utilities has long been unrecognized. Many early microgrids were deployed by utilities. The entire electric utility industry traces back to microgrids developed by Thomas Edison in the 19th century, when the electric utility industry was competitive and focused on customized and localized energy systems. Though the industry switched to a “bigger is better” mentality aligned with tightly regulated monopolies, we are now heading back to the future. In 2021, the amount of DER capacity coming online globally will exceed the amount of capacity coming online from large centralized power plants. Over time, the gap between these two sources of energy services grows, and in favor of DER assets spanning generation, load, energy storage, and EVs.