With microgrid technology becoming more robust, and component prices dropping, it’s not surprising to see a public purpose microgrid hit the ‘lucky nine.’
Nine-year payback, that is.
The Montclair Township microgrid project is the case in point. With microgrid energy savings projected at about $1.2 million annually, the project’s payback is estimated at just under nine years — which is a workable number for public purpose microgrids, according to Fred Fastiggi, principal and managing director, Shoreline Energy Advisors.
“While a payback much above four to five years on this type of project would be a killer in the private sector, public and non-profits may be more amenable to longer terms,” he said. “But perhaps more importantly, as many of these projects will be developed using emerging public-private-partnership frameworks, the credit of the energy off-takers will become more important.”
Montclair was one of 13 New Jersey ‘town center microgrids’ that won state money ($142,480) in late June from the Board of Public Utilities (BPU). The state offered the money for feasibility studies, which will provide greater detail on design, connections, financing and the types of buildings to be included in the microgrids.
The New Jersey town center microgrid concept is similar to what’s called a public purpose microgrid or community microgrid elsewhere. They serve buildings that keep crucial public services operating during a power outage.
The total cost for the proposed Montclair project is estimated at $12,655,000. Assuming $2 million in grant funding, the net microgrid cost would be $10,425,000, according to its microgrid application submitted with Office of Clean Energy. The project team intends to seek out both both public and private investment to develop the microgrid.
Gauging microgrid value
No large, publicly available data base exists on payback for advanced microgrids, since they are just beginning to make their way into the markeplace. So it is difficult to make sweeping statements about what’s typical.
Projects still tend to be “one-offs that cannot be easily fit to a template,” Fastiggi said.
“Site conditions, building proximity, loads, individual state funding programs and the local regulatory framework all combine to make microgrids, at least currently, a ‘custom’ job,” he said.
Valuing a public purpose microgrid is particularly difficult because its worth isn’t purely financial. Public purpose microgrids serve a societal need, often creating electrified places of refuge for the community during a crisis.
Even so, investors appreciate stability and credit-worthiness. So Fastiggi sees well-run municipalities like Montclair, and financially sustainable non-profits like Hackensack-UMDNJ (owners of a hospital within the proposed microgrid), presenting an attractive outlet for private microgrid funding.
A public purpose microgrid for ‘Everytown’
Montclair’s proposal describes the community as an Everytown, with an estimated 73 percent of New Jersey residents living in communities like it, with both town and suburban characteristics. The application submitted to the BPU argues that “any effort at developing a portfolio of workable microgrid pilot projects would include several projects with characteristics representative of 73 percent of New Jersey’s population.”
As presented, the public purpose microgrid incorporates multiple distributed energy resources that will operate on a continuous basis and in parallel with the utility grid. These include combined heat and power (CHP), which the project will leverage to offset utility power and natural gas to provide a cost savings revenue stream, according to the proposal. Microgrid solar photovoltaic systems will be net metered and will provide ‘cost offset’ revenue, as well as renewable energy credit revenue.
The assets will serve core partners including the Montclair School District, United Methodist Communities, New Jersey Transit and Hackensack UMC – Mountainside Hospital.
Critical facilities within the microgrid’s footprint are: Montclair fire department headquarters, Glenfield Middle School, Pine Ridge Senior Living housing, Mountainside Hospital and New Jersey Transit Bay Street Station and Garage.
The Montclair feasibility study will evaluate approximately 2.3 MW of new power capacity that will allow the microgrid to operate during normal and emergency conditions.
The application shows the hospital electric and thermal loads supported by a 2 MW CHP reciprocating engine plant, and the Glenfield School with a 100 kW CHP plant. The hospital CHP plant will run 24/7 while the school CHP plant will run during school operating hours, about 3,000 hours per year.
In addition, 50 kW of roof-top solar PV will be installed on the Pine Ridge building, 75 kW solar PV on the roof of the Glenfield School and 20 kW of solar PV on the roof of the Fire HQ building. Since the Fire HQ also acts as the communications center for the Montclair emergency services, a 100-kWh battery array will be installed at the facility for additional resiliency.
During grid outages, the microgrid also can leverage existing diesel emergency generators and their associated oil storage tanks. This will enable the hospital to operate at near normal operation during a long-term outage.
The team will evaluate both the Siemens SICAM and Johnson Controls Grid Connect microgrid control/communications systems for use in the public purpose microgrid.
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Grounded in market reality
In selecting the site, the team looked for a customer with sufficient thermal needs to take advantage of the economics of a well-designed CHP system. Project designers also sought nearby buildings that could be “interconnected with complementary electric/thermal balances and minimal ownership issues,” he said.
Montclair Township anticipates that its feasibility study will take 11 months to complete from the time funding is committed from the Office of Clean Energy.
After all project feasibility studies are finished, the state expects to begin a second stage of the program, which will seek detailed engineering design.
Hoping to win state support in the later phases of the program, the team tried to avoid “complex or cumbersome designs that would be too costly or time-consuming to be feasible,” he said.
At the same time, the team didn’t want to rely on assumptions “that could be construed as wishful thinking and kept ourselves grounded in market reality.”
The public purpose microgrid program sprang out of the Christie Administration’s goal to improve energy resiliency following the state’s devastating hit from Superstorm Sandy. The board voted to issue the solicitation at its Jan. 25 meeting, and began accepting proposals from local government and state agencies that own or manage critical facilities. The program was open to specified storm vulnerable areas.
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