Microgrids – Integral to Meeting Climate and ESG Goals

June 4, 2021
A microgrid can incorporate any and all distributed energy resources that are viable for the application: PV solar, wind, renewable natural gas, biogas or green hydrogen.

Michael Boswell of Concord Engineering explores how microgrids can help organizations meet their climate and environmental, social and corporate governance (ESG) goals.

Decentralized renewable energy technologies, bundled and operated as a microgrid, provide the opportunity and the means for accelerating sustainable energy solutions and achieving ESG goals, effectively “leapfrogging” the larger utility scale delivery of comparable attributes.

A microgrid can be designed as a “bespoke” solution to address broad initiatives. A microgrid anchored by renewable energy will demonstrate not only intent but will be a tangible and, in the parlance of our time, nonfungible asset that provides value.

There is a lot to unpack here. At a high level, climate and ESG goals can be often met through offsets or other forms of contractual environmental accounting that may or may not affect operations on the ground. Are there opportunities to develop and implement microgrids into operations? In many instances, for many hosts and stakeholders, the answer is most assuredly yes.

The flexibility to design microgrid systems that deliver multiple outcomes is perhaps the value at play. The microgrid can incorporate any and all distributed energy resources that are viable for the application: PV solar, wind, renewable natural gas, biogas or green hydrogen.

The microgrid can be developed to transact beyond the boundary of the microgrid such as exporting solar energy or providing local grid stabilization attributes of energy storage. The microgrid is, of course, a resiliency play that can significantly improve and enhance operations.

None of these outcomes depicted above can be achieved through a contract for carbon offsets that may or may not provide tangible benefits — globally or locally. What is clear is that assessment of the real effectiveness of ESG initiatives is accelerating in sophistication. New metrics valuing hard assets over contracted measures are being implemented that will result in much greater transparency of outcomes that will ultimately effect bond ratings and evaluation of investment outcomes. As Laurence Pessez, head of corporate social responsibility at BNP Paribas, one of France’s largest banks, put it: “It’s obvious that we will have to exit the relationship with at least 30% to 50% of our current clients in the power generation business.” This is a clear vector. Utilities and oil and gas are obvious targets, but the point is the vector is toward higher levels of investment scrutiny about how their funds are invested.

Manufacturing, oil and gas production, mining, water and wastewater authorities, health care, higher education, district energy, port authorities, utilities and muni-co-ops are all examples of entities that are influenced by the accelerating trend by investors and insurance underwriters for climate mitigation action before committing resources or services. Less than tangible activities — green washing — will be increasingly seen through a skeptical eye by active investors, regulators and court systems. Microgrids can be tailored to the specific needs of hosts and offer flexibility to adapt to new technologies and regulatory stimulus. Microgrids offer proven solutions to mitigating climate altering activities while offering benefits to operations.

Michael Boswell is vice president of distributed generation at Concord Engineering.

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