In this week’s Industry Perspectives, Kilowatt Labs’ Omar Ghani explores the potential of specialized microgrids to drive competition and provide utilities with a sustainable commercial model for the future.
Utilities keep the lights on, delivering electricity to us reliably, safely and economically. Having built a robust technical and commercial model over the last century, utilities are now being tasked to remodel both the technical and commercial aspects of their working infrastructure with pressure from regulators, equipment vendors, integrators and renewable advocates, each driving their own agendas to take advantage of this enormous opportunity.
The change is being driven by the need to reduce greenhouse gas emissions to reduce global warming and prevent climate catastrophe. There are several routes to reducing greenhouse gas emissions in the electricity eco-system. These include large scale renewable generation interconnected to the grid, demand side solutions, and increasingly specialized microgrids.
In addition to large scale renewable generation, utilities are actively evaluating demand side solutions through non-wires alternatives such as demand response and energy storage and efficiency. While these solutions allow utilities to avoid or defer expensive and cumbersome upgrades and reduction in peaker plant usage, the don’t reduce greenhouse gas emissions (except in rare cases when solar or wind are included).
Specialized microgrids are behind-the-meter solutions that provide the utility with a viable technical solution with a sustainable commercial model. Because they are based on renewable generation, they bring the added advantage of reducing greenhouse gas emissions and therefore, enabling the utility to meet its RPS mandate.
Currently, behind-the-meter solutions deliver limited scope to utilities. Existing behind-the-meter solutions include roof-top grid tied solar that depends on net metering programs to be economically viable and storage that is being sold as a backup or time shifting resource to residential customers. These use cases have limited scope. Grid-tied rooftop solar is not viable when net metering is not available. Net metering is a subsidy from the utility to a customer (and vendor) to install solar panels with numerous challenges. It isn’t sustainable either technically or economically and most likely has a short future. Storage as a back-up resource is very expensive compared to diesel or gas generators and therefore, only die-hard green fans are buying. As a load shifting resource, it is not economical because (1) there are very few territories that have TOU pricing for residential customers and (2) those that do, do not have significant pricing differentials. However, behind-the-meter storage does work as a demand charge management solution for certain load profiles in territories that have high demand-charge rates for commercial customers.
Digitally enabled demand-response solutions are also being deployed with some success, however, a model that requires the utility to increase or lower the home temperatures of thousands of homes might be challenging to scale.
Specialized microgrids are defined by two key criteria:
- Specialized control electronics that have the functionality to replace the grid in every respect so that no support from the grid network is required. As a minimum, the electronics should be able to operate on renewable generation only, independently handle surge current (at least 1000 percent), be able to accept at least 5x rated capacity renewable generation input, be able to accept multiple generation and storage sources, switch between these sources without affecting the load, correct power factor losses of the load, actively control, filter harmonics, control intermittency and island/anti-island.
- At all times handle 100 percent of the customer’s peak load (kW) and at least 80 percent of energy demand (kWh). Specialized microgrids deliver a comprehensive behind-the-meter solution that utilities can deploy at customer sites either themselves or through third parties. Specialized microgrids can be deployed in a variety of use cases, delivering benefits to the entire value chain.
Specialized microgrids can be deployed rapidly to respond to emergency situations like the closure of Aliso Canyon. By deploying specialized microgrids across 5,000 homes for example, the utility would replace between 25-30 MW of capacity, with an asset that would last 25 years, instead of deploying a 25 MW largescale Lithium Ion battery which most probably has a cycle life of less than 10 years, and a high operating cost. In the case of deploying the specialized microgrids across customer homes, the utility earn a higher ROI and not have to increase rates. While in the case of deploying a large-scale battery solution, it would earn a lower ROI and most likely increase rates.
Specialized microgrids can be deployed rapidly to respond to emergency situations like the closure of Aliso Canyon.
Specialized microgrids enable deferment or avoidance of upgrades to handle congestion. By migrating customers to specialized microgrids in a congested territory, the utility not only avoids expensive upgrades, but also avoids the subsidies it has to pay for demand response programs or the operating costs of running a storage bank.
Specialized microgrids can easily be deployed to offer load expansion services to commercial and industrial customers when this is not possible using the existing sub-station infrastructure. For commercial and industrial customers this will enable them to manage their business growth.
For remote areas, the utility can deliver electricity services by building a specialized microgrid and replace expensive fossil fuel based electricity. Mines, Indian reservations, military installations and bases, end of grid sites etc. are likely locations.
New developments and communities can be powered by specialized microgrids and a local distribution substation without the need for connecting to the main transmission infrastructure.
In each of the use cases described above, the primary generation resource is renewable energy, which allows the utility to meet its RPS mandates. Very importantly the utility meets its RPS mandates without expensive financial subsidies, without technical challenges stressing the grid, without expensive upgrades to the grid to meet these technical challenges, without losing customers, without losing revenue, at the same time delivering reliable, safe, economical electricity at all times. Finally, in each of the use cases above, each participant of the value chain benefits (the solar panel supplier, the specialized electronics supplier, the mounting system manufacturer, the cable supplier, the installer and the regulator).
Kilowatt Labs has installed specialized microgrids in challenging environments in the Middle East and South Asia, powering residential, commercial and industrial customers and eliminating diesel generators. The ability of Kilowatt Labs’ specialized microgrids to provide rapidly deployable (the quickest in the industry) renewable based electricity in any location is an increasingly important consideration. Several leading utilities in the US are developing use cases to pilot the concept. In addition, a large data center developer and a large municipality in South Africa that operates sewage plants have recently asked Kilowatt Labs to develop specialized microgrids to provide reliable and stable power, which is not available from their grid.
Specialized microgrids provide an economical and technical non-wires alternative to utilities. Whether utilities are able to be the primary contact for the end consumer or not, the current diverse energy ecosystem provides growing opportunities to collaborate with third parties to source and sell behind-themeter services based on specialized microgrids. Through such partnerships, utilities will be able to transition to a cleaner grid that delivers a portfolio of profitable non-wires products and services.
Author Omer Ghani is the CEO at Killowatt Labs.