How to Achieve the Highest Efficiency and Revenues for Microgrid and DER Projects

April 5, 2024
The microgrid market is growing fast

The global microgrid market is expected to reach US $245.5 billion by 2032, a 70% increase over the next eight years. This has also been accompanied by a significant increase in microgrid projects using sustainable technologies, with a 47% increase in the market for solar photovoltaics (PV) and battery storage. 

In 2023, the U.S. solar industry added a record 32.4 gigawatts of new capacity, a 51% increase over 2022. Many current PV sites and projects will increasingly include microgrids in the future to optimize the use and delivery of power – and more importantly – to avoid delays in utility interconnections that can slow down the deployment of renewable and electric vehicle projects.

Microgrid projects require the right tools to be viable solutions 

Microgrid and distributed energy resource (DER) projects can be complex, time-consuming, and involve many steps requiring collaboration between many stakeholders and experts (e.g., departments within project owner companies, financiers, utilities, and local regulators).

Data from research performed by Xendee for the U.S. Department of Defense indicates that microgrid feasibility studies on average can cost $75,000, and a full system design can cost $750,000, including electrical studies. However, those design studies are mostly done with suboptimal approaches and tools. And they involve many manual steps or different siloed tools, constituting a non standardized approach that is hard to replicate and, thus, time-consuming.

On top of this, once the microgrid is installed, most microgrid controllers don’t follow the assumptions built into the planning phase because planning and control are also mostly disconnected and done by siloed tools and approaches. However, the transition from designing microgrids and DERs to real-world operation requires consistency between theoretical planning and practical deployment. Most microgrids are designed with several assumptions in mind  including loads, tariffs, battery operation, and expansion plans – all factors that impact the economic feasibility of a project. Of course, they need to reflect the real operational strategy deployed. 

Standardization reduces feasibility and design times and costs

Thus, bridging the gap between theoretical planning and practical deployment by integrating initial planning assumptions into the operation phase using the same methodology (e.g., models, math, and physics) is an important step forward in increasing precision and intended outcomes for the microgrid owner or operator.

A beginning-to-end approach

With the proper beginning-to-end approach, microgrid and DER development yields significant benefits. Because this approach seamlessly integrates steps, as indicated in the figure, the developer can transfer the models from one phase to another with the click of a button. As a result, developers and operators experience time savings, cost savings, and increased accuracy. This allows for the development of increased numbers of microgrids and DERs, which is critical to the clean energy transition.

Meeting operation objectives with a forward-looking and predictive control system

The final phase is the actual operation of the microgrid. The proper controller makes decisions based on local utility tariffs – including demand charges – and identifies the lowest costs for operation by combining weather and load forecasts with the actual state of the system. Such model predictive controllers (MPC) are fairly new and their functionality should be included during planning to avoid a disconnect between the planning and control phases, and to ensure cost savings, resilience, and emission objectives are achieved during operation.

Technical white papers

Two technical white papers written by Xendee establish the benefits of an integrated planning and operational strategy that follows the same modeling principles from the beginning of your project to the actual operation. 

The first one focuses on the standardized discovery and planning phases for microgrid and DER projects and also establishes the integrated process that is needed to bring your project costs down. The paper titled “Reducing Costs and Uncertainty in Microgrid Deployment by Employing an Integrated Solution, Part 1: Sophistication at the Feasibility and Design Analysis Stage is Key” demonstrates project planning costs below 1% of the total project costs, if done the right way.

The second installment of the white paper series titled “Reducing Costs and Uncertainty in Microgrid Deployment by Employing an Integrated Solution, Part 2: The Benefits of a Forward-Looking Integrated Microgrid Control System” shows 60% demand charge savings and nearly 40% energy cost savings for the forward-looking microgrid control system. 

We invite you to read these white papers and improve your project financials.

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